MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
April 16, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Friday, April 16, 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
GUEST LEGISLATORS PRESENT:
Lieutenant Governor Sue Wagner
STAFF MEMBERS PRESENT:
Denise Pinnock, Committee Secretary
Brian Davie, Senior Research Analyst
OTHERS PRESENT:
Jim Endres, Assistant Vice President, AT&T of Nevada
Frank Guisti, Lobbyist, Sedgwick James & Company of Nevada
Larry Harvey, Benefits Specialist, John Ascuaga's Nugget
Larry Matheis, Lobbyist, Nevada State Medical Association
Ann McCarthy, Attorney, Nevada Trial Lawyers Association
John Sande, Lobbyist, Harrah's Hotel and Casino
Jim Shelly, Senior Research Analyst, Employment Security Department, State of Nevada
Scott Young, General Counsel, Nevada State Industrial Insurance System
Sharon Weaver, Life and Health Actuary, Department of Insurance, State of Nevada
Ned Reed, Deputy Attorney General, Department of Insurance, State of Nevada
Tim Carlson, Executive Director, Commission on Economic Development, State of Nevada
Marc Hechter, Assistant General Manager, Nevada State Industrial Insurance System
Chairman Townsend opened the hearing on Senate Bill (S.B.) 344.
S.B. 344: Permits certain employers to pay wages to certain employees monthly.
Jim Endres, Assistant Vice President, AT&T of Nevada, submitted written testimony in support of S.B. 344 (Exhibit C).
SENATOR SHAFFER MOVED TO DO PASS S.B. 344.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend opened the hearing on S.B. 346.
S.B. 346: Provides that prohibition against discrimination against employee for use of product outside premises of employer does not preclude higher health insurance premiums.
Frank Guisti, Lobbyist, Sedgwick James & Company of Nevada, explained the bill was requested to guarantee the common practice of charging higher insurance premiums for smokers could not be challenged in court.
Senator Lowden asked whether Mr. Guisti could tell the committee what would be the dollar amount of the difference.
Larry Harvey, Benefits Specialist, John Ascuaga's Nugget, said they had not raised deductibles for smokers, they had lowered the deductibles for non-smokers. He stated the employee was required to sign a form saying they did not smoke. If the employee was not truthful it was treated as a policy violation.
Senator O'Connell asked whether the "product" could be drugs or alcohol. Mr. Harvey stated their program involved tobacco products only. Mr. Guisti said the purpose of the bill was to allow employers to charge higher insurance premiums only for employees who used tobacco products.
Senator O'Connell pointed out the language in the bill was much broader than that. Mr. Guisti said that, as the requester of the bill, he had no problem with restricting the language to tobacco products.
Senator Townsend stated narrowing the language was important, because "hazardous was in the eye of the beholder." Mr. Harvey said many companies were looking at lifestyles, and implementing incentive programs.
Larry Matheis, Lobbyist, Nevada State Medical Association, stated his organization's support of the bill.
Senator Nevin said the legislature could not legislate lifestyles. Mr. Matheis agreed, but said they could legislate public policies which would encourage, or discourage, certain behaviors.
Senator Townsend asked Mr. Matheis to obtain current statistics on health care utilization patterns.
Ann McCarthy, Attorney, Nevada Trial Lawyers Association, pointed out there were several problems with the bill, including the fact that "hazardous" was not defined. Senator Townsend asked her to assume the bill had been limited to tobacco products. Ms. McCarthy said limiting the bill to tobacco products was also discriminatory, and would produce lots of litigation. She stated:
You've said here that there's not going to be an effect on industrial insurance. Surely that doesn't take into account the cost of litigation. You're going to have smokers who smoke maybe one, or two cigarettes a day, who sit next to alcoholics, who maybe yet are not affecting their work standard, and they're going to say, 'Wait a minute. How come my insurance premiums are higher than this guy over here?' I don't think you can limit it to that. No matter what you do with this bill, its going to discriminate.
And what are you going to do about smokeless tobacco? And what about the various kinds of tobacco they're coming out with now, trying to take care of the effects tobacco apparently has, although that's still being argued heavily in the courts. I think this is a can of worms.
If what you're trying to do here is lower health care costs, why don't you do it the other way? Why don't you, instead, reward the people whose health is good? ... This is negative motivation, and does not work in the long run.
Senator O'Connell asked Mr. Guisti to find out what language other states had used in their bills. He agreed to research the subject.
John Sande, Lobbyist, Harrah's Hotel and Casino, testified in support of the bill.
Senator Townsend closed the hearing on S.B. 346, and opened the hearing on S.B. 380.
S.B. 380: Clarifies that employee leasing company is employing unit of employees it leases to client company for purposes of unemployment compensation.
Jim Shelly, Senior Research Analyst, Employment Security Department (ESD), State of Nevada, stated the bill had been requested by his department.
Scott Young, General Counsel, Nevada State Industrial Insurance System (SIIS), said employee leasing did impact workers' compensation programs very heavily. He pointed out that the definitions in the bill applied only to employment security, not the SIIS. Mr. Young said they might have to ask the committee to include some specific provisions for workers' compensation.
Mr. Shelly explained the intent of the bill.
Senator O'Connell asked for an estimate of the number of employers involved. Mr. Shelly said his department had about 40 companies registered as employee leasing companies. He did not know how varied the companies were. Senator O'Connell asked Mr. Shelly to get that information.
Senator Brown submitted a letter from National Contract Staffing (Exhibit D), stating that S.B. 380 closely paralleled Assembly Bill (A.B.) 474.
A.B. 474: Requires registration of employee leasing companies.
Mr. Shelly said the assembly bill was close to what the ESD was looking for. Senator Townsend stated that since S.B. 380 was a committee bill, they should probably just amend A.B. 474 to serve both house's purposes.
In response to a question from Senator McGinness, Mr. Shelly said the ESD was trying to avoid the kinds of problems other states were encountering.
Sharon Weaver, Life and Health Actuary, Department of Insurance,
State of Nevada, stated her department had had many problems with defining leasing companies.
Senator Townsend said he had met a couple of gentlemen involved in leasing companies. He stated that, on the surface, they would appear to be filling a gap.
Ned Reed, Deputy Attorney General, Department of Insurance, State of Nevada, stated his office's primary concern was "to avoid the leasing companies trying to be self-funded." Mr. Reed said a lot of the companies tried to say they were single employers.
Senator Townsend asked Brian Davie, Senior Research Analyst, to check the status of A.B. 474. The hearing on S.B. 380 was closed, and the hearing on A.B. 375 opened.
A.B. 375: Requires use of employer's previous experience out of state in setting premium for industrial insurance.
Lieutenant Governor Sue Wagner, Chairman, Commission on Economic Development, State of Nevada, submitted written testimony (Exhibit E) supporting the bill.
Senator O'Connell asked if Lieutenant Governor Wagner had compared A.B. 375 to S.B. 316. She said she had not.
Tim Carlson, Executive Director, Commission on Economic Development, State of Nevada, said the difference in the two bills was that S.B. 316 did not set a time limit. Senator O'Connell asked how the commission had arrived at the 3 year period. Lieutenant Governor Wagner stated it was basically a pragmatic figure.
Senator Brown said another difference between the bills was that S.B. 316 allowed the new company to use either their previous rating or their new rating, whichever was lower. The assembly bill mandated they use their old rating.
Senator O'Connell pointed out that part of S.B. 316 had already been deleted in the assembly.
Marc Hechter, Assistant General Manager, Nevada State Industrial Insurance System, said:
At the risk of further confusing the issue, you need both, and I'll tell you why. [Section] 23 dealt with rating and industrial classifications, [A.B.] 375 deals with experience modification factors. They are two different things that drive the cost. The big issue that some of the prior companies, particularly, I think, Alaska Airlines, their experience modification factors would have been considerably lower than ours ... automatically that drove their costs up. The issue about what rating classification they would have fallen into was not so much an issue because they are an airline, and it's pretty much standard across the states.
So, frankly, I would suggest you pass both.
The committee thanked Mr. Hechter for his explanation. There followed general discussion of the state's rating system.
Senator Townsend suggested the SIIS, the Commission on Economic Development, and the other development authorities meet and try to reach a consensus on the two bills.
Senator Townsend closed the hearing on S.B. 375. As there was no further business, the meeting was adjourned at 9:55.
RESPECTFULLY SUBMITTED:
Denise Pinnock,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
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Senate Committee on Commerce and Labor
April 16, 1993
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