MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
March 10, 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 10, 1993, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Sue Lowden, Vice Chairman
Senator Ann O'Connell
Senator Mike McGinness
Senator Raymond C. Shaffer
Senator Leonard V. Nevin
Senator Lori L. Brown
STAFF MEMBERS PRESENT:
Denise Pinnock, Committee Secretary
Brian Davie, Senior Research Analyst
Jan Needham, Senate Bill Drafting Advisor
Frank Krajewski, Senior Research Analyst
OTHERS PRESENT:
Vance Hughey, Assistant General Manager, Nevada State Industrial Insurance System
Don Jayne, General Manager, Nevada State Industrial Insurance System
Scott Craigie, Chief of Staff, Governor's Office, State of Nevada
Ande Engleman, Lobbyist, Nevada Press Association
Scott Young, General Counsel, Nevada State Industrial Insurance System
Ray Badger, Lobbyist, Nevada Trial Lawyers Association
John McGlamery, Attorney, Department of Industrial Relations, State of Nevada
Ray Bacon, Lobbyist, Nevada Manufacturers Association
Sam McMullen, Consensus Group
Larry Zimmerman, Consensus Group
Chairman Townsend opened the meeting, and asked Vance Hughey, Assistant General Manager, Nevada State Industrial Insurance System, to testify regarding permanent partial disabilities (PPDs). Mr. Hughey submitted, and discussed Exhibits C, D, and E, pertaining to PPDs.
Senator Townsend asked whether adjusting the discount rate to market rate would have immediate impact. Mr. Hughey stated the impact would be felt primarily in later years.
Don Jayne, General Manager, Nevada State Industrial Insurance System, was asked to discuss using a $1000-per-point approach, as opposed to a percentage for permanent partial disability (PPD) awards. He stated his concern that any attempt to decrease the threshold level would place pressure on doctors to adjust ratings upward. Mr. Jayne estimated the savings in reducing those awards from $3000 per point to $1000 per point would be approximately $70 million.
Scott Craigie, Chief of Staff, Governor's Office, State of Nevada, said:
In terms of changing the PPD factor from .6 to .5, and the others [reductions] that are here, it seems to me that the [State Industrial Insurance] System suggested in their testimony that the timing for this should be applied to injuries that incur after the effective date of the law. In fact, I think there is some logic to that. I did touch base with Scott Young, and we believe, and Scott indicates it may well be true, that if it's explicitly stated in the statute that you can apply this to all PPD payments that have not been determined yet. So even if the injury occurred before the date that the law takes effect, as long as you define specifically how the PPD payment will be computed, and indicate that it is to be applied to all PPD payments that are determined at that point in time, you may get a more immediate financial impact in terms of the system. I think that if we determine, the Legislature and the Governor together, that there is an equitable formula, and that is the equitable formula we will use in the future, I think it would be appropriate to apply it at the time that the law becomes effective.
Senator Townsend asked Mr. Jayne to explain Table II of Exhibit C. Mr. Jayne did so, and added the figures were "on a carry-forward basis." He stated if Mr. Craigie's suggestion were used there would be increased savings.
SENATOR LOWDEN MOVED TO INCREASE THE DISCOUNT RATE TO MARKET RATE.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend instructed Jan Needham, Senate Bill Drafting Advisor, to meet with Mr. Young for language on the discount rate increase.
Ande Engleman, Lobbyist, Nevada Press Association, stated her organization had some concerns regarding the bid process. The proposed organization would remove the SIIS manager from the open meeting laws. She said if those announcements were made in an advisory hearing the public would have a forum. Senator Townsend asked Senator O'Connell to work with Ms. Engleman and Ms. Needham on the language. She agreed to do so, and asked for Mr. Jayne's input.
Mr. Craigie stated it was difficult to evaluate how the changes being made to benefits would impact different individuals. He strongly recommended the changes be effective from the approval date onward. Mr. Craigie said the Governor would like to see the committee look to other areas for savings besides PPDs. He suggested reducing gross income by another percentage point. Mr. Craigie stated the Governor was very concerned about the committee's appetite to increase the threshold for PPDs to 15 percent. He felt that would invite the potential for more fraud. Mr. Craigie pointed out the savings figures the committee was using would be drastically changed if the committee changed the effective date.
Senator Brown reminded the committee there were several areas of savings which, since there were no concrete figures on savings, Senator Townsend was not including in the running total. He said he was being conservative, and pointed out the committee had agreed on the necessity of reaching the $300 million total savings goal. He also stated the SIIS would be submitting new estimations based on the new information.
Scott Young, General Counsel, Nevada State Industrial Insurance System, submitted Exhibit F, a chart which illustrated how much each percentage point would be worth.
Ray Badger, Lobbyist, Nevada Trial Lawyers Association, explained how to use the chart, and gave some examples.
Senator Nevin introduced Exhibit G, proposed language setting up an administrative court. John McGlamery, Attorney, Department of Industrial Relations, State of Nevada, and Ms. Needham explained the proposed language. Ms. Needham clarified that the new court would issue administrative fines only, not civil or criminal fines.
SENATOR NEVIN MOVED TO INCLUDE THE ADMINISTRATIVE COURT LANGUAGE IN THE SIIS BILL.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend submitted Exhibit H, Stress. Senator Brown questioned the need for paragraph 2, Exhibit H. Ms. Needham stated it was included at the request of the Governor's Office. Senator Brown said, "The problem that I see with this is, first of all we have [paragraph] 1(b), saying, 'You can't say it was stress because I was fired,' but if you leave paragraph 2 in there, then any time there is some traumatic event all an employer has to do to cover himself if he doesn't want to pay for any injuries arising out of it, is fire the guy immediately."
Ms. Needham suggested changing the language to read, "a voluntary termination on the part of the employee", or removing paragraph 2.
SENATOR BROWN MOVED TO DELETE PARAGRAPH 2 FROM THE STRESS LANGUAGE (EXHIBIT H).
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR BROWN MOVED TO ACCEPT THE STRESS LANGUAGE AS AMENDED.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Ray Bacon, Lobbyist, Nevada Manufacturers Association, suggested a technical correction in Exhibit I, Employer Deductibles.
Ms. Needham questioned the intent of paragraph 5. Sam McMullen, Lobbyist, said the intent was to make sure the money was recovered by the employer if it was improvidently paid. He suggested the return of compensation issue be addressed through the appeals process.
Larry Zimmerman, Consensus Group, and Senator Nevin discussed the use of the term, "last medical treatment."
SENATOR NEVIN MOVED TO AMEND AND DO PASS THE EMPLOYER DEDUCTIBLES LANGUAGE. (SECTION 1, PARAGRAPH 4, DELETE "AMOUNT OF THE DEDUCTIBLE", AND INSERT "$200", DELETE "AFTER THE CLAIMANT'S LAST MEDICAL TREATMENT", AND INSERT "IF THERE HAS BEEN NO MEDICAL TREATMENT", SECTION 1, PARAGRAPH 5, DELETE "IN DISTRICT COURT".)
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SENATOR O'CONNELL MOVED TO REDUCE THE PPD FACTOR TO .3.
SENATOR LOWDEN SECONDED THE MOTION.
Senator Shaffer stated, "Mr. Chairman, I cannot take any more money away from the injured worker. I just can't see it. We're beating him to death now."
Senator Brown reminded the committee that the Governor felt .3 was too low.
THE MOTION CARRIED WITH DISSENTING VOTES. (SENATORS SHAFFER, NEVIN, AND BROWN VOTED NO.)
* * * * *
Senator Townsend introduced Exhibit J, Estimated Costs of Various SIIS Components. He explained that the exhibit showed projected savings if the average monthly wage was reduced, as opposed to changing gross income to net income.
SENATOR O'CONNELL MOVED TO REDUCE THE AVERAGE MONTHLY INCOME BY 10 PERCENT BEFORE CALCULATING BENEFITS.
SENATOR McGINNESS SECONDED THE MOTION.
Senator Townsend said a 10 percent reduction would result in a savings of $25.9 million.
THE MOTION CARRIED WITH DISSENTING VOTES. (SENATORS SHAFFER, NEVIN, AND BROWN VOTED NO.)
* * * * *
There being no further business the meeting was adjourned at 9:35 a.m.
RESPECTFULLY SUBMITTED:
Denise Pinnock,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
March 10, 1993
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