MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
June 21, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Monday, June 21, 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:
Frank Krajewski, Senior Research Analyst
Brian Davie, Senior Research Analyst
Sheri Asay, Committee Secretary
OTHERS PRESENT:
Rita Hambleton, Member, Nevada Capital City Task Force, American Association of Retired Persons
Jonathan Andrews, Chief Deputy Attorney General, Civil Division, Attorney General's Office, State of Nevada
Terry Rankin, Commissioner of Insurance, Department of Insurance, State of Nevada
George McNally, Lobbyist, Nevada Trial Lawyers Association
Fred Hillerby, Lobbyist, Nevada Society of CPAs, Professional
Insurance Agents
John Grable, Private Citizen
Larry Harvey, Lobbyist, Nevada Employers Workers' Comp Coalition
Bob Ostrovsky, Lobbyist, Nevada Resort Association
Nancy Samon, Chief of Contributions, Employment Security Department, State of Nevada
Scott Craigie, Chief of Staff, Governor's Office, State of Nevada
Larry Zimmerman, President, CDS of Nevada
John McGlamery, Legal Counsel, Department of Industrial Relations,
State of Nevada
Senator Townsend called the meeting to order and announced that Senate Bill (S.B.) 547 has been withdrawn by the sponsor.
SENATE BILL 547: Requires payment of costs and other damages to employee in appeal concerning occupational disease brought by employer or insurer against certain police officers or firemen.
Senator Townsend referred to Assembly Bill (A.B.) 148, which deals with air bags, and explained that it is Assemblyman Petrak's bill.
ASSEMBLY BILL 148: Requires reduction of premium for policy of insurance for motor vehicle equipped with certain safety devices.
Senator Townsend remarked that after deliberation with the commissioner of insurance, the committee decided to leave the discretion with the agency, rather that mandate the premium reduction. He stated, "They have said they refuse to concur in the amendment...I have already spoken to Mr. Petrak and he was in acceptance of that amendment...it is my recommendation that we do not recede from that amendment, and just go to conference..."
SENATOR MCGINNESS MOVED TO DO NOT RECEDE FROM THE SENATE AMENDMENT.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Townsend opened discussion on Senate Bill (S.B.) 201.
SENATE BILL 201: Prohibits factoring of drafts on credit cards and authorizes banks to report employees' defalcations to each other.
Senator Townsend said there is a proposed amendment, by the Assembly Committee on Commerce, to delete sections 2 and 3 and to renumber section 4 as section 2.
There was general discussion of the amendment.
SENATOR O'CONNELL MOVED TO DO NOT CONCUR ON THE AMENDMENT.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Townsend read Senate Bill (S.B.) 212, and explained the proposed amendment, which is to delete lines 12 through 14 of section 2, page 2.
SENATE BILL 212: Makes various changes relating to licensing of contractors.
Discussion ensued on the amendment.
SENATOR O'CONNELL MOVED TO CONCUR WITH THE AMENDMENT.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Townsend opened up discussion on Senate Bill (S.B.) 545.
SENATE BILL 545: Provides duties and liabilities of financial planners.
Rita Hambleton, Member, Nevada Capital City Task Force, American Association of Retired Persons (AARP), addressed the committee on S.B. 545. She submitted written testimony to explain the position of the AARP (Exhibit C), and stated that the purpose of the bill is to try to regulate financial planners. Ms. Hambleton stressed that the elderly are often victims.
Senator Townsend expressed concern that "we not miss the ultimate goal here...there are people who, because they can go and afford a card printed at Kinko's, can call themselves a financial planner...and may or may not sell a product...." He added, "...It's one thing for someone to simply give advice...and then walk away from it. It's another thing to present that kind of investment portfolio planner and then say, 'By the way, I happen to have a product that fits into one of those categories.'"
Jonathan Andrews, Chief Deputy Attorney General, Civil Division, Attorney General's Office (AGO), State of Nevada, responded to this concern. He said that this is basically a policy issue, and the bill could "certainly exclude people who are otherwise licensed, and where there are protections already built into the statute to cover what those people do professionally." Mr. Andrews stated that the AGO and AARP want regulation in areas where none currently exists.
Mr. Andrews submitted a letter from Attorney General Frankie Sue Del Papa, urging support of S.B. 545 (Exhibit D). Further discussion of the bill ensued.
Terry Rankin, Commissioner of Insurance, Department of Insurance, State of Nevada, expressed a concern with S.B. 545. She explained that any licensee, under the Unfair Trade Practices Act, who charges a consulting fee rather than selling the products, is required to disclose that they can get commissions if they sell the product. Ms. Rankin pointed out that some states have adopted "very comprehensive statutes on financial planning to cross over the real estate attorney, life insurance...variable annuity salesmen...that are doing financial planning plus product type activities."
Ms. Rankin expressed concern that, while this legislation requires a bond and clearly sets out the liability, there is no regulator named, creating a situation which could end up in the courts for
regulation.
Senator Townsend asked Mr. Andrews if the AGO has enough staff to deal with the regulatory situation. Mr. Andrews replied, "This bill does not address regulation of financial planners. This creates a cause of action, for actions by financial planners." He explained that because this bill was initiated late in the legislative session, there would not be enough time to address regulation, and that regulation would have fiscal impact. Mr. Andrews remarked, "This bill is simply designed to create a cause of action, and some encouragement for the private bar to enforce that cause of action."
George McNally, Lobbyist, Nevada Trial Lawyers Association, commented on S.B. 545. He said that an attorney who gives financial advice has "malpractice coverage.. and discipline through the state bar. So it's the financial planners...that this bill is really working on."
Senator Townsend referred S.B. 545 to a subcommittee headed by Senator Shaffer.
Fred Hillerby, Lobbyist, Nevada Society of CPAs, Professional
Insurance Agents, addressed the committee on S.B. 545. He stated he is not opposed to the idea of trying to provide protection. Mr. Hillerby expressed concern because he represents "licensed people who are doing this, and already there are regulatory schemes in place to protect the public." He said the bill lacks definition of what a financial planner is, and "needs a little work."
Senator Townsend stated that financial planners often do not let the customer know they will receive a commission from the sale of a product, even if the planner charges a fee. Speaking to Mr. Hillerby, he said, "I think you have to visit with the insurance commissioner and make sure your guys are still telling people that." Senator Townsend explained that the Senate Committee on Commerce and Labor "processed that bill and we think it's in the best interest of the consumer that they do that."
Senator Brown asks what kind of action is taken if a financial planner is found to be operating fraudulently. Mr. Hillerby responded that the professions he represents (CPAs and insurance agents) are licensed, so their livelihood is at stake. In addition, they carry errors and omissions malpractice.
John Grable, Private Citizen, testified regarding S.B. 545, and informed the committee that he is a registered investment advisor and a certified financial planner. He stated his opinion that the regulation is already established. Mr. Grable expressed concern about the bill, specifically the fiduciary obligation he would have to a one-time client, and the high cost of the insurance he would have to carry for errors and omission.
Senator Townsend closed the hearing on S.B. 545. He commended the legitimate fee-only financial planners, and said the committee is looking at the "less than professionals who are doing other things that create problems."
Senator Townsend referred to Bill Draft Request (BDR) 54-2113.
Bill Draft Request 54-2113: Establish program to provide post-
secondary construction education and training.
SENATOR NEVIN MOVED TO INTRODUCE BDR 54-2113.
SENATOR BROWN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Townsend opened discussion on the technical amendments to Senate Bill (S.B.) 316 (Exhibit E), and explained the suggested changes.
SENATE BILL 316: Makes various changes to provisions governing industrial insurance.
Senator Nevin asked whether or not page 29, section 63, line 37, of S.B. 316, includes the Attorney General's Office (AGO). It was agreed that it does.
Senator Townsend asked Scott Craigie, Chief of Staff, Governor's Office, for input on the amendments.
Mr. Craigie presented a change regarding the stress claims (Exhibit F). Senator Townsend read the proposed change, which Mr. Craigie referred to as a "simple definition that works."
There was further discussion on the stress language. Mr. Craigie stated, "It has to be clear that the primary cause of this mental injury arose...at the place of employment."
Larry Zimmerman, President, CDS of Nevada, presented a handout of technical amendments (Exhibit G). He stated, "We defer to Scott Young's [Legal Counsel, State Industrial Insurance System] version...we felt the heading should be that stress is not covered in this state. The way it's termed now, it says 'is covered.' If we'd rather it be it's 'not covered' because that should be the intent of the message, unless we want to have certain things happen that cause that. And we really feel that it should be changed that way."
There was general discussion regarding "primary cause," in section 20, subsection 3(b) of Exhibit G.
Senator Townsend remarked that the language expressed by Mr. Craigie covers all of the committee's concerns. Mr. Craigie said he favored the opening language by Scott Young, regarding "not compensable" (Exhibit G).
There was further discussion of Exhibit G.
In section 21.7, page 12, subsection 4, Mr. Craigie said he had initially suggested the 1-year time period. He claimed it was a lack of attention on his part that the 1-year time period remained in the bill, and that it should be replaced by the 30-day limit.
Larry Harvey, Lobbyist, Nevada Employers Workers' Comp Coalition, stated that there was originally a lot of restrictive language for employers in this section. He explained the restrictions and the problems they would create for on-the-job-training. Mr. Harvey said, "The trade-off for all of these rules would be an incentive, the employer would have to pay 50 percent, but it would be returned, if the person was indeed employable...."
Mr. Craigie stated that on-the-job-training, as well as all vocational rehabilitation, focuses on the difficult-to-place people in the workplace. Anyone with a marketable skill is going to go for job placement only, he added.
Mr. McNally talked about the contract which a person who goes into vocational rehabilitation enters into with the State Industrial Insurance System (SIIS) and the employer. He remarked, "...Now what this seems to say is, at the end of 30 days following a successful completion, now that employer is going to get some bucks back...." He said this would give some good direction in the area of vocational rehabilitation.
Bob Ostrovsky, Lobbyist, Nevada Resort Association, commented about section 24, page 13 (Exhibit G):
If I could make one comment for the record, about the nurse practitioner situation. Some of this language got in at the request of the nursing association, is my understanding, because they had been operating under...the attorney general's opinion, and they wanted to strengthen their position relative to that. I just would like to make it clear that we want to continue to use nurse practitioners to do the same kind of things they're doing now. Not to expand their scope of practice, but to be sure that, on the record, we intend to continue to use these people that are used frequently in clinic settings. And we certainly don't want to interfere with what...the work they are currently providing, it is a less expensive way of handling some routine work on certain claims. As long as that is on the record.
Mr. Craigie said there would be resistance to this in the assembly. He noted that Assemblywoman Chris Guinchigliani has agreed to all other removals, but would like to have nurse practitioners left in the bill.
Senator Lowden asked if advanced practitioners could prescribe drugs. Mr. Harvey responded that they could prescribe drugs, do sutures, and perform a few other tasks in between a nurse and physician, but only under the standing orders of the physician.
The changes regarding page 91, section 190, were explained by Mr. Harvey. There was discussion on the physical conditions to which this language applies. Senator Brown stressed that the committee's intention was that, if someone can do something about their condition and does not, they would lose benefits. However, if they cannot change the condition, they would retain their benefits. Mr. Harvey said, "Unfortunately...you're going to include compensation for claims that have never been compensated before." He gave an example of such a situation.
In section 93, Mr. Zimmerman explained the change he desired in this section. He referred to a C-36 form, used by SIIS for a claimant request for compensation, which helps to detect fraud. Mr. Zimmerman remarked that it would be very unnecessary and expensive to send this form out with every disability check. He said he would like the insurer to have the discretion of whether or not to send the form.
There was discussion as to whether or not the bill drafters made a mistake in deletion in this section.
Responding to a question by Senator Townsend regarding the section marked "general" (Exhibit G), Mr. Zimmerman discussed the agreement between self-insured employers and SIIS on the funding of the fraud unit. He said there is nothing in the bill that specifies how the unit will be funded.
Discussion ensued on the funding of the Attorney General's Office relative to fraud, and the handling of fraud cases by the AGO.
John McGlamery, Legal Counsel, Department of Industrial Relations (DIR) explained that the funds come from assessment from the DIR, not the AGO.
Senator Lowden asked, "For each individual self-insurer, how do you divvy it up, to get up to 10 percent? Has that been worked out?"
Mr. Ostrovsky explained that the DIR, which does the assessments, would probably have to make that assessment on total claims, as they do now. He and Mr. McGlamery elaborated on the method used by the DIR.
There was discussion about adjacent counties, on page 33 of S.B. 316.
Mr. Zimmerman inquired about the managed care issue. "On the managed care, my understanding is that the insurer, basically SIIS, will contract with managed care organizations (MCOs). Employers will choose the MCO and injured workers will have to use that MCO. The problem is that there's no language that tells us that." He expressed concern that the mechanism for the employer contracting with the MCO is not in the bill.
Mr. Craigie explained, "What we have done when we went to the caps and the minimum number is, we went to a system where the employer will sign based on marketing by the MCOs." He said the Governor's Office wants to make sure it is clear that the employer selects the MCO. He added that they did not want, however, to put anything in the statutes which defines the process for the employer to select, that might "tie the hands of those who are in the process, both those employers, MCOs and the system [SIIS]."
There was further discussion on the process of the employer selection of the MCO.
Senator Nevin expressed concern over the elimination of the mediation process, under section 3 of S.B. 316, and about the removal of the oversight committee. Senator Shaffer explained how the oversight committee was eliminated.
Senator Townsend opened discussion on Amendment No. 895 to Senate Bill 237.
SENATE BILL 237: Makes various changes relating to insurance guaranty association.
Ms. Rankin stated that section 1 of Amendment No. 895 clarifies "which part of credit insurance is covered, and it removes some of the vendor's single interest language, and keeps it consistent with other provisions on credit insurance in Title 57." She explained the changes in sections 2, 3 and 5 (Exhibit H).
SENATOR NEVIN MOVED TO AMEND AND DO PASS S.B. 237.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Townsend opened the discussion of Senate Bill (S.B.) 208.
SENATE BILL 208: Revises provisions for determining status as independent contractor for purposes of unemployment compensation.
Nancy Samon, Chief of Contributions, Employment Security Department, State of Nevada, addressed the committee on S.B. 208.
There was discussion of a proposed amendment, which had not been drafted, as of yet. In answer to a question by Senator Townsend, Ms. Samon acknowledged a problem her office has with the amendment.
Senator O'Connell stated, "It was testified to us that this was common law, and they were simply clarifying within the statute what that common law was. What would be the problem?"
Ms. Samon said the language in the amendment would place the burden of proof on the department, not on the employer, to prove this particular common law situation. She said, "It would also remove the c section from what is commonly referred to as the a,b,c test for determining what constitutes an independent contractor." Ms. Samon explained the difficulties this would cause her department.
There was general discussion on resolving the conflicts with the amendments to S.B. 208.
There being no further business, the meeting was adjourned at 10:28 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
June 21, 1993
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