MINUTES OF THE

      SENATE COMMITTEE ON COMMERCE AND LABOR

 

      Sixty-seventh Session

      March 3, 1993

 

 

The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Wednesday, March 3, 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 Anaylst

Sheri Asay, Committee Secretary

Frank Krajewski, Senior Research Analyst

 

 

OTHERS PRESENT:

 

Michael E. Fondi, District Judge, First Judicial District, Carson     City, Nevada       

George McNally, Lobbyist, Nevada Trial Lawyers Association

Scott Craigie, Chief of Staff, Governor's Office

Matt Dorangricchia, Assistant General Manager, State Industrial

      Insurance System

Don Jayne, General Manager, State Industrial Insurance System

Gayle Sherman, Management Analyst, State Industrial Insurance    System

Marsha Berkbigler, Lobbyist, Nevada Association of Rehab

      Professionals in the Private Sector

Kathy Sigurdson, Legislative Representative, Nevada Association of       Rehab Professionals in the Private Sector

Dave DeVinney, Rehabilitation Counselor, Stinson, Isom & DeVinney       Ltd.

Dominique Morrow, President, Nevada Association of Rehab    Professionals in the Private Sector (Testified from Las Vegas)

Ed Howden, Owner, Ed Howden & Associates (Testified from Las Vegas)

Leonard Cash, Testified from Las Vegas

Steven Shaw, Administrator, Rehabilitation Division, Department of       Human Resources

Scott Young, General Counsel, State Industrial Insurance System

John Orr, Deputy Administrator, Rehabilitation Division, Department       of Human Resources

 

 

 

Senator Townsend opened the meeting by announcing a discussion of rehabilitation. He introduced the first testifier, Judge Michael E. Fondi, District Judge, First Judicial District, Carson City, Nevada.

 

Judge Fondi stated he was addressing the committee as Chairman of the Legislative Committee for the Nevada District Judges Association. He offered his opinion on the proposed de novo  proceedings in district court for State Industrial Insurance System (SIIS) appeals. Judge Fondi explained how the appeals are presently handled, and said he thought the de novo proceeding in district court would prolong the process.  "...some solutions need to be designed to expedite the process even further, but having a de novo proceeding, I don't believe, is one of them," he said.

 

Judge Fondi discussed preferential settings for workers' compensation cases. He stated the constitution already provides for preferential settings in criminal cases and in public service commission cases. Judge Fondi praised the work of the hearings officers and appeals officers, and thought their positions were justified.

 

Senator Brown asked Judge Fondi if he thought the system was  working effectively, or if it should be streamlined. He responded affirmatively, and explained how the system was designed. Judge Fondi stressed that "...the standard the district court is required to apply to a review of the appeals officer's decision, is the same standard the Supreme Court is supposed to apply to the district court decisions in all other cases." He explained the criteria involved as set forth in Nevada Revised Statutes 233b.135.

 

Judge Fondi responded to a question by Senator Brown, regarding the statistics on appeals. Out of 16,000 appeals, he said, 70 or 75 percent are resolved at the hearing officer level, approximately 5000 at the appeals officer level, and only 200 statewide go to district court. Mr. Fondi thought those figures were very satisfactory.

 

George McNally, Lobbyist, Nevada Trial Lawyers Association, verified those figures. 58 percent of SIIS appeals alone are resolved at the hearing officer level, he said.

 

Scott Craigie, Chief of Staff, Governor's Office, agreed with Judge Fondi's statement regarding the impact workers' compensation hearings are having on the courts. He explained why the Governor's Office wanted to see some of the steps eliminated in the appeals process. Mr. Craigie thought many of the cases were appealed unneccessarily, because of the system now in place which encourages the appeal process.

 

Senator Townsend stated the goal of the committee is to move the appeals process more quickly.

 

Judge Fondi recited a case which included a lengthy dissent by Justice Cliff Young, pointing out that one of the reasons for appeals is due to the uncertainty of legislative intent in certain areas.

 

Mathew Dorangricchia, Assistant General Manager, SIIS, addressed the committee with a discussion of early intervention in workers' compensation. He presented guidelines which explain the proposed changes in NRS 616.2225 and NRS 616.223 (Exhibit C).

 

In response to a question by Senator Townsend, Mr. Dorangricchia said that the savings from the early intervention program, instituted in November, were due to the SIIS disability prevention teams. He explained that the teams were getting claimants back to work without incurring rehabilitation costs.

 

Mr. Dorangricchia discussed the removal of vocational rehabilita- tion from the Bureau of Vocational Rehabilitation (BVR) in 1973.

He explained that vocational rehabilitation was transferred to the former Nevada Industrial Commission (NIC) and SIIS. Mr. Dorangricchia discussed a 1987 study which compared the private sector to the public sector nationally, in regard to rehabilitation. The study concluded that the private sector was more successful because of early intervention and lower caseloads.

 

Mr. Dorangricchia explained the difference between the state federal vocational rehabilitation programs and workers' compensation rehabilitation. He explained the paradox of "paying people to be sick" in workers' compensation rehabilitation. Mr. Dorangricchia spoke of the three clients involved in workers' compensation;  the injured worker, the primary client, and the employer. The state federal vocational rehabilitation system has only one client, the injured worker, he said.

 

Mr. Dorangricchia referred to NRS 616.378, which defines the priorities to be followed in workers' compensation rehabilitation. It is an international guideline, he said, used to return people to work and to rehabilitate them in the workers' compensation setting. Mr. Dorangricchia expressed concern over the priority workers' compensation claimants would get in terms of care under the BVR.

 

Mr. Dorangricchia discussed vocational rehabilitation in the rural areas. He expressed concern over caseload size, pointing out that the Rehabilitation Division is contemplating having a caseload of 76 clients when they receive the SIIS claimants. Mr. Dorangricchia discussed other areas of concern,  dispute resolution and referrals.

 

There was general discussion on the number of clients SIIS takes on for rehabilitation yearly. Mr. Dorangricchia also spoke about the SIIS disability intervention teams.

 

Mr. Dorangricchia described SIIS' relationship with private providers, in response to a question by Senator Shaffer. He spoke of vendor managers, "... senior rehab (rehabilitation) counselors who monitor cases not being done by SIIS personnel."

 

Senator Townsend pointed out that the length of time for rehabilitation is a major problem. Mr. Dorangricchia quoted an average time of 13.6 months, and said the major problem was the development time prior to getting a person into rehabilitation. There was discussion on the development phase. In response to an earlier question, Mr. Dorangricchia stated the percentage of claimants entering a second or third rehabilitation program was very low. He gave examples of how this situation could occur.

 

There was a general discussion of light duty programs.

 

Mr. Dorangricchia expressed concern over claimants who continue to receive Temporary Total Disability (TTD) while being rehabilitated, if they are not released under certain circumstances, which are set forth in section 175 of the proposed legislation (Exhibit D). He explained, "This is a classic rehabilitation eligibility clause.... We may eliminate rehab (rehabilitation) maintenance from the act," added Mr. Dorangricchia, "but it will simply be replaced by more Temporary Total Disability."

 

There was discussion on what constitutes "a demeaning job."

 

Mr. Dorangricchia informed the committee that he incorrectly stated the time spent on rehabilitation maintenance. He said the correct figure is 9.1 months, rather than 13.6 months.

 

Don Jayne, General Manager, SIIS, testified before the committee regarding the fiscal estimate for SIIS. He discussed the early intervention program, and the decrease in rehabilitation costs that should occur as a result of its implementation. Mr. Jayne cited statistics which compared how many rehabilitation cases SIIS handled from 1983 until the present time.

 

Mr. Jayne discussed the Americans with Disabilities Act in relation to rehabilitation. He explained that if the injured worker cannot be returned to the workplace, they will be accessing rehabilitation services. Mr. Jayne suggested that access could be limited through the rehabilitation regulations, in addition to the early intervention program and more appropriate back-to-work releases.

 

Mr. Jayne explained the role of the rehabilitation counselor in the disability prevention teams, in terms of shortening the length of rehabilitation time.

 

Senator O'Connell inquired about the self-insureds, who have dramatically reduced their costs. She pointed out they are not managed care providers, nor do they currently work with a closed panel. Mr. Jayne responded that the self-insureds have a tremendous advantage in being able to work one-on-one with their injured employees. He thought the cost savings were primarily due to the fact that they could get the injured worker back to work quickly.

 

There was discussion on the role of third party administrators, and the impact they have on cost savings for the self-insureds.

 

Gayle Sherman, Management Analyst, SIIS, testified before the committee regarding the 1973 Rehabilitation Act, which she described as an advocacy act for the disabled person. Ms. Sherman explained the difference between SIIS and the BVR in this regard. She referred to section 105 of the proposed legislation (Exhibit D). Ms. Sherman thought rehabilitation counselors at SIIS would have to be retained, to make the eligibility determination and then send the case to BVR. She added that if BVR makes the determination, the rehabilitation time would be prolonged. Ms. Sherman discussed other reasons why she thought it would be advantageous for SIIS to continue to handle rehabilitation cases.

 

In response to a concern by Senator Lowden, Ms. Sherman discussed the injured workers fears, and how they can be alleviated. She explained her involvement in the appeals process.

 

Senator O'Connell inquired about injured workers who turn down jobs. Ms. Sherman explained the circumstances of these situations.

 

Ms. Sherman discussed Oregon's numerous problems with the state's BVR. She said the relationship was eventually severed after insurers and employers put pressure on the state legislature because of skyrocketing costs.

 

According to Ms. Sherman, Washington State never had their vocational rehabilitation department perform rehabilitation for injured workers. Senator Townsend asked why Nevada is not copying the Washington program, citing a potential savings of $75 million dollars.

 

 

There was further discussion on which states have eliminated state vocational rehabilitation. Senator O'Connell and Mr. Dorangricchia also talked about a possible "pooling provision" in the SIIS regulations for small employers.

 

Senator Brown clarified her views on injured workers not accepting certain jobs offered to them. Ms. Sherman explained how possible subsequent problems were handled between the worker and employer, in cases where the worker had to accept a different job.

 

Senator Nevin expressed concern over the priority injured workers would have if they are sent to BVR.

 

There was further discussion comparing the manner in which SIIS and the BVR deal with rehabilitation.

 

Senator Townsend wondered what Mr. Dorangricchia thought about all rehabilitation being sent to the private sector. Mr. Dorangricchia responded, "Frankly, I think ultimately it would be more expensive." He elaborated on his conclusion. Mr. Dorangricchia concluded his remarks with a discussion of the disadvantages, from a manager's viewpoint, of people from outside his division doing the rehabilitation.

 

Marsha Berkbigler, Lobbyist, Nevada Association of Rehab Profes- sionals in the Private Sector (NARPPS), addressed the committee.

She explained the function of NARPPS. Ms. Berkbigler specified that what they are proposing to change in the statutes is to require all injured workers be referred to the private sector for rehabilitation. Ms. Berkbigler explained how they intend to institute these changes, and discussed the cost savings she thought would result.

 

Dominique Morrow, President, NARPPS, testified from Las Vegas in response to a question from Senator Lowden. He discussed peer review, referring to section 4 of the proposed legislation (Exhibit D). 

 

Ms. Berkbigler responded to the issue of the bid process, stating the criteria was established during the last legislative session. 

Senator Townsend asked about the 130-day development time in a rehabilitation case. Kathy Sigurdson, Legislative Representative, NARPPS, responded with an explanation of the process.

 

Ms. Berkbigler discussed caseload size and the fees charged for rehabilitation by private vendors. She said counselors had been asked by SIIS to renegotiate their contracts and reduce their fees by 10 percent. Ms. Berkbigler explained the methods proposed for evaluating the progress of the private vendors.

 

Dave DeVinney, Rehabilitation Counselor, Stinson, Isom and DeVinney LTd., stated that his company has a caseload of 35 or less. In response to a concern expressed by Senator Shaffer, he said they are capable of giving prompt attention to SIIS clients, as well as their other clients.

 

Ms. Sigurdson responded to a question by Senator Nevin, and stated that some NARPPS members expressed a willingness to donate time to do a peer review.

 

Senator McGinness inquired about the impact on rural Nevada regarding the private sectors handling of rehabilitation. Ed Howden, owner, Howden & Associates, responded from Las Vegas. He

explained the provisions his firm, and other firms, have made for rehabilitation in rural Nevada.

 

Senator Brown asked if private vendors would be required to take the harder rehabilitation cases. Ms. Berkbigler said they would.

 

Senator Brown inquired about fees. Leonard Cash responded from Las Vegas that his group chose to bid at a flat rate. He thought the flat rate method offered more diversity in the market.

 

There was further discussion on how private vendors would handle the more difficult cases.

 

Mr. Dorangricchia elaborated on the contract bidding process, and discussed the 10 percent cut private vendors were asked to take.

 

Steven Shaw, Administrator, Rehabilitation Division, Department of Human Resources, responded to a question by Senator Lowden, regarding the number of cases his division will have to handle if they get the SIIS cases. Mr. Shaw said the counselors would have 76 clients, and explained how they could handle that increase in the caseload. He also discussed the costs involved with his division handling the SIIS cases.

 

Senator Nevin asked about the priority the Rehabilitation Division would have in regard to the SIIS cases. Mr. Shaw replied that they are currently serving everyone who walks in the door, and will not be in an order-of-selection system with the SIIS cases. He explained their function as advocates for injured workers.

 

Senator Brown expressed concern about separating rehabilitation  from the rest of the claim under the new proposal. Mr. Shaw replied he knows of no insurance company that has its own rehabilitation unit. He reiterated the qualifications of his division to handle rehabilitation.

 

Scott Young, General Counsel, SIIS, testified before the committee, asking Mr. Shaw to clarify how many cases his counselors would have per year. He asked if the Rehabilitation Division would be able to handle 76 cases per year per counselor.

 

John Orr, Deputy Administrator, Rehabilitation Division, DHS, explained how they arrived at the number of cases specified in their proposal. He added, "The capacity that we have proposed...funded at the level that is included in our budget, will satisfactorily serve the injured worker in Nevada."

 

Mr. Shaw affirmed that statement. He also discussed the number of SIIS rehabilitation cases, which is what the Rehabilitation Division built their budget on.

 

Mr. Dorangricchia clarified the number of rehabilitation cases SIIS handled in 1992. He said, "These aren't people who lost time from work, these are people who are eligible for rehabilitation services, and received some type of rehab (rehabilitation) services during that year." Mr. Dorangricchia cited the current caseload amount.

 

Senator Townsend stated the important issue was the threshold question,  who was going to be eligible for rehabilitation? He thought the question of where vocational rehabilitation would be placed was less critical.

 

There being no further business, Senator Townsend adjourned the meeting at 10:50 a.m.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

            RESPECTFULLY SUBMITTED:

 

 

 

                                    

            Sheri Asay,

            Committee Secretary

 

 

 

APPROVED BY:

 

 

 

 

                                     

Senator Randolph J. Townsend, Chairman

 

 

DATE:                                

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Senate Committee on Commerce and Labor

March 3, 1993

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