The Committee on Commerce and Labor was called to order at 3:45 p.m., on Monday, March 22, 1999. Chairman Barbara Buckley presided in Room 3142 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Ms. Barbara Buckley, Chairman

Mr. Richard Perkins, Vice Chairman

Mr. Morse Arberry, Jr.

Mr. Bob Beers

Ms. Merle Berman

Mr. Joe Dini, Jr.

Mrs. Jan Evans

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. David Humke

Mr. Dennis Nolan

Mr. David Parks

Mrs. Gene Segerblom

GUEST LEGISLATORS PRESENT:

Assemblywoman Bonnie Parnell, District 40

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Douglas Devries, O.D., Nevada Optometric Association

Jeffrey Austin, O.D., Nevada Optometric Association

Rudy Manthei, Representative, Nevada State Board Osteopathic Medical Examiners

Michael Stanko, M.D., Sierra Eye Associates

William Durant, M.D., Ophthalmologist, Sierra Eye Associates

Ken Johnson, Chief, Capitol Police

Robert J. Gagnier, Executive Director, State of Nevada Employees Association

Lenard Ormsby, General Counsel, Employer’s Insurance Company of

Nevada

Clifford N. King, Supervisor, Nevada Division of Insurance

Jack Jeffries, Representative, Southern Nevada Building and Construction Trades Council

Dean Hardy, Attorney, Hardy & Hardy

Nancyann Leeder, Nevada Attorney for Injured Workers,

Jim Chavis, Regional Manager, Placer Dome U.S., Nevada Mining Association

Patricia Walquist, President, Nevada Self Insured Association,

Amy Hill, Vice President, The McMullen Strategic Group

Following roll call, Chairman Buckley opened the hearing on A.B. 432.

Fred Hillerby, representative, Nevada Optometric Association, spoke in support of A.B. 432. Mr. Hillerby presented a handout (Exhibit C) to the committee. He explained one of the more important things in the handout was a list of states which authorized optometrists to treat glaucoma. Mr. Hillerby discussed section 2 of A.B. 432, which dealt with limiting how painkillers were dispensed. Section 4 of the bill dealt with regulations for certification of some optometrists to treat glaucoma. Section 6 added to the definition of "prescription". Section 8, lines 34 and 35 referred to the ordering of laboratory tests to assist in the diagnosis of an abnormality of the eye or its appendages. Section 9 brought forth the issue of fictitious names for businesses, while section 11 was to allow optometrists to the controlled substance statutes.

Douglas Devries, O.D., Nevada Optometric Association, testified in support of A.B. 432 (Exhibit D). He said he had testified in prior sessions to allow optometrists to prescribe therapeutic pharmaceutical agents to patients. The committee, the governor, and the entire legislature had the foresight at that time to grant those privileges to the optometrists in Nevada. During the 1995 Legislative Session optometrists asked for a therapeutic bill which included all modalities for the treatment of eye diseases including the use of lasers. A foreshortened bill was compacted which allowed optometrists to prescribe topical medications, oral antibiotics, and to remove corneal and all types of foreign bodies. Specific exclusions of surgeries, lasers, and the treatment of glaucoma were included in that bill. The optometrists were grateful for the opportunity to prove their capabilities in using those therapeutic agents. The optometrists requested no further expansion in the 1997 session. It was now time to amplify the law passed in 1995. The optometrists did not ask for laser treatments, injectable drugs, oral steroid medications, oral glaucoma medications, or any minor surgical procedures in A.B. 432. What they did ask for was the ability to keep their patients comfortable while treating them for painful corneal conditions by prescribing a limited number of schedule 3, 4, and 5 oral narcotics such as Darvoset, Tylenol with codeine, or Vicadin. The optometrists would not be treating chronic pain in the patients. The cornea healed very quickly, but for a few days the patient could be in a great deal of discomfort.

Currently, said Dr. Devries, optometrists were held responsible for detecting glaucoma and for monitoring the interoccular pressure in all patients. The privilege to treat glaucoma would only be granted to those optometrists who had co-managed at least 15 patients for 1 year with ophthalmologists.

A.B. 432 would improve access to eye care throughout rural and metropolitan areas in Nevada and lower the cost to a patient by eliminating redundant referrals. Appropriate referrals which involved laser and filtering surgery would continue to be made as they had been. In the 42 states which allowed optometrists to treat glaucoma there had been no increase in malpractice rates and there was no differentiation between glaucoma and a non-glaucoma state. Optometrists had treated ocular allergies with topical medications for the past 3 years. Optometrists diagnosed a variety of different ocular diseases and so asked for the right to use laboratory privileges. The opposition might make the issue an emotional one based on scare tactics of fear of creating physicians through legislation and not education. However, Dr. Devries said, such was not the case. Optometrists sought expansion based on education, training, and ability to serve the citizens of Nevada with cost-effective eye care.

Jeffrey Austin, O.D., Nevada Optometric Association, testified in support of A.B. 432 (Exhibit E). He said optometrists were asking for very reasonable clinical privileges. Optometrists already made diagnoses of glaucoma on a regular basis and determined the need for treatment at that time. The treatment of glaucoma was generally straightforward and it was relatively easy to monitor the efficacy of such treatment. The instrumentation required was no different than was used in optometry offices statewide for the detection and diagnosis of glaucoma. Optometrists now had the clinical privileges to utilize all the medications needed to treat glaucoma and were very familiar with the side effects and precautions needed to prevent any untoward reactions to those medications. Through his association with the Veteran’s Administration in New Mexico and Las Vegas, said Dr. Austin, he had clinical privileges far broader than those being requested in A.B. 432.

Dr. Austin continued the real question was whether optometrists were properly trained to care for glaucoma patients. Optometrists attended 4 years of specialized training in eyecare after college. The training was exactly the same as dentists and podiatrists received for their specialized areas. Dentists and podiatrists actually performed surgery as well as providing specialized medical care after 4 postgraduate years. The optometrist’s courses on pharmacology, anatomy, and physiology were the same as in dental, podiatry, or medical school; and in some cases were taught by the same professors. There was a thorough training, testing, and certifying program established by the Nevada State Board of Optometry to ensure only optometrists with the proper training were licensed to provide medical eyecare. Optometrists were required to pass the Treatment and Management of Ocular Disease test administered by the National Board of Examiners in Optometry prior to becoming board certified to treat ocular disease. Every state board of optometry in the nation recognized that test as a certifying test for treating ocular disease.

Fred Hillerby presented videotaped testimony by Helga Pegio, O.D., who said she was a Board Certified general ophthalmologist in Las Vegas since 1996, an associate clinical professor at the University of Nevada School of Medicine, and was involved in the education of medical students and internal medicine residents regarding eye disease. Dr. Pegio said her practice sponsored a full-time 1-year optometry residency program which was designed to provide extensive experience in medical and quick surgical management of eye disease. She assisted in training dozens of local optometrists in Las Vegas to achieve certification for therapeutic pharmacy agents in accordance with current Nevada law.

Dr. Pegio continued she dealt primarily with medical and surgical management of eye diseases. In particular, she saw a high volume of patients referred by their optometrists or primary care physicians for the treatment of glaucoma. The most common type of glaucoma was a chronic disease of the elderly which required years of medical therapy and careful examinations to prevent damage to their vision. Most patients could be properly treated with medication without requiring intervention of surgery or lasers. During 3 years in Oklahoma, Dr. Pegio had witnessed the skills, training levels, and prudence of optometrists regarding medical management of various eye diseases including infections, inflammation, and glaucoma. Oklahoma optometrists had the prescribing right to treat glaucoma since 1984. In the ensuing 15 years there had never been a case of malpractice brought against an optometrist regarding such treatment. Optometrists in Oklahoma had also been able to prescribe oral medications and controlled substances for pain relief since 1994. There had been no cases of malpractice reported related to that practice.

Dr. Pegio concluded she felt optometrists should be allowed expanded prescription and laboratory privileges. She believed optometrists who met the educational requirements had the ability, skills, and knowledge base necessary to effectively and competently treat their patients with glaucoma, allergies, and other painful eye conditions.

Chairman Buckley said she had received comments from committee members that last time the optometrists issues had been considered it was understood some time would go by before they would reconsider and the members felt it was too soon to revisit the issue. Mr. Hillerby wondered how much time was enough. It had been in excess of 3 years and there had been no adverse outcomes. West Virginia had privileges since 1976. Optometry as a practice had the privileges for many years in many locations.

Assemblyman Goldwater wondered if malpractice coverage was commensurate with exposure to potential liability. Mr. Hillerby replied there was no distinction in rates because the insurance underwriters found the treatment of glaucoma to be a risk factor.

Chairman Buckley noted for the record nonspeaking supporters of A.B. 432. See (Exhibit B.)

Rudy Manthei, representative, Nevada State Board Osteopathic Medical Examiners, testified he was also past president of the State Society of Osteopathic Physicians. As a board member he handled most complaints for the board and recommended them for further evaluation. He said he was a little surprised at testimony there had been no complaints against optometric physicians. Patients got angry with physicians whether they were right or wrong. That led Dr. Manthei to wonder at the ability to monitor complaints.

Dr. Manthei said primary care osteopaths were concerned there was unnecessary risk involved with increased possibilities of complications which could lead to poor patient care. He saw no shortage of care and no need to provide optometrists with further privileges.

Dr. Manthei emphasized he did not represent physicians, he represented the people of Nevada. He was concerned physician’s assistants in Nevada were licensed through physicians, meaning a D.O. or an M.D. had to sponsor a physician’s assistant in order for him or her to practice. A lot of abuse was seen attributed to managed care and the cost of medicine. The fact that physician’s assistants who were originally brought in as adjuncts were starting to replace those physicians with the result that quality of care was being reduced. Physician’s assistants were interviewed not for knowledge but for patient management. A few years ago, Senator Randolph Townsend had expressed concern a therapeutic bill had been passed without much governing over how to monitor and control it. Several other senators had brought to his attention that abuse problems had occurred among a group of optometrists who referred to a particular ophthalmologist, and there had been an obscene number of surgeries within a short period of time.

Dr. Manthei suggested there should be a review into present monitoring practices of the optometric board. Primary care physicians feared prescription privileges would be granted to optometrists who could not control or care for possible complications. He also expressed concern there would be more rules and regulations, and more control problems than necessary.

Dr. Manthei pointed out other states which had optometrists privileges as requested in A.B. 432 also had laws that allowed optometrists and ophthalmologists to work together in the same office. Two years ago a bill was introduced to allow that in Nevada. The problem in implementing that plan was the Optometric Board laws which prevented that union.

Finally, said Dr. Manthei, he performed a great deal of surgery. Pain could be controlled in many cases without the use of narcotics. Allergies could be treated with eyedrops.

Michael Stanko, M.D., Ophthalmologist, Sierra Eye Associates, testified in opposition to A.B. 432. Dr. Stanko said he had experience with approximately 25,000 patients dealing with glaucoma. He was an assistant clinical professor at the University of Reno where he dealt with many internal medicine and family practice residents. He discussed A.B. 432 with Kevin Miller, who was the only other Fellowship trained glaucoma specialist besides Dr. Stanko in Nevada. Both gentlemen were concerned the glaucoma disease process had been trivialized. Glaucoma was an irreversible disease. It could take a long time to appear and once it did, could be extremely disabling and detrimental to the patient’s quality of life. His main concern was nonrecognition or undertreatment of glaucoma would lead to the patient going blind. Dr. Stanko questioned the statement of there being no complaints. He said he was deposed in a court of law within the past 18 months in two separate cases, one involving an 11-year-old girl against a local Nevada optometrist who was blind in her right eye, and another which involved a 50-year-old woman against yet another local optometrist who was legally blind in both eyes. In both cases, the disabilities were caused through nonrecognition of glaucoma. The disease could be very difficult to diagnose and misdiagnosis could lead to severe ramifications to the patient.

Another area of concern to Dr. Stanko was overtreatment. That could subject the patient to unwanted morbidity from tremendous side effects from medication. He said the medication entered the eye and residual medication got into the nose and was disseminated throughout the body. A lot of elderly patients were treated for glaucoma and the medical history of those patients was crucial to their being properly treated. The eyedrops were also incredibly expensive, and Medicare patients on a budget could simply not afford unnecessary medications. Sometimes the medicine did not work and precise monitoring of the patient was required to determine the efficacy of treatment. The learning curve for diagnosing and treating glaucoma was very difficult and steep. It took a lot of experience. The thought of someone following 15 patients for 1 year and being an expert in glaucoma was ludicrous. The effective education took thousands of patients over a period of years to get a feel for the disease and how to treat it.

Dr. Stanko commented that painkillers were prescribed by him on a very limited basis, perhaps to a handful of patients a year. He did not understand the desire to use narcotics for just any corneal operation. There were very effective topical drops available for allergy patients and if the diagnosis involved more than that treatment, the patient should be referred back to their primary care physician for adequate treatment. One of the current privileges which were given to optometrists included topical steroids. Dr. Stanko had seen a patient with a severe condition as a result of undertreatment with steroids.

William Durant, M.D., Ophthalmologist, Sierra Eye Associates, echoed previous testimony in opposition to A.B. 432. He was concerned about the ability to create a board by fiat to certify people to treat glaucoma. He wondered who on the board would have the experience to offer the opinion of who was and was not qualified. Taking a standardized test and following 15 patients did not qualify a person to treat glaucoma. As a medical student, Dr. Durant said, he had delivered 15 babies, but he was not an obstetrician. Nor was he a pediatrician after having seen 15 children. The composition of the board in question would be optometrists who had limited or no glaucoma experience and would judge their colleagues. That was like the wolves watching the chicken coop. There was a medical school in Nevada which could provide 600 hours of practice for those who wanted to obtain glaucoma privileges. A couple of Saturday mornings and 15 patients would not provide the necessary experience to make a person proficient in the treatment of a disease that blinded people.

Assemblyman Nolan wondered about cases being under-reported. He asked how many patients with glaucoma had optometrists successfully diagnosed and referred.

Dr. Stanko explained the lawsuits he mentioned were settled out of court so never got much notoriety, and he did not know the reporting mechanism for reporting such cases. He said misdiagnosis was a hit-or-miss thing. He felt for every person who had diagnosed glaucoma there was another who did not know they had the disease. It was the responsibility of ophthalmologists to find and treat those people.

Dr. Manthei said of the referrals he received from optometrists for glaucoma approximately 60-to-70 percent had glaucoma. Other factors such as carotid artery disease and central nervous system abnormalities caused similar symptoms.

Submitted but not spoken was testimony in opposition to A.B. 432 by the Nevada State Society of Anesthesiologists (Exhibit F.)

Chairman Buckley noted further opponents of the bill (see Exhibit B.) She closed the hearing on A.B. 432 and opened the hearing on A.B. 532.

Assemblywoman Bonnie Parnell, Assembly District 40, said A.B. 532 was to revise the definition of police officer to include the officers of the Capitol Police Division. Those officers were within the Department of Motor Vehicles and Public Safety. The change needed to be made for the purpose of certain benefits for occupational diseases.

Ken Johnson, Chief, Capitol Police, said the Nevada Capitol Police were put under early retirement in 1989; however, the inclusion to the heart-lung bill was never addressed. A.B. 532 was to correct that oversight. Mr. Johnson said the capitol police had exposure to the occupational diseases addressed in the bill and inclusion would benefit both current officers and recruitment efforts. He said a fiscal note was prepared and sent forth; the bottom-line cost for 26 officers was $7,800. That figure was reached because on an average, Las Vegas and Carson City officers were over 40 years old which would require a "panel 3" test at approximately $300 per year according to figures supplied by the Risk Management Division of the state. Legislative police were classified differently because they were considered part-time workers and were not included in the legislation.

Assemblyman Goldwater asked if there were claims pending or any that had been denied. Mr. Johnson said Nevada Capitol Police did not have any such claims.

Assemblyman Nolan asked if the department itself had any physical fitness policies. Mr. Johnson said no annual physical was required and that issue would be addressed. Assemblyman Nolan asked if a physical maintenance or standard physical requirement was going to be developed. Mr. Johnson said none of the officers under the Department of Motor Vehicles and Public Safety were required to maintain a yearly physical agility after initial hiring performance tests.

Assemblyman Perkins asked if thought had been given to the balance of police officers in Nevada who were otherwise categorized and not included in A.B. 532. Assemblywoman Parnell responded the capitol police issue had been previously discussed and had been deleted from the budget by the governor. Similar situations should certainly be investigated.

Assemblyman Perkins said it would take some investigation to determine who was excluded. There appeared to be a number of amendments to the statute which covered police officers and their benefits, but there were obvious inequities. Assemblywoman Parnell agreed further investigation was warranted.

Chairman Buckley said she would have the matter researched and the bill could be considered in a work session.

Robert J. Gagnier, Executive Director, State of Nevada Employees Association, testified in support of A.B. 532. He said the bill was long overdue. There were several other bills concerning other state-employed peace officers and firefighters such as S.B. 463. He urged support for A.B. 532.

Chairman Buckley closed the hearing on A.B. 532 and opened the hearing on A.B. 334.

Assemblyman Lynn Hettrick, Assembly District 39, explained A.B.334 concerned worker’s compensation for casual labor. People were concerned if they hired casual labor around their homes it could result in lawsuits and loss of property. Section 2 of A.B. 334 stated "the system or any private carrier may establish a plan to provide industrial insurance."

Assemblyman Hettrick said many other states allowed homeowner’s policies specific endorsement to cover worker’s compensation for fixed premiums. A.B. 334 allowed the insurance commissioner to set rates to be charged based on man-months worked. At least 1 full work month would be charged. The same definitions for casual labor or laborer were used as were already in statute. A.B. 334 was not a way to circumvent labor laws or union rules since the work done had to be outside the trade, business, profession, or occupation of the employer. It was intended just to allow insurance companies to make the insurance available to homeowners.

Assemblyman Goldwater wondered if both the laborer and the insured would understand such a policy and would it prohibit the laborer from suing the homeowner for negligence. Assemblyman Hettrick responded worker’s compensation provided exclusive remedy except in the case of willful negligence. He thought there would always be a right to sue. Assemblyman Goldwater said that applied except in worker’s compensation cases which changed the venue for lawsuits.

Chairman Buckley agreed A.B. 334 entered the worker’s compensation arena with all its rules.

Lenard Ormsby, General Counsel, Employer’s Insurance Company of Nevada, explained exclusive remedy protection was included with the coverage in A.B. 334. The casual laborer or the employer might not understand that. There would be no tort liability on the homeowner under those circumstances.

Assemblyman Hettrick said there could be a renter of a home who had no assets for which an injured casual laborer to sue. If A.B. 334 passed, the employer of casual labor could at least offer some coverage. The other intent was to protect the homeowner who did not know he was liable for injuries with or without insurance.

Clifford N. King, Supervisor, Nevada Division of Insurance, offered an alternative proposal to A.B. 334. Mr. King said current law conflicted with Nevada Revised Statute 686b (Exhibit G.) He explained on July 1, 1999, the state moved into the National Council on Compensation Insurance method of providing coverage. The method contained a coverage called "Coverage C – Voluntary Insurance." That coverage was for people who fell outside the definition of an employee. An employer and an insurance company agreed to provide coverage using rates, forms, and coverages provided by the standard National Council On Compensation Insurance policy. The method of determining the premium was based upon payroll. Unfortunately, said Mr. Ormsby, the typical homeowner probably would not buy such a policy, but an employer who had temporary labor would because the insurance typically cost several hundred dollars a year. Mr. King felt most states provided homeowner coverage for casual labor such as mowing lawns. Very few companies would offer the kind of policy Coverage C suggested. Such a policy was usually found being offered for volunteer coverage. Exhibit G provided rules which were used to determine coverage and premiums for Coverage C.

Assemblyman Hettrick said he had requested information regarding homeowner policies in California which were significantly cheaper than Coverage C rates. Language in California law said "any private carrier may. . ." to allow the liability companies to write the policy as an endorsement to the homeowner’s policy. Assemblyman Hettrick did not want to substitute as proposed by Mr. Ormsby. The intent was not to affect labor since it might cause opposition.

Chairman Buckley closed the hearing on A.B. 334 and opened the hearing on A.B. 326.

Danny Thompson, representative, Nevada AFL-CIO, testified in support of A.B.

326. Mr. Thompson explained exclusive remedy to the committee. Originally workers compensation laws were enacted to protect employers as much as employees. The system was truly designed as a "no fault" program. Prior to workers compensation the employee had the right to sue the employer for injuries on the job. Exclusive remedy was implemented, which was compensation provided by law for which the employee agreed not to sue. There would be no problems except over the years changes had been made to the law which added stipulations and requirements to the detriment of the injured worker. In 1993 the system had a $2.1 billion deficit. The legislature was told at that time workers compensation was a constitutional trust fund and had to be replenished by the state. The legislature cut benefits to injured workers approximately 23 percent. Every Supreme Court ruling in favor of injured workers was overturned by the legislature. Preexisting conditions were enacted, and primary cause language was changed. The most egregious thing, said Mr. Thompson, was the legislature eliminated the threat of a bad-faith lawsuit which gave immunity to third party administrators and insurers, and in place of that enacted a benefit penalty.

Mr. Thompson remembered being told by the legislators who passed the changes that when the system was solvent the benefits would be returned. A.B. 326 did not restore all of the benefits which were removed. At the same time rate cuts of approximately 45 to 50 percent were granted to employers.

Jack Jeffries, representative, Southern Nevada Building and Construction Trades Council, spoke in support of A.B. 326. Mr. Jeffries said the individual worker was left out of the equation of workers compensation. Both sides of the issue talked about greedy attorneys, third party administrators, and employers. Seldom were the problems of injured worker addressed. Mr. Jeffries said full-duty work releases were given to workers who clearly could not perform. When immunity was given against bad faith lawsuits it opened the door to abuses. The people in the system all knew the worst thing that could happen was when the injustices were brought to light they would pay what they should have paid to begin with. Meanwhile, the injured worker did without medical treatment, without compensation, and unable to work. When a worker had been previously injured there was an automatic denial of benefits.

Mr. Jeffries said when the laws were passed in previous sessions, the rallying cry was to save the system. Now that was not an issue. It was time to restore benefits. Possibly the biggest change in the past was managed care and the loss of right to choose a physician. That issue was not being addressed at present.

Dean Hardy, attorney, Hardy & Hardy, provided a synopsis of A.B. 326. He said sections 1 and 2 dealt with the arena of bad faith. Section 3 related to a claimant’s opportunity to participate in the selection of a doctor for a disability examination. There was a significant amount of litigation involved in that area for a number of reasons. Until 1997 the second edition of the Guidelines for the Evaluation of Permanent Impairment was used to evaluate injured workers. There was a third edition, and a third edition revised, which the state never utilized, and finally the forth edition came out and was utilized starting in May of 1997. At the same time there was a significant expansion in the number of physicians who were authorized and certified by the Department of Industrial Relations to do disability examinations. A great number of new physicians with no background and no experience utilized new guidelines to try to resolve the issue of residual impairment. That created an amount of litigation which might be curbed by allowing some participation in the selection process of a rating physician. Significant work was needed on A.B. 326 in the area of choice of physician.

Section 4 dealt with the same issue. Mr. Hardy said if a claimant had an issue with the original examination and secured a second examination, current law required the physician come from the Department of Industrial Relations from a rotating list of doctors. If that resulted in an increased rating of disability, the claimant would be reimbursed for the cost of the examination. The evaluation cost at least $450. An amendment in 1995 eliminated the claimant’s opportunity to be reimbursed for that examination. A.B. 326 asked that be reversed to allow reimbursement.

Section 5 also needed discussion because it would change the law significantly. Currently, if a claimant had a preexisting condition and had an industrial injury, the claimant had to show by a preponderance of evidence that the industrial injury was the primary cause of their current medical malady. Remember, said Mr. Hardy, the system was managed care and the claimant was forced to be treated by physicians acceptable to a self-insured employer or a managed care coordinator acceptable to a managed care organization. To get the proof required to prevail in a primary causation hearing was difficult at best and extremely difficult if a claimant was engaged with a medical practitioner who was within the managed care organization. The doctor no longer worked for the patient, the doctor worked for the organization. A.B. 326 would shift the burden to the insurer to come to the hearing and prove by clear and convincing evidence that the current problem the claimant had was primarily related to a preexisting condition. Such a change was significant but was fair to the claimant since they were at a distinct financial disadvantage in attempting to prove their claims.

Mr. Hardy said in 1993 previous testimony by a gentleman on behalf of the State Industrial Insurance System stated they were required to care for individuals who had minor traumatic injuries that because of preexisting conditions became major events. An example was given that an individual with diabetes had dropped a case of food on his foot, and the diabetes caused the injured worker’s foot to be amputated. In that example, Mr. Hardy had agreed the employer should not have to pay for the amputation. However, claims were being denied on a daily basis because of preexisting conditions. He gave the example of a blocklayer of 20 years whose back went out when he lifted a block. His examination suggested he had degenerative changes in his lumbar spine, and the claim was denied as a result.

Assemblyman Beers wondered if the condition was an all-or-nothing thing. Could it not be part preexisting and part as a result of injury. Mr. Hardy responded it was an all-or-nothing proposition.

Mr. Hardy continued sections 6 and 7 also allowed the claimant to participate in the rating physician selection if ordered by a hearings or appeals officer.

Section 8 allowed for the calculation of the offset provision if an individual selected a lump-sum payment and thereafter reopened a claim. Nevada had lifetime reopening rights. Current law dictated recoupment of lump sums from a re-injured worker was in effect until the end of the claim. If a worker received $12,000 in a lump sum and was re-injured, the recoupment did not stop with the $12,000. It went on ad infinitum until the end of the claim. The reason for that was supposedly the claimant had the use of the money and so was charged for that use. Mr. Hardy said that was just inappropriate.

Section 9 dealt with the offer of temporary light-duty. In 1993 there was a consensus group with insurers, self-insureds, and administrators. The self-insureds wanted a change between the status of someone who was on temporary light-duty versus someone who was permanently on light-duty. An example was given that an individual with a temporary back strain could be brought back to his original position at his original wage after a short period on lower-duty lower-pay status. Unfortunately, after that change was allowed, in many cases workers were left in positions of lower pay and lower responsibilities.

Section 10 again allowed for participation in the selection process mandating the strict use of the American Medical Association’s guidelines as written. The section also restored the math factor to the pre-1993 level. In 1993 in response to the cries of deficit and the need for deficit reduction, permanent partial disability awards were reduced by 10 percent. Mr. Hardy continued since the system appeared to be healthy again, the 10 percent should be returned.

Section 11 addressed vocational rehabilitation. It was Mr. Hardy’s contention that even if there was not residual impairment, any worker whose physicians determined could not return to his prior job should be entitled to full vocational rehabilitation regardless of the percentage of disability. Section 12 extended the maximum period of vocational rehabilitation for catastrophic injuries. Section 13 outlined conditions by which out-of-state workers who were injured while employed in the state should be entitled to the same vocational rehabilitation benefits even though they went home to recuperate. The law was passed in 1993 because the industrial insurance system simply did not have enough staff to monitor people who were out of the state. Now that there was the administrative ability to monitor out-of-state vocational retraining, individuals injured in Nevada should be allowed the opportunity regardless of where they lived.

Finally, said Mr. Hardy, section 14 was the reinstatement of the opportunity to pursue a cause of action against an insurer or their agent for the inappropriate administration of a workers compensation claim. In 1995, an administrator had been sued for bad faith. Bad faith referred to the breach of covenant of good faith and fair dealing. In any other arena in Nevada, if the insured was not dealt with fairly and equitably, or if the insurance company dealt with reckless disregard of the insured’s rights, there was the independent cause of action for bad faith and negligent or intentional infliction of emotional distress. Mr. Hardy related a case of suicide after a claimant had found herself denied benefits from one administrator after another administrator had assured her she was entitled to benefits. The new administrator had even demanded the return of a wheelchair the claimant was sitting in the day before she killed herself. When her son and brother approached Mr. Hardy, he was forced to tell them they had no recourse.

Chairman Buckley asked if suits were previously allowed for bad faith versus negligent administration, as the change in section 14 indicated. Mr. Hardy answered prior to 1995 there was no statutory direction relative to independent causes of action for independent administration of a bad faith claim. There was no attempt to expand beyond what other Nevadans had as rights to pursue a cause of action against their insurance company.

Chairman Buckley said if the previous standard was similar to intentional conduct under similar bad faith cases and that was what section 14 of A.B. 432 intended to correct, it was not made clear.

Danny Thompson said A.B. 432 did not ask for any new benefits, just that those benefits be restored that were taken away in 1993. The level of benefits that were promised to be restored once the system was solvent should be restored. With a $2.1 billion deficit, argument could be made that those draconian cuts were necessary but the present time was a different story.

Speaker Dini understood there was still an $800 million deficit. Mr. Thompson replied he was the chairman of the Division of Industrial Relations Advisory Board. He recalled sending auditors to SIIS and they came back and said it was not possible to audit them because they did not do case management and the bills were stacked up. The $2.1 billion deficit was questioned in 1993 by the board and the deficit was still in question. If there was such a deficit, Mr. Thompson wondered why a 50 percent reduction in premiums was given to the employers. Speaker Dini said not all employers got that reduction. Assemblywoman Guinchigliani said the previous session wrote off the previous debt.

Nancyann Leeder, Nevada Attorney for Injured Workers, testified in support of A.B. 326. Ms. Leeder said section 8 of the bill was most important. In 1995 the legislature passed a change to correct the abuses of insurers taking interest in addition to the amount of permanent partial disability being paid in a lump sum. There was discussion as to how many cases would be covered by the change and if in fact it would correct the situation. Because it was supposed to correct, the change to the law was made retroactive. A subsequent case SIIS v. Miller went to the Supreme Court. When the Supreme Court got the case, because the statute said the law was retroactive, they applied it to that case. Section 1(b) of the law said very clearly that permanent total disability could be offset only up to the amount of the permanent partial disability that had been paid. The Supreme Court nullified that provision and said interest also could be taken.

In a case Ms. Leeder was presently litigating, permanent total disability was offset by permanent partial disability until the permanent partial disability amount had been recovered up until 1992. At that point the insurer began taking interest as well. The person was injured, treated, and the case closed with a permanent partial disability. The claimant returned to work, the injury worsened, he reopened the case, was treated, and received a second permanent partial disability. Two permanent partial disability’s paid him a total of approximately $35,000 in lump sum. Thereafter he worsened again and was on temporary total disability for an extended period of time. The claimant wanted to return to work, but his doctor said no. Because he was receiving temporary total disability, the claimant received a letter stating his entitlement would be reduced to the amount of a minimum lump sum. The minimum lump sum was approximately $16,000. So the claimant repaid, in the course of receiving temporary total disability, about $8,000. Then he was persuaded he could not return to work and therefore should receive permanent total disability instead of temporary total disability so he would not have to send in forms every 2 weeks. When his permanent total disability pension was calculated, repayment was to be not only what he had previously received but interest on that amount of about 6 percent, which the insurer would have received if they had kept the money. He would ultimately have repaid approximately $72,000, with no credit for the $8,000 he had already repaid. Therefore, under the present law the claimant would have to repay approximately $80,000 for $34,000 he received in prior paid lump sums.

Jim Chavis, Regional Manager of Public Affairs, Placer Dome U.S. and Nevada Mining Association, testified against A.B. 326. Mr. Chavis said he was disturbed by the assumption that employers and third party administrators wished to give as little as possible to injured workers and assumed all employees were goldbricks. Mr. Chavis said the mining industry valued its employees and intended to care for those who were injured. To that end, the industry had coordinated benefits at the mines he represented. Workers compensation benefits were coordinated with short-term disability benefits so depending on the length of service the employee could receive 100 percent wages in addition to having medical and dental benefits paid.

Mr. Chavis felt there should be some compromise regarding A.B. 326. The bill seemed to put the entire emphasis on the employer to prove the employee was not entitled to compensation. While there had been hearings with workers compensation, in the 10 years Mr. Chavis worked for the mines there had not been one litigation. He felt the majority of mines had the same compensation package.

Mr. Chavis was concerned with section 5.2b of A.B. 326. He said the way the section read, an employee might exacerbate an on-the-job injury while skydiving, and he would still be compensated. He continued he had attended a commerce and labor hearing that very morning in the Senate, where there was discussion of using private investigators, which was one way employers checked on worker’s compensation fraud. Should the Senate bill in question pass, it would limit the employer’s ability to meet section 5 of A.B. 326.

Patricia Walquist, President, Nevada Self-Insured Association, testified in opposition to A.B. 326. Ms. Walquist was concerned with section 3 of the bill. She asked the committee to remember the State of Nevada certified all the physicians used for permanent partial disability ratings. She also said the demands of A.B.326 would be very costly to implement and would lengthen the time before a claimant could receive permanent partial disability ratings. If section 3, subsections 1 and 2 were passed, section 4 should be deleted as unnecessary. As had been testified to, section 5 changed the burden of proof from the claimant to the employer. It was easier for the claimant to prove his case than the employer to prove his. The present method had always seemed fair for that reason. Concerning light-duty, Ms. Walquist said section 9 contained no incentive for the employee to return to work. There were times the employee could not be placed back into their old position, but it was necessary to put them into some kind of job they could do.

Ms. Walquist felt ratings should be based on impairment after efforts were made to return the claimant to pre-injury status. The question of raising the permanent partial disability rate to .06 would be better visited in the next legislative session when three-way insurance came into law.

Vocational rehabilitation, explained Ms. Walquist, was not a demand from the physician but a decision of the insurer. She strongly opposed out-of-state rehabilitation, calling it "nothing more than a request to send a check." The bad faith issue addressed by Mr. Hardy was unfortunate but rare. Ms. Walquist said she found it admirable that a third-party administrator had become involved when she learned of the injustice and asked the committee to remember that fact.

Assemblyman Goldwater asked if Ms. Walquist was opposed to the bad faith section of A.B. 326 to which Ms. Walquist replied she was. She felt the insurers policed themselves rather well. Assemblyman Goldwater asked if the bad faith issue would prohibit the insurers from policing themselves. Ms. Walquist replied she tried to follow the rules and would never be willfully hurtful of a claimant. Assemblyman Goldwater asked her why then she would object to have the bad faith issue in statute. She replied it added more unnecessary government intervention.

Assemblywoman Guinchigliani wondered if it was possible to find out how many bad faith claims had been filed since the inception of workers compensation. Ms. Walquist said she would research the question. Assemblywoman Guinchigliani then stated clear and convincing evidence in section 8 of A.B. 326 was a standard the courts used, which put the burden of proof on the injured worker rather than the employer and asked if there was other language which could be used or if the opposition was out-and-out against anyone with a preexisting condition. Ms. Walquist replied the injured worker was always treated. The preexisting condition was what was not treated.

Assemblywoman Guinchigliani commented it was not always possible to know which came first, and there used to be a statute protecting the injured worker by erring on the side of caution. Ms. Walquist said she had no language suggestions at the moment, and Assemblywoman Guinchigliani said a lot of rights and benefits had been taken from the injured workers over the years. It would be helpful to the committee to have some language to consider.

Amy Hill, Vice President, The Mcmullen Strategic Group, interjected the association would be working with proponents of A.B. 326 over the next few weeks and would consider the request for language.

Assemblyman Goldwater said section 3 was very important. He thought language as to why rating physicians were dismissed as they frequently were would be helpful. It would give physician protection as well as show good faith.

Chairman Buckley reminded those present of the April 9 deadline for bills. She asked for rewrites as soon as possible so as to meet that deadline.

Next to testify was Jack Kim, representative, Sierra Insurance Group. Mr. Kim said his group would be one of the insurers to write worker’s compensation insurance beginning July 1, 1999. Mr. Kim said he opposed A.B. 326 because it needed a lot of work. He mentioned the bad faith provision in section 14 and said NRS 616 allowed the Insurance Commission to pull the license of any third party administrator who behaved as Mr. Hardy described. There were concerns about preexisting conditions which were in statute as primary cause issues. Section 10 concerned the American Medical Association guidelines and permanent partial disability ratings. Mr. Kim said when specific language was added as to how to do a rating it led to micromanaging American Medical Association guidelines.

Chairman Buckley said while there might be regulatory action available, it was rare to completely immunize an insurer against bad faith claims. She could understand negligence because that defeated the purpose of a no-fault workers compensation system. However, where it could be proven a good claim was deliberately denied, there could be no rationale for a public policy statement of immunizing and legitimizing wrongful claim denials.

Mr. Kim said there were problems with the bill as written. The section in question could be construed as making any violation subject to lawsuits.

Chairman Buckley asked if the section was rewritten to clarify the passage referred only to bad claim actions subject to the same standards as in all other lines of insurance whether there would be objection. Mr. Kim replied since he only wrote worker’s compensation he did not feel competent to answer the question.

Assemblyman Goldwater asked Mr. Kim if he had ever pursued or had knowledge of a benefit penalty for what would be considered bad faith or the revocation of a license. Mr. Kim said he had not worked on regulatory issues so would not be the person to ask that question. Assemblyman Goldwater asked if Mr. Kim would advocate for bad faith if the language stated it was willful. Again, Mr. Kim said he would have to read the language before he made a statement.

Lenard Ormsby, General Counsel, Employer’s Insurance Company, said while he was not at the hearings in 1993 when S.B. 316 was formed. He wished to make the point that insurance was a contract. In 1999 when three-way insurance became effective there would be a National Council on Compensation Insurance policy adopted by the Insurance Commission. Currently, the legislature wrote the benefits. As a contract, the employers had a right to have the contract enforced as did the injured workers. Rates were a projection of the future. Effective July 1, 1999, the function of rate setting would be turned over to the National Council on Compensation Insurance. Rates would be set as a rolling period looking at the most recent experience over 2 or 3 years and projecting by class code what projections would be over the next 1-year period.

Mr. Ormsby continued in dealing with permanent partial disability issues, he had not heard what the problem was. Currently when a doctor determined someone was stable and ratable the Division of Industrial Relations was contacted for the next doctor on the list to examine the worker. A.B. 326 would add 30-90 days to the process, and Mr. Ormsby stated again he did not know what the problem was the bill attempted to fix. The section to put the burden on the employer by clear and convincing evidence of a preexisting condition was a dramatic change in the law. Currently the burden was on the employee and A.B. 326 set into place the highest possible standard which would come with an expense. Ms. Leeder testified the Miller decision in the Nevada Supreme Court stated if a lump sum was received and additional benefits at a later date, the insurer had a right to the value of the use of that money. If installment payments had been received over that period of time the insurer would have had the right to invest the money and receive the interest.

Chairman Buckley said she did not believe the injured worker knew at the time of the first settlement he would be reinjured such that he would save and invest the money. Most likely they used it to compensate for the fact they weren’t getting full wages. It was incomprehensible to hear Mr. Ormsby say it was right to put a burden on the injured worker to come up with years of interest. Mr. Ormsby said he was trying to explain what the Supreme Court ruled.

Assemblyman Goldwater asked if someone was denied benefits initially and later awarded benefits whether they received interest on the money they should have had. Mr. Ormsby said he was advised the worker could collect interest but had to fight for it.

Assemblyman Beers said he was surprised lump sum payments were offered. Permanent partial disability was a reduction in earnings over one’s lifetime, Mr. Ormsby said if lump sum payments were eliminated the problem of who had the burden or benefit of time value of money would be solved. Mr. Ormsby said he would work on a compromise with the proponents of the bill.

Assemblywoman Guinchigliani asked Mr. Ormsby if he was in complete opposition to A.B. 326. Mr. Ormsby replied there were problems with the language and some of the changes.

Assemblyman Perkins commented he was concerned about opposition from Mr. Ormsby since it was the legislature’s purview to create policy and the agency was to carry that policy out. Mr. Ormsby’s statement that none had defined the problem led Assemblyman Perkins to comment it would take more hours than the legislature had to define the problems so many people had. He had unfortunately participated in some of the reductions in benefits in 1999, and he knew many others did as well, to save the system. The changes now were dramatic but no more so than those made in 1995 that hurt injured workers ever since. His suggestion was the people involved with the bill bear that in mind. Bear in mind also, continued Assemblyman Perkins, the verbal contract that was made during the previous meetings that when the system was corrected the benefits stripped from the workers could be restored to the extent the state could afford them. There was great evidence there was some money out there to at least look at those things. He encouraged both parties to work in good faith to do so.

Chairman Buckley closed the hearing on A.B.326 and opened the work session on A.B.311.

Vance Hughey, Committee Policy Analyst, submitted a document, (Exhibit H) to explain A.B. 311 which revised provisions governing certain employment practices.

Mr. Hughey said Assemblyman Parks had included several technical amendments (Attachment A). He had indicated during his presentation the amendments would delete provisions from the bill that were unnecessary. Mr. Hughey continued there was also a proposal from Janine Hansen, Nevada Eagle Forum, which suggested that certain organizations be specifically excluded from the provisions of A.B. 311 which prohibited discrimination based upon sexual orientation.

Chairman Buckley commented there were strong feelings both of support and concern. Some of the statements made in the hearing on A.B. 311 were very hateful in her opinion and she did not think those statements were shared even by those who opposed the bill.

ASSEMBLYMAN GOLDWATER MOVED AMEND AND DO PASS A.B. 311.

MOTION SECONDED BY ASSEMBLYWOMAN GUINCHIGLIANI.

MOTION CARRIED.

There being no further business before the committee, Chairman Buckley adjourned the meeting at 6:50 p.m.

RESPECTFULLY SUBMITTED:

Lois McDonald,

Committee Secretary

APPROVED BY:

Assemblywoman Barbara Buckley, Chairman

DATE: