MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
February 5, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Friday, February 5, 1993, in Room 119 of the Legislative Building, Carson City, Nevada. The meeting was teleconferenced to Cashman Field, Las Vegas, 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
Susanna Martin, Committee Secretary
Brian Davie, Senior Research Analyst
Jan Needham, Senate Bill Drafting Advisor
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Scott Craigie, Chief of Staff, Governor's Office, State of Nevada
Brian Harris, Legal Counsel, Governor's Office, State of Nevada
Frankie Sue Del Papa, Attorney General, State of Nevada
Don Jayne, General Manager, Nevada State Industrial Insurance System (SIIS)
Dean Hardy, Lobbyist, Nevada Trial Lawyers Association (NTLA)
Larry Zimmerman, Consensus Group
Allan Hanssen, President, Hospital Health Plan
Scott Young, General Counsel, SIIS
Larry Matheis, Lobbyist, Nevada State Medical Association
Bob Gagnier, Executive Director, State of Nevada Employees
Association (SNEA)
Bill Champion, Lobbyist, Employers Coalition
Chairman Townsend opened the meeting and asked Scott Craigie, Chief of Staff, Governor's Office, State of Nevada, to present his proposal on managed care. Mr. Craigie said:
There was a lot of information distributed and mentioned last night. I would just like to comment on one item off the top. I don't believe any of these comments were focused on our plan or any of the motivations of any of the committee members or the Governor, but I do want to make it clear that the changes that have been proposed by the Governor are not driven by any particular bias or belief that injured workers are somehow finding ways to milk the system. The Governor's changes are specifically designed to do, as Brian Harris [Legal Counsel, Governor's Office, State of Nevada] articulated at the beginning of the testimony yesterday, to run this operation like an insurance company. That requires a significant number of changes in the way people think about the system. Injured workers are, in fact, the group of people that we are here to protect, serve, get medical treatment, and return to work. I want to make sure that's clearly on the record.
Senator Lowden asked why Mr. Craigie was opposed to the inclusion of willing provider language. He stated it would raise the rates. Senator Lowden disagreed.
Senator McGinness inquired how Mr. Craigie anticipated the paid provider organization (PPO) system would work in rural Nevada. Mr. Craigie said rural Nevada would be much more difficult to cover. He said it was entirely possible that some portion of the medical services would be done on a contract basis.
Frankie Sue Del Papa, Attorney General, State of Nevada, stated:
For the record, from 1912 until 1993, the Attorney General's Office has had 81 years of not being involved with worker's compensation. Everyone just assumes that the Attorney General's Office represents every state agency. I'm happy to say that up until now this is one of the ones we have not represented. Be that as it may, in 1993 the Governor's Office, the Senate, and the Assembly have Bill Draft Resolutions asking us to cover the fraud portion of it. We have tried to work closely with the Governor's Office because we know what a priority this is, both for the Governor and the state. But, you have to understand, too, we have not the expertise in our office. We're trying, based on the expertise we gained in the development of the medicaid fraud unit, which is comparable and is a really good model, to try to follow in developing the fraud unit here.
She said her office was understaffed and could not absorb the addition of fraud cases without additional help. Senator Townsend explained the targeted budget for the new fraud unit was $1.3 million.
Senator Lowden asked Mr. Craigie to explain who would run SIIS if the board were abolished. He stated there would be eight people appointed by the Governor to run the system. They would report specifically to the Governor. Mr. Craigie said, "They would be folks who understand how to run an insurance company." He explained the proposed bill suggests the Governor would directly appoint the manager, all the assistant managers, the chief counsel, and the ombudsmen. The manager would report directly to the Governor. There would be a sunset clause in the bill. Mr. Craigie said he anticipated changing to a board at the sunset, but a board which would be very different from the current board. He said the board would be smaller and encompass a broader range of experience.
Senator O'Connell requested Mr. Craigie clarify the changes in the language regarding ombudsmen. Mr. Craigie stated the new language would increase the visibility of the ombudsmen. Mr. Craigie handed out Exhibits C, D, and E. He reiterated the fact that the Governor intended SIIS be run more like a private insurance company. Mr. Craigie explained businesses with 25 or more employees would be required to take back injured workers up to three years after the injury. He stated using that figure would exempt 88 to 90 percent of the state's businesses. Senator Nevin questioned the advisability of that requirement and wondered what would happen when an employer said they just did not have a position for the employee. Mr. Craigie said there would need to be sacrifices made across the board. He explained Exhibit C contained amendments to the Governor's proposal on workers' compensation. He then discussed Exhibit D, titled Temporary Total Disability Compensation: Net versus Gross.
Senator Townsend introduced Exhibit F, Overview of Governor's Proposals on Workers' Compensation (Revised). He stated the committee would be voting directly off Exhibit F:
Senator Townsend said he would accept a motion establishing a special fraud unit.
Senator Nevin asked what the threshold would be for the unit. Senator Townsend stated it would be $1.3 million.
SENATOR NEVIN MOVED TO DO PASS THE "FRAUD" CLAUSE.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR O'CONNELL MOVED TO DO PASS THE "DETERMINATION OF BENEFITS" CLAUSE.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO DO PASS PARAGRAPH 1 OF THE "COMPENSATION BENEFITS" CLAUSE.
SENATOR O'CONNELL SECONDED THE MOTION.
Senator Brown questioned whether the clause referred to those accused, whether they had been convicted or not. Mr. Craigie stated the consensus legislation, as written in the summary, said the person must be convicted. Senator Brown stated:
My feeling on that is that if the criminal justice system has wrongly accused someone, and yes, his employer isn't paying him, and yes, his unemployment isn't paying him ... I don't think we should also be a party to causing this person these problems if he's not convicted.
Senator Shaffer stated he, also, could not support the legislation as written. Senator Nevin withdrew his motion.
No motions were submitted concerning paragraphs 2 and 3 of the "Compensation Benefits" clause.
SENATOR O'CONNELL MOVED TO DO PASS PARAGRAPH 4 OF THE "COMPENSATION BENEFITS" CLAUSE.
SENATOR NEVIN SECONDED THE MOTION.
Senator Nevin stipulated the figures in the bill be within the parallels the Governor's Office set down.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend explained paragraph 5 of the "Compensation Benefits" clause had been amended (Exhibit C) and read the new language.
SENATOR McGINNESS MOVED TO DO PASS PARAGRAPH 5 OF THE "COMPENSATION BENEFITS" CLAUSE AS AMENDED.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR SHAFFER MOVED TO DO PASS PARAGRAPH 6 OF THE "COMPENSATION BENEFITS" CLAUSE.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Dean Hardy, Lobbyist, Nevada Trial Lawyers Association, stated the language in the "Reopening Claims" clause would increase the burden on the injured worker to give clear and convincing evidence of the need to reopen a claim past a five year limit.
Larry Zimmerman, Consensus Group, clarified that if there were no permanent disability award or the claim did not involve temporary total disability payments, after a one year period of time had elapsed the claim could never be reopened.
Senator Nevin said he felt more comfortable with a three year period than with the five years.
SENATOR NEVIN MOVED TO AMEND AND DO PASS THE "REOPENING CLAIMS" CLAUSE TO REFLECT THE THREE YEAR TIME PERIOD.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend explained the "Hearings and Appeals of Contested Claims" clause had been amended as reflected in Exhibit C, paragraph 2.
SENATOR O'CONNELL MOVED TO DO PASS THE "HEARINGS AND APPEALS OF CONTESTED CLAIMS" CLAUSE.
SENATOR NEVIN SECONDED THE MOTION.
Senator Nevin stated he would like to add the term "and/or arbitrator" to the section wherever "hearing officer" occurred. Senator Brown agreed she would rather give the worker a choice between binding arbitration and an appeal. Senator Nevin agreed that had been his intent.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator O'Connell asked whether the committee would remove the word "objective" from paragraph 1 of the "Other Medical Care Provisions" clause. There was general agreement.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS PARAGRAPH 1 OF THE "OTHER MEDICAL CARE PROVISIONS" CLAUSE (REMOVE THE WORD "OBJECTIVE").
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Allan Hanssen, President, Hospital Health Plan (HHP), advocated the inclusion of a pharmaceutical formulary to the language of paragraph 2 of the "Other Medical Care Provisions" clause. He also suggested predetermining a 30 day supply of each drug and listing which drugs are available in generic form. Mr. Craigie agreed with the proposed changes.
SENATOR NEVIN MOVED TO AMEND AND DO PASS PARAGRAPH 2 OF THE "OTHER MEDICAL CARE PROVISIONS" CLAUSE (INCLUDE THE ADDITION OF A FORMULARY, PREDETERMINED SUPPLY AMOUNTS, AND A LISTING OF WHICH DRUGS ARE AVAILABLE IN GENERIC FORM).
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO DO PASS THE "EMPLOYER SELF-INSURANCE" CLAUSE.
SENATOR McGINNESS SECONDED THE MOTION.
Senator O'Connell asked why the clause prohibited groups from becoming self-insured before January 1, 1995. Senator Nevin answered it was to allow the SIIS time to "get back on it's feet".
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO DO PASS THE "LOSS CONTROL AND PREVENTION" CLAUSE.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO DO PASS THE FIRST PARAGRAPH OF THE "INDUSTRIAL INSURANCE CLASSIFICATIONS, RATES AND FUNDS" CLAUSE.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR O'CONNELL MOVED TO DO PASS PARAGRAPH 2 OF THE "INDUSTRIAL INSURANCE CLASSIFICATIONS, RATES AND FUNDS" CLAUSE.
SENATOR McGINNESS SECONDED THE MOTION.
Senator Townsend clarified the language would include "or their premium" after "experience modification factor".
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Brown asked if, in paragraph 3 of the "Industrial Insurance Classifications, Rates and Funds" clause, the committee would consider offering the employer the option of a $250 deductible or a $400 deductible. Senator Townsend said there had been discussion about allowing a certain amount of flexibility for employers if they chose to go above the minimum threshold. He said allowing them too much flexibility would be self-defeating.
Mr. Craigie stated his office would not have a problem with doing so.
Senator Nevin agreed there should be flexibility. Senator O'Connell felt the $400 deductible would be a problem for a small employer.
SENATOR NEVIN MOVED TO AMEND AND DO PASS PARAGRAPH 3 OF THE "INDUSTRIAL INSURANCE CLASSIFICATIONS, RATES AND FUNDS" CLAUSE (CHANGE $400 TO $200 AND INCLUDE LANGUAGE TO ADJUST DEDUCTIBLES ABOVE THAT).
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO AMEND AND DO PASS THE "LEGISLATIVE OVERSIGHT" CLAUSE (CHANGE "INTERIM" TO "STANDING").
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO DO PASS THE "ADMINISTRATION OF INDUSTRIAL INSURANCE LAWS" CLAUSE.
SENATOR BROWN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mr. Craigie wanted to clarify all the votes taken be the committee during that meeting were contingent on passage and approval of the bill.
SENATOR NEVIN MOVED TO DO PASS PARAGRAPH 1 OF THE "VOCATIONAL REHABILITATION" CLAUSE.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR McGINNESS MOVED TO DO PASS PARAGRAPH 2 OF THE "VOCATIONAL REHABILITATION" CLAUSE.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mr. Zimmerman stated the "Managed Care" clause referred only to the SIIS. He asked if provisions could be made to allow self insurers to require managed care. Senator Townsend said that should be very clear.
Senator O'Connell stated she preferred the language submitted by Larry Matheis, Lobbyist, Nevada State Medical Association. Senator Brown read the proposed clause:
The responsible authority shall certify managed care plan. If the responsible authority finds that the plan: a) does not discriminate against or from participation in the plan any Nevada licensed health care provider who is willing to abide by the terms of the contract for managed care, including payment, reporting and utilization review criteria, but may be suspended or removed by the contractor or the appropriate authority for good cause shown.
Mr. Hanssen testified opposing "diluting a managed care system with an all-payor system".
Mr. Matheis said his proposed language had nothing to do with an all-payor system because it specified the providers must be willing to abide by the contract. He stated the proposal would establish the means for removal, by the proper authority, of anyone not abiding by the contract.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS THE "MANAGED CARE" CLAUSE (INSERT MR. MATHEIS' LANGUAGE).
SENATOR LOWDEN SECONDED THE MOTION.
Senator Brown said she would further amend it to state "shall be suspended" instead of "may be suspended".
SENATOR O'CONNELL ACCEPTED THE AMENDMENT TO HER MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Senator Townsend clarified the SIIS would have the option of contracting for claims management if they chose to.
* * * * *
Mr. Hanssen stated HHP had been trying to re-price claims through the current SIIS system. He said it is integral to a managed care system to process claims, analyze the data, and have an integrated approach. Senator Townsend agreed and suggested including language that would state the SIIS would not be precluded from hiring a managed care organization of any type that would, or could, include claims management within that group.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS THE PREVIOUS MOTION WITH THE FOLLOWING: SIIS COULD HIRE A MANAGED CARE ORGANIZATION WHICH INCLUDED CLAIMS MANAGEMENT.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend opened discussion on paragraph 1 of the "SIIS Organization and Procedures" clause. As there was no motion on the paragraph, Senator Townsend suggested restructuring the board as opposed to abolishing it.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS. (CURRENT BOARD MUST TURN IN THEIR RESIGNATIONS TO THE GOVERNOR. UPON PASSAGE AND APPROVAL THE GOVERNOR WOULD APPOINT A NEW BOARD OF DIRECTORS WITH A DIFFERENT COMPOSITION.)
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend stated he would entertain a motion to restructure the board of directors to include seven members who were all premium payers or policy holders except one who would be a public member. All seven members would be appointed by the Governor.
SENATOR NEVIN MOVED TO AMEND AND DO PASS THE PREVIOUS MOTION. (INCLUDE LANGUAGE TO RESTRUCTURE THE SIIS BOARD OF DIRECTORS AS FOLLOWS: SIX PREMIUM PAYERS OR POLICY HOLDERS, ONE PUBLIC MEMBER. ALL SEVEN MEMBERS TO BE APPOINTED BY THE GOVERNOR.)
SENATOR O'CONNELL SECONDED THE MOTION.
Senator Brown stated in most instances policy holders are also the people who receive the benefits, but in the SIIS this is not true. She wondered if having a majority of premium payers on the board would ensure the welfare of the people getting the services.
Senator O'Connell said that, as a premium payer, the employees' welfare was the major concern.
THE MOTION PASSED WITH DISSENTING VOTES. (SENATORS SHAFFER AND BROWN VOTED NO.)
* * * * *
Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA), spoke in opposition to paragraph 2 of the "SIIS Organization and Procedures" clause. He said the proposal was counterproductive to improving the system.
Senator Brown asked whether, after due process, a classified employee could be fired for not doing their job. Mr. Gagnier said they could.
Senator Townsend noted if the SIIS employees were removed from the State Personnel Act it was not an attempt to penalize them. Rather it was a way of enabling the SIIS to pay those employees who were "killing themselves". He said it would give more flexibility to reward those people who work overtime.
SENATOR O'CONNELL MOVED TO DO PASS PARAGRAPH 2 OF THE "SIIS ORGANIZATION AND PROCEDURES" CLAUSE.
SENATOR McGINNESS SECONDED THE MOTION.
Senator Brown pointed out good employers do give raises for employees who work very hard and classification ensures employees would get due process.
Senator Nevin asked for clarification of the "unclassified employees" mentioned in the clause. Senator Townsend suggested removing that segment of the paragraph. Senator O'Connell withdrew her motion.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS PARAGRAPH 2 OF THE "SIIS ORGANIZATION AND PROCEDURES" CLAUSE (REMOVE THE SIIS FROM THE STATE BUDGET PROCESS, BUT DO NOT REMOVE IT FROM THE PERSONNEL ACT).
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend asked that language be included which would state any policy payer monies still available at the end of the year would not revert to the General Fund.
SENATOR O'CONNELL MOVED TO AMEND AND DO PASS THE PREVIOUS MOTION (INCLUDE LANGUAGE TO ENSURE ANY POLICY PAYER MONIES AVAILABLE AT THE END OF THE YEAR WOULD NOT REVERT TO THE GENERAL FUND).
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Nevin said his understanding was that only the department heads were to have been declassified. Mr. Craigie stated what had been proposed by the Governor's Office was that the management team be appointed by, and serve at the pleasure of, the Governor. He stated this would make them accountable to a single individual. Senator Brown asked if Mr. Craigie was suggesting classified employees were not accountable. Mr. Craigie said there was a different standard for those who serve at the pleasure of the Governor.
There followed general discussion regarding the merits of declassifying the management team.
SENATOR O'CONNELL MOVED TO DO PASS PARAGRAPH 2 OF THE "SIIS ORGANIZATION AND PROCEDURES" CLAUSE (REMOVING THE SIIS EMPLOYEES FROM THE PERSONNEL ACT).
There was no second.
Senator Nevin said he would like to see a list of exactly who would and would not be declassified.
* * * * *
SENATOR O'CONNELL MOVED TO DO PASS PARAGRAPH 4 OF THE "SIIS ORGANIZATION AND PROCEDURES" CLAUSE.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mr. Craigie testified that paragraph 5 of the "SIIS Organization and Procedures" clause had been included on the assumption the SIIS board of directors would be abolished.
Senator Townsend announced they would move on to Exhibit G, Overview of Remaining Workers' Compensation Proposals:
SENATOR O'CONNELL MOVED TO DO PASS PARAGRAPH 2 OF THE "SIIS ORGANIZATION AND PROCEDURES" CLAUSE.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR NEVIN MOVED TO CREATE AN ADMINISTRATIVE COURT.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR LOWDEN MOVED TO AUTHORIZE JAN NEEDHAM, SENATE BILL DRAFTER, TO PUT THE PRECEDING VOTES IN BILL FORM.
SENATOR McGINNESS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend requested committee introduction of the following bill draft requests (BDRs):
BILL DRAFT REQUEST 53-1166: Providing that real estate licensees are not employees or employers for purposes of industrial insurance under certain circumstances.
BILL DRAFT REQUEST 20-814: Prohibits local governments from adopting ordinance regulating rental rates.
BILL DRAFT REQUEST 8-289: Prohibit factoring of drafts on credit cards and authorizes banks to report employee defalcations to each other.
BILL DRAFT REQUEST 53-725: Authorizes "fair share agreements" for public and private employers.
BILL DRAFT REQUEST 54-187: Clarifies circumstances when compensation by physical therapist for referral of patient is grounds for disciplinary action.
BILL DRAFT REQUEST 53-1305: Requires licensing of biophysical therapists.
BILL DRAFT REQUEST 53-212: Revises provisions governing enforcement of claims for wages, commissions, and other demands of persons financially unable to employ counsel.
BILL DRAFT REQUEST R-247: Direct legislative commission to conduct interim study to review certain benefits required by the state to be provided by policies of health insurance.
BILL DRAFT REQUEST 58-821: Eliminates provision allowing cable TV operators to deduct certain costs from franchise fees.
SENATOR O'CONNELL MOVED FOR COMMITTEE INTRODUCTION OF BDRs 53-1166, 20-814, 8-289, 53-725, 54-187, 54-1305, 53-212, R-247, AND 58-821.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
As there was 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 5, 1993
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