The Committee on Commerce and Labor was called to order at 3:45 p.m., on Wednesday, April 28, 1999. Chairman Barbara Buckley presided in Room 4100 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. Bob Beers

Ms. Merle Berman

Mr. Joe Dini, Jr.

Mrs. Jan Evans

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. Dennis Nolan

Mr. David Parks

Mrs. Gene Segerblom

COMMITTEE MEMBERS ABSENT:

Mr. Richard Perkins, Vice Chairman (Excused)

Mr. Morse Arberry, Jr. (Excused)

Mr. David Humke (Excused)

GUEST LEGISLATORS PRESENT:

Senator Ann O’Connell, Senate District 5

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

The meeting was teleconferenced to Las Vegas.

Following roll call, Chairman Buckley noted Assemblyman Arberry, Assemblyman Perkins, and Assemblyman Humke were to be marked excused. She opened the hearing on S.B. 45.

Wallace Beinfeld, Producer of the Las Vegas Antique Arms Show, testified first. He had been with the Las Vegas Antique Arms Show for 37 years. He provided a draft of a revised amendment, and a form which was distributed at his gun show, which encapsulated the Federal Regulations in regard to the transactions of business at gun shows (Exhibit C). Page 3 of Exhibit C defined the three basic categories of entities that might transact business at a gun show. Nevada had several "layers" of firearms regulations on distribution in Clark County and some of the other counties, which basically prohibited the sale of firearms at shows by out-of-state persons or anyone other than a federal licensee without a Department of Justice check. He recommended changes to the proposed amendment on page 2 of Exhibit C. He agreed with the removal of the word "ammunition" because collectable ammunition was only typically sold at gun shows, and most new ammunition was sold at gun stores.

There was a question about item 2-17, Exhibit C, page 2, which defined how long a show could continue; its technical draftsmanship prevented any individual show producer from having more than one show in a 6-month period. Through negotiation, it was agreed to recommend that a show not last longer than 5 days and no producer was permitted to produce more than two in any 6-month period.

The most important change was the language as passed by the Senate, which referred to the rules and regulations contained in the Gun Control Act of 1968; the Federal laws for doing gun business. He believed the wrong section was quoted, so language was added in the section, which indicated who may do business at a gun show. He recommended the amendment to S.B. 45 include specific reference to the two federal codes, which dealt with licensing procedures and all firearms, transactions at gun shows.

Lieutenant Stan Olsen, representing the Las Vegas Metropolitan Police Department (LVMPD) had no objections to Mr. Beinfeld’s proposed amendments.

Chairman Buckley noted individuals who owned used bookstores in Clark County were concerned because the definition of "junk dealer" was written so broadly it covered used bookstores. By that inclusion, people were being discouraged from opening used bookstores. Chairman Buckley asked Lieutenant Olsen if he had any comment on that issue from a law enforcement prospective. She thought used bookstores would be less likely to trade in stolen goods, which she believed to be one reason for the more serious regulation.

Lieutenant Olsen stated Chairman Buckley was absolutely correct; there was obviously less trading going on with stolen used books. The trading of highly valuable antique books was a different issue. LVMPD would have no issues with used books, as long as it was narrowly enough defined that it did not include the purchasing of other items outside of books. There had been incidents where bookstore owners had mistakenly purchased stolen property.

Alfredo Alonzo, representing Lionel Sawyer and Collins, and Superpawn, testified next. S.B. 45 was a result of prior legislation that dealt with the reporting of secondhand books, antiques or items considered to be "used." That legislation was a result of individuals who advertised and ultimately sold items that may have been stolen, even out of hotel rooms in places such as Las Vegas. The integrity of the pawn and second-hand dealers’ industry was the issue.

There had been extensive discussions on that issue between the organizations he represented and Senator Schneider, who was very interested in the bill. Mr. Reid, who was a book dealer, had been discussing it as well. Ardel Jorgensen, from Business and Licensing had committed to work on licensing issues, to make it easier to obtain a license. The bonding issue was also significant because it was a very expensive process to get a license. Mr. Alonzo noted Ms. Jorgensen wanted to take care of those issues on a local level and it was his understanding that she had committed to Senator Schneider to do so.

Chairman Buckley noted the committee might want to take action instead of waiting for county government, which may take longer and in turn would hurt small businesses.

Robert Barengo, representing Nevada Collateral Loan Association, testified next. He expressed concern regarding the amount of time that had already been spent on the bill. He noted the problems for book sellers was the way in which the city conducted their licensing compared to how the county conducted their licensing. There was also a problem regarding the fees charged to secondhand dealers who had small secondhand wagons in malls, and did not do a great deal of business.

Mr. Barengo noted there had been a meeting with everyone concerned, to work out the problems, and the county and the city could "get on the same page." There were commitments from everyone involved that it could all be handled locally and no laws were needed. There had been an attempt to solve the problem at the best level of government to deal with the problem because second hand dealers still had and get licenses from city and county agencies.

Chairman Buckley appreciated his perspective but was not satisfied that all was being done to help second hand dealers and individuals in the trade show business.

Chairman Buckley asked Mr. Beinfeld to clarify the exact amendments he supported with regard to Exhibit C. The committee members had a first reprint of the bill which contained the amendments from the Senate. She asked Mr. Beinfeld to work off of that document, and tell the committee anything he felt needed to be changed so it would be clear for the record.

Mr. Beinfeld was provided a copy of the first reprint of the bill. He noted the amendment in Exhibit C changed the language since it dealt specifically with gun shows.

Chairman Buckley asked Mr. Beinfeld if he wanted to make any changes on the first reprint, or if he was satisfied with the way the bill was on the first reprint.

Mr. Beinfeld answered "no." He noted Exhibit C contained different language than the bill passed by the Senate. The definition of a federal firearms licensee had been expanded to make it more clear as to who was permitted to attend shows. The two basic categories were the licensees and the non-licensees. The non-licensee was more silent in the bill passed by the Senate and that would "open the door" for conditions that were not intended.

Chairman Buckley clarified the amendment in Exhibit C was presented to the Senate, but it was left out in the reprint. So, Mr. Beinfeld was concerned the bill did not cover everything. She noted certain items were sometimes left out of reprints by the legal drafters for particular reasons, because all of Nevada’s statutes had to read the same way and use the same internal references. His proposed amendments and the first reprint would be examined to ensure everything was included to determine if anything could be further refined.

Mr. Beinfeld agreed, but noted the basic draftsmanship of the bill that passed in the Senate had been presented to the Senate committee after he made his presentation; the bill that passed did not have much authorship from the Legislative Council Bureau (LCB) drafting staff. It substantially reflected the amendment that was submitted after the amendment contained in Exhibit C, without permitting a further discussion. Two fundamental changes were made. One change was the definition of who could attend a gun show and the reference for that language was federal law; the specific provision of the 1968 Gun Control Act. The wrong code number was used and so he recommended changing the code number in the current bill to the correct one. In negotiations, a shortening the frequency of gun shows that could be held in the State of Nevada was accepted. So there was a reduction in the number of shows per producer. Removed from the original language was the question of ammunition being present at shows. There also was a question in the original draftsmanship about collectibles. Because the definition of a collectable was so argumentative, that was removed from the language.

Chairman Buckley asked him if he wanted Exhibit C to be considered to be adopted by the Assembly committee, to which he responded "yes."

Mr. Nolan noted Exhibit C was confusing. He asked if there was actually a definition of a collector, licensed or otherwise. If an individual was a collector, and was not so licensed, then the individual was simply any other citizen.

Mr. Beinfeld noted that was correct with one exception. Under Federal Law an individual may be "an unlicensed dealer," which the individual was not allowed to be. An unlicensed dealer was a person who was in the business of buying and selling guns, but had not taken out a federal firearms license. It was not Mr. Beinfeld’s intention to expand the law to cover those people. It was his intention to cover those defined as legitimate federally approved individuals who may either transact business or personally dispose of their own collection.

Mr. Nolan asked that a copy of that set of federal regulations be provided to committee members. It was provided the following day, see Exhibit D.

Ms. Giunchigliani noted on line 217(b), in Exhibit C, page 2, a show was conducted for not more than 5 consecutive days and not more frequently than twice in any 6 months. She asked him to explain the rationale or the purpose of that language.

Mr. Beinfeld pointed out if an event lasted 10 or 12 days, it would be more like a retail store than a trade show. Secondly, if there was unlimited frequency, there could be a 5 or 7 day trade show that closed on Sunday night, but could then open again the next day.

Chairman Buckley closed the public hearing on S.B. 45. She opened the hearing on S.B. 56.

Patrick Coward, representing Smith Kline Beechum and the Pharmaceutical Research and Manufacturers of America, testified first and introduced those present to testify on S.B. 56.

Tom Wood, Elected Task Force Chairman for the drug companies in Nevada as well as a State Government Affairs Manager for Wyeth Pharmaceuticals, spoke next. The explanation of the bill was simple in the fact that it took a drug company $400 to $500 million to bring a product to market through the FDA licensing procedure. In that procedure, the drug was tested in areas the FDA approved. Sometimes when a product came to market, other uses were found that were not contained in the labeling; hence the term "off label." In no other field of medicine was that more practiced than in oncology and the rationale was very simple. Double-blind studies with a placebo and a drug were not performed in cancer studies. Cancer was a disease that was life ending, or life threatening at the minimum. Many inventive individuals, typically oncologists and oncology nurses, were looking to find ways to help patients who had exhausted all other areas. Sometimes drugs that had no link with cancer were found to work, those were "off label" drugs.

Language in the bill conformed to "off label" as defined by federal administrators for the Health Care Financing Administration (HCFA), meaning Medicaid and Medicare coverage. Specifically, lines 9 through 14 on page 1 of the bill were language directly from the Federal Register, as researched by legislative staff and conformed to HCFA and Medicare guidelines.

Mark Savage, representing the American Cancer Society of Nevada and approximately 3,000 volunteers statewide, testified next in support of S.B. 56. It was important to note cancer was unique; it depended on novel approaches more so than most other diseases. So novel approaches often required access to novel treatments and drugs. Unfortunately that may be blocked by insurance that covered only the FDA approved use of the drug. For the cancer patient the risk of side effects was far less than the risk of death from cancer. He told the committee of a friend who’s mother had cancer and did very well with an off label drug. After her death it was discovered that she had been forced to stop taking the drug because it was too expensive, and her insurance company would not pay for it because it was an off label drug. He asked the committee to support the passage of S.B. 56 on behalf of the American Cancer Society volunteers of Nevada and the over 8,000 new cancer patients that would be diagnosed in Nevada that year.

Christian Downs, Director, Provider of Economics and Public Policy for the Association of Community Cancer Centers (ACCC), testified next. ACCC members included physicians, nurses, cancer center administrators, and patient advocacy organizations. Currently 32 states had passed legislation very similar to S.B. 56. Off label legislation was being heard before the legislatures in Arizona, South Dakota, Pennsylvania, and South Carolina. The federal Government also covered off label use under the Federal Medicare Program; that program was also very similar to S.B. 56. The Congressional Budget Office issued a fiscal analysis for the federal Medicare program and that report indicated there would be no additional cost to the Federal Medicare Program because of S.B. 56. In addition, information from the insurance departments from both Michigan and New York indicated that since the passage of similar legislation there had been no increase in insurance premiums in those states.

Chairman Buckley clarified that S.B. 56 provided that a physician and a patient may utilize certain drugs that were in the insurance company’s formularies as long as the drugs were approved by the Federal Drug Administration, and could be used for the treatment of cancer. The bill did not mandate that any drug approved by the FDA for cancer must be provided by the insurance company for the patient.

It was Mr. Downs’ understanding that being similar to the Medicare Program, if the drug was approved by the FDA and there had been a significant study that showed it could be relevant to the treatment of cancer it would be provided by the insurance company. He specified as long as it was approved by the FDA with a caveat that significant studies had been done to show that it had some relevance to cancer.

Chairman Buckley asked which drugs or treatments were not being provided currently, that in his opinion should be.

Mr. Downs deferred the question to the physicians would be testifying later.

Dr. John Shields, President of the Nevada Oncology Society, testified next. The society represented the medical oncologists, doctors who treated cancer patients in Nevada. S.B. 56 would provide access to all the best drugs available for patients with cancer in the state. Frequently, when the FDA approved a drug, it approved it for a specific disease. After that drug was approved, frequently other studies were done which revealed the drug was effective for treating other types of cancer.

The Nevada Oncology Society wanted insurance companies to provide remuneration for treating those other types of cancers, for which there had been well-indicated studies to show the drug was effective. His organization was not asking for anything more than what Medicare already recognized. When cancer patients were treated, approval from the insurance company was frequently required for particular drugs. The insurance company might deny approval for the treatment of that patient if it was decided that although the drug was effective for treating one type of cancer it was not labeled by the FDA for treating another type of cancer for which there were very adequate studies to show it was effective.

Chairman Buckley clarified, under S.B. 56, as long as the drug met the criteria of being approved by the FDA and if the use was specified in the medical encyclopedias and pharmacopoeia and supported, then automatically it must be provided.

Dr. John Shields affirmed Chairman Buckley’s statement. When the FDA approved a drug for certain conditions, he was asking that the drug also be utilized for other conditions for which there was good evidence of its effectiveness. The supporters of the bill were not asking for just any drug to be used for any particular purpose. They were asking for the drug to be used where there was good scientific evidence with good studies that had been done in academic centers throughout the country to show that it was effective in treating other types of cancer.

He gave the example of a drug that was initially approved for the treatment of pancreatic cancer. Subsequently, the drug was found to be very effective for treating lung cancer and bladder cancers; however, there was not an indication in the FDA labeling for the treatment of those cancers. Medicare paid for physicians to treat patients with those other cancers with off label drugs. However insurance companies sometimes denied usage of those drugs because the treatment was not in the original labeling.

The proponents of the bill wanted a law that stated if there were good studies and if those agents were approved for other types of usage other than what was in the label, that appropriate reimbursement should take place.

Mr. Wood noted Chairman Buckley was correct in terms of the utilization of the language. If a drug was approved on a formulary for any other treatment then that drug could not be denied for its use in cancer. The bill would eliminate any controversy concerning a physician’s use of off label drugs in treatment of cancers and would clarify that the drug was provided for in the health insurance policy for treatment of any other illness.

Chairman Buckley clarified if an Health Care Organization (HMO) had a list of approved drugs, they must allow that approved drug to be used for the treatment of cancer. It did not require a drug that was not on that list to be prescribed. Mr. Wood noted that was what the language indicated. Chairman Buckley had concerns with the drafting of the bill. Mr. Wood noted the language in S.B. 56 was drafted directly out of the Federal Government’s language.

Assemblywoman Evans noted the procedure for FDA approval was sometimes long and arduous. She asked if the FDA made revisions to modify labels after alternative uses for a drug were discovered.

Mr. Wood noted the FDA currently recognized the off label aspect of drug usage. The long process to bring a drug to market sometimes did not allow enough time to bring another indication or labeling to market, and when the product went generic, there was even less incentive to do so. The Federal Government had allowed a submission for off label usage, if the studies were done and submissions were made to the medical journals. That had not been possible before. Changing a label after alternative uses were discovered would take considerable time and money. He noted those drugs needed to be used as soon as possible, there was not time to wait and resubmit an entire new batch of indications.

Bobbie Gang, representing the Nevada Women’s Lobby, testified next. Nevada Women’s Lobby supported S.B. 56 in its original form which did not limit the use of drugs that were proved to be effective in treatment of other cancers or other illnesses. Her organization supported it when it was limited for cancer use. She suggested many people had firsthand experience with relatives and friends who used drugs which were approved by the FDA for one use but were used on a trial basis for another use. After a certain amount of time the patients were no longer covered by their insurance for the drug and they had to discontinue use. It was very difficult and very painful to see that happen. The Nevada Women’s Lobby urged the committee to pass S.B. 56.

Larry Matheis, representing the Nevada State Medical Association was next to testify. He noted how important the bill was. Knowledge as to what could be done to effectively make the lives of people who were living with chronic and terminal conditions had become very important. Physicians were learning anew, the various methods that could be implemented to make the quality of life valuable and useful to people. The bill only addressed the field of cancer and only addressed that when physicians had good information that a drug that had been approved for one purpose could be used effectively for some other part of the treatment of cancer. His organization encouraged the committee’s support of S.B. 56.

Robert Ostrovsky, representing Nevadans for Affordable Health Care, testified last on S.B. 56. He noted his organization opposed the bill in its original form, which was an "off label drug bill" for all drugs. Individuals from Nevadans for Affordable Health Care had participated in an effort to modify the bill to cover only cancer drugs. Many insurers covered those drugs normally, but they were off the formulary list. Frequently in formulary lists, there were very specific drug protocols applied to individual drugs, and there were not many choices for the physicians who used those drugs.

His organization supported S.B. 56 in its current form, but he noted the bill covered a very small number of employers; it did not cover state employees, self-insured individuals, or union plans. The bill dealt with a very small group of individuals in Nevada who received their care under the provisions of those sections of the law.

Larry Matheis stated he was looking forward to the managed care industry supporting Congress to make certain those reforms were done in the Employment Retirement Income Security Act (ERISA), Medicare, and the rest.

Chairman Buckley agreed. She pointed out the latest number of which she knew, was that with Nevada state laws, 591,000 individuals were covered. Mr. Ostrovsky noted the number of individuals who would be covered was not an insignificant number, but everyone was not covered.

Chairman Buckley closed the hearing on S.B. 56, and asked the committee to entertain a motion.

ASSEMBLYWOMAN EVANS MOVED TO DO PASS S.B. 56.

ASSEMBLYMAN NOLAN SECONDED THE MOTION.

Mr. Goldwater asked if the language was satisfactory.

Chairman Buckley noted it was not as clear as it could be, but the record indicated the intent was to follow the Federal Government’s exact language and she thought that was appropriate rather than amending the bill.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Buckley opened the hearing on S.B. 133.

Senator Ann O’Connell, Senate District 5 presented the bill. S.B. 133 was discussed several times in the Interim Committee on Worker’s Compensation. She noted consolidated insurance programs (CIPs), which were owner controlled insurance program (OCIPs) and contractor controlled insurance programs (CCIPs) were very new to everyone in Nevada, so the Interim Committee had proceeded with caution when considering the issues. She noted that the Senate Committee on Commerce and Labor and the Interim Committee felt very strongly about making an effort to keep the language as near to what was going to be presented as possible. Everyone had worked very hard to come to an agreement, and she emphasized that was not an easy task.

Scott M. Craigie, representing the Alliance of American Insurers and Liberty Mutual Insurance Group, testified. He gave an overview of what S.B. 133 was designed to do. "Wrap-up" insurance policies, whether done by an owner or a prime contractor on a major construction project, were somewhat new to Nevada. The definition or an example of "wrap-ups" was used in large construction projects like the Mirage or the Sands. It was one insurance policy that covered all of the worker’s compensation insurance needs of that construction project, and it covered all of the various contractors doing work on that site. There were economic advantages to that because all of that business was consolidated into one lump sum so the risk of some of the areas was spread.

It had been proven extremely effective in areas of improving the safety on the site. It also improved dramatically the ability of injured workers to determine where they were going to go for medical assistance. In terms of the benefits for the workers and financial benefits it proved to be very effective. There were similar programs in many states throughout the country. Nevada’s, however, was different than most states. Many protections and requirements were built into the plan which did not exist in other states. The reason for that was there was a great deal of concern within the construction community and within the labor community that if the plan did not work, there could be serious problems on the largest construction sites in the state. Therefore, there were a series of requirements in the plan which would help during the 2 year transition period.

Those OCIPS would be eased into place with certain requirements. The two-year transition period was set up to be a conservative entry, highly overseen and regulated in the marketplace. It established strict requirements for project-wide safety programs and project-wide claims programs, so that there were not different safety programs from five different major contractors. It was one program system-wide, and there was one place to go if a worker had a claim. There was value to consolidated programs by having a fully coordinated safety and claims package, all contractors would operate under the same safety and claims program, and it did reduce injuries when it was done effectively.

Tom Czehowski, Director of Safety and Planning, Steel Engineers Incorporated (SEI), representing the Associated General Contractors (AGC), testified next. The first time he was exposed to an OCIP, as director of safety and personnel of Steel Engineers Incorporated, he was not informed during the pre-bid procedure but just as they were going onsite to begin work. Once they were prepared to go onsite, he called the insurance broker for information on the protocol of claim filing procedures and to which clinic the workers would go if injured. He also asked about safety procedures. The insurance broker stated "Yes, SIIS is going to have a meeting in a couple of weeks." Mr. Czehowski did not think that was adequate information because he had workers who were going to be on the site the following day. It took quite some time to figure out what the procedures were. About a week and a half into the job, an employee twisted an ankle on the job site and he went to the job trailer to see the prime contractor safety person to seek medical attention. At that point, that injured employee was told that he did not need medical treatment, he needed only to go home and soak it. Right away the general foreman on the job site called the field superintendent, the field superintendent called Mr. Czehowski, and he called the prime contractor explaining to them that the employee needed to be treated at a medical facility. There were also problems with the claims handling.

As a contractor his organization bid the job, and then had to back out the costs for worker’s compensation and general liability in their contract because the owner or the prime contractor had decided to carry the insurance. Therefore the prime contractor should be completely responsible onsite for the claims administration, as his organization was completely responsible for their employees offsite. That was not the case. As contractors, his organization would have preferred to operate under their own insurance. SEI was a self-insured company that controlled their own claims. So there were problems as to who administered claims and who signed the C3 forms. Since SEI did not have the policy, they were concerned and did not want to sign the C3. SEI felt the owner or the prime contractor should have done that.

An employee cut his hand on the job site and went to the clinic where he was given a prescription for painkillers, but he could not get that prescription filled. As the head of personnel and the safety director, Mr. Czehowski was frustrated because he did not know what to do because that employee was covered under an OCIP. Mr. Czehowski knew the protocol for getting injured workers to the clinic but not for the pharmacy. The only thing he could do was to call the job site and explain that there was a problem because an employee needed to get pain medication. Mr. Czehowski had to send the employee back to the job site. Similar types of problems continued to occur as the job progressed. There were problems with safety issues as well. His organization cared about its employees. After making no progress with the safety person onsite, he contacted the project superintendent, who agreed with him that there were unsafe conditions that needed to be resolved. Qualifications for the safety persons were addressed in the bill, and his organization preferred those be reviewed and approved by the Department of Industrial Relations (DIR).

He pointed out usually a prime contractor did not make a profit until the job was completed, and it could be as long as 6 to 8 months because that was their retention. When a contractor started a large job $1 million or $ 2 million could be put into that job before a profit was made. Because his organization questioned who was supposed to be responsible for the claims administration and objected to signing the C3, the prime contractor informed him that they were told by the SIIS claims adjuster to withhold the progress payment to them. The progress payment was in excess of $500,000. His organization contacted their attorney, who in turn contacted DIR and the Division of Insurance. DIR addressed it immediately, and planned a meeting at the job site the following day. Once SIIS was told of the meeting, the payment was released. His organization decided to address those issues in regulations.

He was testifying as a safety individual who had been practicing safety since 1968. He had in excess of 6,000 hours of training in safety and in excess of 10,000 hours of giving training. S.B. 133 was needed the way it was written. Accidents could be prevented. He believed in protecting his employees, and he did not hesitate to pull employees off of jobs when he did not feel they were safe. He reiterated S.B. 133 was needed in Nevada the way it was written.

Mr. Goldwater noted on page 4, he did not understand sections 10 and 11. Section 10 said the consolidated insurance program "must not cover" more than one construction project, and section 11 said it "may cover" more than one construction project.

Mr. Craigie stated both lines were correct, but one expired, and the other one took effect. He referred to section 27, page 12, of the bill. The first 2 years "rolling wraps" were in effect. A rolling wrap was a contract that would be singed for many job sites, or projects all in the group. For example, all of the elementary schools in Clark County could be done as a single rolling wrap. Rolling wraps were not currently allowed for the first 2 years during the transition. Then at the end of the 2 years and after a legislative session, and it was determined if the wraps worked, rolling wraps were allowed. Therefore, literally one ended on September 30, 2001 and the other started on October 1, 2001.

Chairman Buckley thought it was important to go through the bill section by section.

Mr. Craigie noted section 2 addressed the Consolidated Insurance Program (CIP). Consolidated Insurance Program described all of the worker’s compensation wrap-ups for large projects. The top of page 2 listed what that included. Sections 3 and 4 detailed the most common types of consolidated insurance programs to be expected contractor control or owner control. Section 5 dealt with the exclusive remedy. All of the first three subsections and the last were old language. Section 4 confirmed that the no-fault system required that the injured worker’s exclusive remedy on an OCIP was the same as if he or she had an injury in any other kind of insurance program that covered worker’s compensation. It added the consolidated insurance programs to the exclusive remedy cause. If a person was injured on a work site, it was a no-fault system, therefore, the employer could not sue and claim the worker was not wearing his belt that day. Also, a worker was not allowed to sue and claim the employer put him into an unsafe situation. That happened in every other kind of worker’s compensation coverage and section 4 added those consolidated programs to the no-fault system.

Mr. Goldwater made note of the process of bundling insurance programs which seemed to be gaining popularity with Mr. Craigie’s clients, and asked if that would have any implications.

Mr. Craigie noted the CIPs to which he referred, for the most part, were going to be project-oriented and then terminated. He was not certain they could effectively be bundled. Section 6 indicated where certain sections were. Section 8 was the key section in creating the ability to do wrap-ups. Section 8 basically allowed a private company, public entity, or utility to enter into those contracts; 1(a) allowed the establishment of the wraps and 1(b) stated contractors could be required to participate through the bid process. Section 2(b) required general contractors to make the payments they owed the contractor or subcontractor and not withhold the money against "doing the right thing" with an injured worker. The self-insured groups suggested sections 9 and 10. For the term of the transition period, the CIP had slightly lower rates than the National Council on Compensation Insurance (NCCI) approved rates. Those two sections would allow contractors to cover their workers under their own insurance programs rather than the wrap-ups.

Chairman Buckley referred back to section 8, paragraph 2. If a private company established the consolidated program and they owed a periodic payment for work already done, she wanted clarification they could not withhold the payment because the business had not signed the employer’s report.

Mr. Craigie noted the "trigger" was on lines 27 through 30, which signified the company shall not withhold that required period payment on the basis that the contractor or subcontractor did not sign the employers report of an industrial injury.

Chairman Buckley asked what the problem was about signing the report.

Mr. Craigie pointed out the most important thing about the management of claims was that the insurance company became the responsible party for the injured worker and for the C3 form.

Chairman Buckley clarified it was not an issue of having a report signed but an issue of an attempt to shift responsibility.

Mr. Craigie emphasized he did not want there to be a situation where that happened to a claim.

Chairman Buckley asked if all issues dealing with contract and performance on the job and the insurance could be completely separate. She asked if there would be another reason for a withholding of periodic payments based on administration of the program or otherwise.

Mr. Czehowski stated that particular issue was addressed in that way because most performance type payments were addressed in the actual contracts between the owner and the prime contractor and the general contractor and the subcontractor. However, in the case of OCIPs, it would be possible for the general contractor not to have any input in the contract negotiations. That was specifically why he thought it needed to be addressed in regulations.

Mr. Craigie pointed out section 8 put more detail into statute than he was truly comfortable doing. However, it was agreed upon because it was new and was in an area where there had been bad experiences. He thought that case was unusual, but there was a need to be very prescriptive.

Ms. Giunchigliani referred to sections 9 and 10 and asked what the self-insureds rationale was in needing that language.

Mr. Craigie noted there was another witness who would address that issue. He also noted he had put on the record on the Senate side, that he opposed those two provisions in section 9, as did his clients.

Section 12 allowed private carriers into the wrap-up market. Without S.B. 133, wrap-ups would not be possible. Section 12 contained very strict rules; subsection 2 of section 12 stated the organization must file their package with the commissioner. Subsection 3 stated the commissioner had 60 days, and they could disapprove it if was not appropriate. He noted that language was necessary because of the transition period, he wanted to make it so everyone was comfortable with what was going forward.

Sections 13 and 14 laid out the broad responsibilities and components of the safety and claims programs. Lines 20 and 21 in section 13 said the safety of an employee must be provided; a safety program operated on that site was required, the subsections of section 13 outlined the specific details of the requirements for that program.

A proposed amendment agreed upon by all parties involved was distributed, (Exhibit E). It was agreed that DIR should check the credentials of the safety officer, certifying that person had the right experience. Section 14 was a direct parallel of section13, but it dealt with claims instead of safety. The contractor was required to have a single touch point for the claims program. He was required to appoint an administrator of that claims program, and that person must be on site every minute the construction was undergoing. That person would be in charge of giving an injured worker a correct referral and the C3 was to be filled out on the site by that person so that the paperwork was started immediately.

Section 15, was another area where in retrospect they would like to propose a change. Section 15 required contractors and subcontractors to post a bond in case they left the state. That was a common problem. Construction companies came in from other states, and they did the work. There was occasionally an injury afterward, but then they were out of the state. Even if a contractor left, the insurance company was certified by the insurance commissioner. Page 8, section 19, dealt with the issue, but it put the burden on the insurance company. It said the system or private carrier was responsible for all of those injuries. Even if the claim was filed after the completion of the project or if the contract was not within the stated time of the claim. No matter where the construction company was, that insurance company was the one responsible for those claims. He recommended to the committee section 15 be eliminated.

Chairman Buckley clarified that recommendation was made because section 15 was sufficiently covered under section 19.

Mr. Craigie continued, sections 16 and 17 dealt with the split between the subcontractor who had his own insurance, and the contractor who had wrap-up insurance. The contract had to define a specific area the wrap-up covered. He used the Belaggio hotel and casino in Las Vegas as an example; the wrap-up could cover everything on that property. However, any work done offsite was going to be covered by the subcontractor’s own insurance. So if Mr. Czehowski‘s group bid on a wrap-up, and he was told that all the work was going to be done onsite, he would back out all of the money he paid for worker‘s compensation insurance when he did his bid. If he did not take all that money out he would lose that bid. He would have to honestly reflect and reduce his bid by the amount of money that he spent on insurance. If, 6 months into the program Mr. Czehowski‘s group was moved offsite for whatever reason, then the system required the person who had the wrap- up insurance to reimburse the subcontractor for the costs that he or she should have left in their bid. That was because their insurance program was going to have to pick up that worker’s compensation coverage.

Mr. Craigie noted the way that reimbursement was made was the contractor who moved offsite kept track of all the hours.

Mr. Craigie noted quite often, a project built "up and out," so the subcontractors would move offsite to some other location. The move had not been anticipated when the bid for the job was made, so all of the workers’ compensation costs were reported to the prime contractor. If employees were taken offsite, they were not covered under the OCIP. That section clarified that when workers were onsite, the owner or prime contractor of the policy was completely responsible for injuries. When employees were offsite the subcontractors were responsible. If that money was backed out initially the payroll needed to be prorated for the man-hours that were originally in the initial bid, but were moved offsite.

Mr. Goldwater asked if it would take affirmative action to elect out for doing that.

Mr. Craigie declined to go through his objections to those areas before Daryl Capurro, Managing Director of the Nevada Motor Transport Association, testified. He stated it was a unique situation that those who were self insured or associations of self insured groups did not want to be covered by the wrap.

Senator O’Connell noted what was being debated had to do with public works projects so taxpayer dollars were being considered. Mr. Capurro had pointed out to her that a company should be able to use insurance with a lower rate than the "umbrella" insurance, because taxpayer dollars were being spent. That was the issue addressed in section 9.

Chairman Buckley asked if there were any other ancillary employees involved, such as bookkeepers, who did not work on the construction site and asked how their insurance coverage worked.

Mr. Czehowski noted there were office employees who did not work onsite, such as people who worked in payroll, who were covered under the subcontractor’s or the general contractor’s policy, depending on for whom they worked. There could also be delivery drivers who delivered items on the job site. Those issues were covered in the task force in1998, and the best way they found to resolve those issues was by tying the entire package together and when a worker was offsite, he/she was the responsibility of the subcontractor. That responsibility included worker’s compensation claims administration and everything else currently covered. However, when that worker was onsite, he/she was the responsibility of the prime contractor or the owner who purchased that policy.

Chairman Buckley noted there was going to be a certain "overlapping" and she wanted to know how did the task force gauge the costs, and how much money would really be saved.

Senator O’Connell stated that was one of the threshold questions discussed when the interim committee first started looking at the issue. It was a complex issue and it was not an easy issue to answer and was why the interim committee was so protective of the agreement to which everybody came. However, history of other states that had taken on similar projects showed it was a major money-saver to the general contractor or the owner of the project. Therefore, many private companies in Nevada were very interested in getting involved, but since there was nothing on the books that regulated it, it was very difficult. The contractors were very upset because they thought it would weaken the self-insureds already operating and their groups that were not under Title 57.

Mr. Nolan referred to page 5 under section 12 and noted during the interim committee he had been a proponent of making sure the safety professionals on board were qualified people. There was controversy as to whether the World Safety Organization (WSO), which was listed on page 5, line 9, was a legitimate organization. He noted there might be a conflict with some of Nevada’s statutes. He asked Mr. Czehowski to explain from where WSO came.

Mr. Czehowski clarified the certification boards listed in S.B. 133 were taken from a previous plan as an example, which he believed was in the State of Michigan which had gone through a similar process and had listed those regulatory authorities. The WSO was a certifying agency. His organization did not want to preclude anybody from being able to work on one of those sites if they had the experience or if they had the certification. He did not object to the deletion of that, if it offended Mr. Nolan.

Mr. Nolan commented it was not something that was personally offensive. However in the safety profession, there was much controversy with that particular organization as to its legitimacy. Several states had eliminated the WSO because of its questionable practices.

Mr. Czehowski addressed Chairman Buckley’s question on cost savings. Where most of the cost savings were realized was in the safety program and the administration of the safety program. He distributed an article about Liberty Mutual, which described how the company dealt with a large number of worker’s injuries after a 44-story scaffolding buckled (Exhibit F). Liberty Mutual did not argue who was at fault; they simply began processing claims. So the consolidation and the safety programs that went with it were what really saved money.

Mr. Goldwater mentioned there was a case in Nevada that dealt with a worker who was injured when scaffolding collapsed. The person who assembled the scaffolding was not under the contractor’s "umbrella." The accident was not under his jurisdiction, the regulation wasn’t part of the safety program. However, the injured worker who fell from the scaffolding and subsequently was hurt claimed they did not get exclusive remedy because it was not simply an on-the-job injury, it was a neglect on someone else’s part. He asked if that was something that was something the bill was intended to cover.

Mr. Czehowski noted that was his concern with section 9. He addressed section 18, which required in the Request for Proposals (RFPs) that what would be covered by a CIP be clearly laid out; it laid out the program so that the person bidding would know exactly what the terms were. Section 19 was the fully insured program thus eliminating the need for the deposit. Section 20 addressed contract requirements. At a minimum, every contract on a wrap-up site was required to have the safety and administration of claims programs, the names and qualifications of the safety and administration claims personnel, the terms and conditions under which all was going to be managed, a definition of the site, and the scope, details and the duration of the project as well as all the penalties among all the principals. Every contract was required to have all of those components so it was absolutely clear what the package required. Section 21 allowed the commissioner to adopt the regulations necessary. Sections 22 through 26 were consistency changes to other statutes to bring them into line as to what had been done with the rest of the sections. Section 27 explained why sections 10 and 11 could contradict each other.

Chairman Buckley complemented Mr. Czehowski on his testimony.

Daryl Capurro, Managing Director Nevada Motor Transport Association and a Trustee of the Nevada Transportation Network Self-Insured Group, testified next. Nevada Transportation Network was the first self-insured group that was approved to operate by the insurance commissioner of the State of Nevada. There were very stringent standards set forth for his organization to be able to operate. Nevada Transportation Network had been able to show that self-insured groups did work, as they had in over 25 other states for many years. His organization’s "track record" had been extremely good since they had been in business for 3 ½ years.

Nevada Transportation Network felt section 9 was necessary. There were individuals in his group who wanted to bid in on those OCIP and CCIP projects, but to do so they would have to back out the assessments they paid into the program of self-insurance. His organization’s rates were lower than many of the classification rates under the NCCI rates which all employers in the state who were covered by insurance companies were required to follow. He pointed out the law that was passed which allowed for three-way insurance included administered pricing. So in the first year, all rates for insurance companies were required be the same; they must meet the NCCI rates. There was a provision in the law which allowed discounting in the second, third, and fourth years and open rating in the fifth year. In the law there was also an opt-out provision, which allowed an employer to opt-out of the consolidated program and retain the coverage under the self-insured group, if the self-insured group had lower rates. His organization was also regulated by the state insurance commissioner, as were all other insurers of worker’s compensation. If his organization’s rates were lower, it made sense to continue to provide the coverage and the safety programs; that would lower the cost of a project. That was particularly beneficial to public works projects. An opt-out provision was important in saving taxpayer monies.

Section 16 contained the "back out" provision. When an employer bid on a project, the cost of worker’s compensation would be backed out. There were certain procedures followed in order to reimburse the employer if employees were in fact placed back under the employer’s insurance coverage.

Mr. Capurro noted the benefit of the opt-out provision in section 9 was that his organization’s employees were never involved in that, because their coverage was already provided whether they were onsite or offsite. He did not feel safety coordination would be a problem, because it had not been a problem in other areas where opt-out provisions had been put into place. His organization coordinated their safety activities with the primary contractor. As a self-insured group, the claim costs of the Nevada Transportation were less because they dealt with the injuries as soon as they occurred, and there were not the delays that some other employers had experienced in the past under the Employers Insurance Company of Nevada (EICN). Section 9 allowed self-insured employers, whose premium rates for the same job classifications were less than NCCI’s rates to provide the same coverage, coordinate the safety administration, and still bid the job.

Mr. Goldwater asked Mr. Capurro if it took affirmative action to opt out.

Mr. Capurro noted when the requirements for the job were posted his organization would know what work classifications were needed for that job. If their rates were lower, Nevada Transportation Network would then decide to bid the job. However, Nevada Transportation Network would not want to pay the worker’s compensation rates established by NCCI, rather they would like to pay the lower self-insured rates.

Mr. Goldwater asked for comments from the witnesses regarding the scenario he gave to Mr. Craigie, in which a subcontractor hired someone to put scaffolding together and that person was injured.

Robert Vogel, Vice President of Operations of Pro-Group Management, commented. His organization oversaw the safety for the groups they managed. In that situation, the injured employees were taken care of first. While they might do the investigation on the cause of the accident, and subsequently a mechanical failure was found to be the cause of the accident, the claimants were attended to first and payments were made. He made reference to Exhibit F. The claimants were the first responsibility of any insurer and that was the same with the self-insured group or Liberty Mutual or EICN.

Mr. Goldwater asked if his organization would attempt to subrogate after the initial claim was done.

Mr. Craigie stated there would be no subrogation under that provision. In the event the investigation showed the accident was the fault of a general contractor, or another contractor under the "umbrella," his organization would not be able to subrogate against them.

Chairman Buckley asked how would the bid from self-insured employer compare to other bids from employers who were not self-insured. She questioned if such a comparison would be like comparing apples and oranges.

Mr. Vogel noted the bids would be based upon the actual cost, identifying the cost of the worker’s compensation separately, so the contractor or the owner could back out the appropriate costs. They would be backing out a lower cost for the self-insured member who was opting out.

Buckley asked if there was anything to prohibit someone from reviewing the application and rejecting the applicant for failure to participate in the program.

It was Mr. Capurro’s belief that section 9 would protect against discriminatory action in the bidding process because it specifically allowed groups to opt out. There was no guarantee that his group would get the job even they were the low bidder irrespective of the worker’s compensation rates.

John Sande, Jones Vargas Law Firm, representing Aon Risk Services, spoke next. He introduced Kenneth Caldwell, Senior Vice President, Aon Risk Services, who had some suggestions regarding S.B. 133 for the committee and interested parties. He noted they were not able to testify on the bill when the Senate heard it.

Mr. Caldwell explained that Aon was an insurance broker, which was the interface with whomever wanted to do a CIP and the insurance companies for whom they brokered. After the program was put into place, Aon administered safety, and helped with claims and other such issues. S.B. 133 affected the brokerage community tremendously, and the ability to do wrap-ups in Nevada.

He was responsible for the wrap-ups or CIPs within the western states and had dealt with the legislative issues on that point in California and Hawaii and several other states. Aon had 30 projects going on in the west and 150 nationally. Aon was also very close to the Associated General Contractors of America (AGC). Aon was in a difficult position because it was the largest broker for construction. His organization sponsored the AGC "Build America" awards. Such programs had existed for over 40 years and had recently had begun to include, not only heavy construction, but such wrap-ups had permeated into cable companies. So it would not be uncommon for an individual who installed cable television to be covered by an owner controlled insurance company. In the home building industry wrap-ups were being used to help with the construction defect litigation issue. He pointed out wrap-ups did not only cover worker’s compensation but also general liability and public liability exposure, which was collateral to such programs for all the exposure. He noted three deaths had occurred on a large project in Las Vegas that was covered by Aon. He emphasized the safety program and the responsibility for the safety program under a wrap-up did not change when compared a normal project.

Mr. Caldwell stated section 9 would effectively kill the ability to do a wrap-up in the state. The entire purpose of a wrap-up was that everyone would be under the same "umbrella" and the sponsor who decided to do a wrap-up made that decision not only for money-saving reasons but for coverage reasons as well. In the case that Mr. Goldwater had addressed earlier, Mr. Caldwell surmised there would be significant subrogation. Section 9 would not prevent action over claims if an employee was injured as a subcontractor, the employee had the right to sue the prime contractor of the job for negligence. The action over claims was eliminated under wrap-ups, but under such a policy it would not be. Such a policy would also encourage creating rates, and it would be very hard to determine whose rates were lower through that scenario. Many of the wrap-ups did not necessarily have rates published, but they were retro-plans. Aon operated a loss sensitive program, therefore if the losses were low, the company’s rate was very low; it was not a standard published rate so the rate would not be easy to implement.

The second issue he addressed dealt with rolling wrap-ups. When considering the construction market in Nevada, most of the major casinos and private entities had been built out. Nevada was "in the throes" of catching up with infrastructures in such areas as school systems, water systems, and prisons. In the following 2 to 5 years there was $2 to $4 billion needed in infrastructure work. By prohibiting a rolling wrap-up, those public entities would be prohibited from using those funds to build more infrastructures for the taxpayers of Nevada. In California, rolling wrap-ups were prohibited, and the Los Angeles Unified School District introduced legislation which allowed rolling wrap-ups for school districts. By doing a wrap-up, the school district would be able to build two additional middle schools as well to extend the level of safety down to contractors that might otherwise not have safety programs because of the insurance program. He suggested if it was going to be limited, it could be limited to only public entities over the following 2 years, and private companies could not do rolling wrap-ups.

In reference to safety and contract law with respect to construction sites, the contractor was responsible for the safety and health of employees. The way the language was written in section 13, the owner was made responsible for safety and health of all employees of all levels of contractors on the job site. He speculated that would lead to extensive litigation. Currently, a contractor was responsible for the safety and health of the employees; they had their own safety plans which they were required to administer and protect their employees. The section needed to be modified slightly to indicate the job site should have those things. As the section was currently drafted, it was directly contrary to way California and Nevada Occupational Safety and Health Administration (OSHA) regulation read in the sense that the accountability was placed on the contractor for a safe job site. The same was true with section 14 that dealt with claims. There had to be claims processing, which was normally done by the insurance company; the level of staffing the two would add significantly to the cost. He thought sections 13 and 14 could be amended very easily which just a few changes.

Chairman Buckley suggested Mr. Caldwell work with other interested parties on the bill. She also noted the committee would consider all of those issues in work session, and she mentioned she might form a subcommittee.

Nancy Wong, Division Counsel, Department of Business and Industry, Division of Industrial Relations (DIR), provided testimony next. She referred to Exhibit E, and explained the portion regarding the new sections concerning Nevada Revised Statute (NRS) 616D.120 and 616D.130, which were the benefit penalty provisions. Prior to 1995, if an injured worker had a bad faith action against an employer, an insurer, or a medical provider, he/she could file a tort action. In 1995, the statute prohibited an injured worker from maintaining bad faith action and his/her remedy became a benefit penalty. DIR investigated complaints and if an insurer, employer, third party administrator, or medical provider had committed any of the violations listed under NRS 161D.120 and it was determined the delay of payment was unreasonable, the Division could administer a $1,000 fine. Five hundred to ten thousand dollars went to the injured worker as a benefit penalty in lieu of his/her tort remedy. DIR believed that if there were going to be OCIPs, the principle contractors and the owners of construction projects should also be on that list for protection of the injured workers.

Mr. Goldwater asked by including primary contractors and owners on that list, if they would be excluded from bad faith.

Ms. Wong answered "Yes," because NRS 161D.130 and 616D.030 indicated that their remedy would be the benefit penalty.

Ms. Giunchigliani wanted clarification if they did not have an option. The division decided to access and therefore they were locked out of making that decision.

Ms. Wong explained that in 1995 was there was a list of insurers, employers, third party administrators and medical providers who could not be sued in tort for violations of the worker’s compensation NRS 616D and 617.

Roger Bremner, Administrator, Division of Industrial Relations, stated he was present to endorse the amendment as proposed by Mr. Craigie.

Amy Halley Hill, Vice President, the McMullen Strategic Group, representing AIG, testified last. Her organization supported S.B. 133, but in lieu of concerns and questions brought up in the meeting, they wanted to continue to work with interested parties and the subcommittee to answer some of those questions.

Chairman Buckley closed the public hearing on S.B. 133. She noted if she was going to appoint a subcommittee, she would ask Assemblyman Parks to chair it, and ask members who served on the interim, or from the Committee on Commerce and Labor to sit on the subcommittee.

Mr. Hettrick suggested the committee determine if it was possible for the interested parties to get the bill negotiated.

Chairman Buckley, told the interested parties to contact her, and she would make further determinations from that point. She opened the public hearing on S.B. 140.

Senator Ann O’Connell, representing District 5 in Clark County, presented the bill. She stated S.B. 140 was to what she referred as the "sunshine issue." In 1987 she started requesting legislation that would identify for consumers what they were actually paying in their billing. She felt very strongly about premium tax. She did not think many of Nevada citizens realized they paid a tax on their insurance. S.B. 140 asked for a breakout of those costs so the consumer actually what knew part of their insurance bill was a tax. There was an amendment added on the Senate side, which attempted to take care of the year 2000 compliance problem if indeed there was going to be a problem. The companies were given an opportunity to not have to redo all of their software until after the year 2000. S.B. 140 was very simple, it would indicate the insurance cost and the tax cost, and if there were any other un-funded mandates imposed on insurance companies, those would be identified in the billing.

Chairman Buckley thanked her for her testimony.

Mrs. Segerblom asked if premium tax was on automobiles, health, and other insurance.

Senator O’Connell answered affirmatively and noted the tax was usually the third largest source of the general fund.

Jim Wadhams, representing the American Insurance Association, testified next. The American Insurance Association was a trade association of about 225 property and casualty insurance companies that did a substantial volume of business. The association was in support of S.B. 140, and he commented he thought "sunshine" was an appropriate word to use. He pointed out sales tax was always attached to purchases; however, the insurance premium tax, currently at 3 ½ percent was a transaction tax. S.B. 140 did not change the tax, it simply allowed the consumer to know which portion of the price was the tax.

Chairman Buckley closed the public hearing on S.B. 140. She opened the public hearing on S.B. 145.

Senator O’Connell presented the bill. The purpose for S.B. 145 was to deal with major problems that were brought to her attention when her husband went in for back surgery. At that time several doctors spoke with her about lobbying issues addressing some practices that were being perpetrated on the medical profession by companies which currently dominated the health care system. She thought it was serious enough that she put in a request for a prompt-pay bill. Some of the information provided to her was that doctors were not being paid for as long as 9 months after delivering service. Those doctors were not able to recoup their cost for that service delivery. Another fact that she thought to be unconscionable was in order to remain on a health care panel it cost as much as $2,000 per year. The problem had become so bad that the medical community went to the insurance commissioner and asked if she could do anything about it. The only thing she could do was issue a bulletin indicating there was a fiduciary responsibility, but she could not even enforce that bulletin.

Lawrence Matheis, representing Nevada State Medical Association, testified next. He noted there were physicians present who would give more background information and summarize personal experiences. Subsection 1 of section 1 required that once medical service was delivered and a payment for that service was submitted, the administrator had 30 days to process the claim and 30 days to pay the claim. If the amount due was not paid within 30 days of it having been approved as a claim, then (they) the administrator was required to pay the amount in full with the interest rate that was set by the state for noncontracted situations. If there was an express contract in place that set a different interest rate, that would prevail.

Subsection 2 of section 1 indicated if the insurer wanted more information before it was determined whether to deny or accept the claim, they had 20 days from the date they received the claim to request any information. Thirty days from when the supplemental information was received they had to pay. If they did not, the provisions in the first subsection counted. Subsection 3 of section 1 made it clear that there had to be a legitimate reason for asking for information, and the request could not be simply to slow the process or harass the physician or provider.

Subsection 4 of section 1 required that once a claim was established as "fully payable" the claim could not be partially paid. Subsection 5 of section1 set forth that if those steps did not lead up to payment of the claim, and the physician or provider decided they must go to court, the prevailing side received their reasonable costs.

Section 2, which was repeated throughout the bill, gave the Insurance Division the authority to regulate the practice of charging. That charge had to be reasonably related to an actual cost that the company or the insurer incurred in order to be able to put the provider on the panel. If there was no cost and it was just a charge, that would be prohibited, and the Insurance Division could now be responsible for regulating.

Chairman Buckley noted the committee was familiar with those issues and mentioned there had been many concerns expressed in the interim by physicians on those issues as well. She appreciated that Senator O’Connell brought the bill forward.

Mr. Goldwater made reference to the State Group Health Insurance Program, and asked if the state would be subject to provisions in the bill.

Mr. Matheis stated it was his understanding that the state would not be, but the third party administrator would be.

Chairman Buckley noted the doctors would have been in a better position to make a complaint and discover the fraud more quickly.

Ms. Evans asked if there were any delaying tactics in getting the claims approved. Mr. Matheis noted the physicians who were present could confirm there were significant ways to delay payment, which could not be justified.

Ms. Evans asked if there were deadlines or timetables for submission of claim information from a provider to insurer, and if those deadlines were missed, she asked if the claim was denied, or if there was some type a penalty.

Mr. Matheis noted usually if a claim was not submitted within a certain amount of time, usually 6 months, it became a "stale claim," and it did not have to be paid. So it was obviously in the best interest to the provider to submit a claim as soon after the service as possible. There were multiple reports from insurance companies having mislaid or lost claims and, then the doctor was outside of the deadline, and the claim became stale.

Ms. Evans thanked him for pointing that out. She noted doctors and other providers sent their information by registered mail because insurers were telling them they never received the claim. She thought it was reprehensible on the part of insurers.

John Scott, Urologist in private practice and President of the State Medical Association, provided written testimony (Exhibit G). He reinforced what Ms. Evans had mentioned and agreed it was ridiculous.

Ms. Segerblom asked if there was a way to make Medicare pay faster. Dr. Scott stated Medicare was billed electronically, and he was paid within the week. Ms. Berman asked Dr. Scott if there any other companies doing electronic billing. Dr. Scott believed there were but did not know which ones.

Alice Molasky Arman, Commissioner, Department of Business and Industry, Division of Insurance, testified next. The Commissioners Health Care and Insurance Advisory Committee consisted of members of the industry as well as consumers, and they set out to develop the bulletin mentioned by Senator O’Connell. The bulletin established the basis of S.B. 145 because it mirrored the bill in many respects. The bulletin did not cure all of the problems, but she believed the bill would reinforce their position. Ms. Molasky Arman made reference to a consumer who’s physician had ceased her care under a particular plan because of payment methods of her insurer. As a consequence the consumer was forced to drive 25 to 30 miles just to receive regular care. She also mentioned when slow payments by insurers or HMOs was recognized, it immediately lead to questions of solvency and competency; so it caused the Division of Insurance a great concern.

Ms. Berman asked the Commissioner if she had any power to do anything if there was a solvency problem in which the insurer did not have the money to pay the physician.

Ms. Molasky Arman responded when an insurer became insolvent, they were taken under receivership. If it was an HMO they were also taken under receivership and then claims were run off. There was a guarantee association that "backed up" the claims of insurers but for HMOs, there was none. The contracts were quite different and HMO contracts were normally replaced almost immediately. When something alerted the division to solvency then they hopefully were in a position to a conduct an examination to determine whether there were any financial problems. The division also had the ability to take any insurer or HMO under administrative supervision and thus monitor the business practices including their claims practices.

Dr. Joseph Walls, Orthopedic Surgeon from Carson City, testified next. He noted over the prior week, he had performed six operations, and he would be fortunate to be paid by August. He noted he would be more fortunate if he was paid correctly. Fifty five percent of the funds owed to him for services he had provided were more than 90 days overdue; and that did not mean that 45 percent of them had been paid on time. That was just not enough time for them to become delinquent. The year prior, he paid $30,000 to a billing service in order to expedite prompt payment. Obtaining reimbursement for services that he rendered was the biggest administrative problem he had in his office. Anything that could be done to alleviate that would be greatly appreciated.

Mr. Hettrick asked if the language in the bill would allow only a portion of a claim to be approved and paid, leaving the rest unpaid because it was not approved.

Mr. Matheis responded the bill was explicitly written such a way so that would not happen. There might be multiple claims for a particular patient and some might need additional information or be denied. The language in the bill indicated when a portion of a claim was approved, that part should be paid. He was referring to page 2, lines 13 and 14, which was amended language that was added to clarify the point.

Mr. Hettrick noted the lines read "shall not pay only part of the claim that has been approved and is fully payable." Could an administrator approve and pay only a portion of the claim but did not approve the entire claim, therefore not paying the rest of it. Mr. Hettrick did not want to prohibit that. The language read "must approve a claim" it did not specifically read "or a portion of a claim" and pay.

Mr. Matheis noted what that language was meant to do was, when a portion of a claim was approved that portion was owed. That section prohibited the payment of only percentages of the full amount due.

Mr. Hettrick understood the language indicated a portion of a claim could not be paid if the entire claim was approved. He wanted to know what happened if only a portion of a claim was approved to be paid.

Mr. Matheis stated it was his understanding the language required that portion to be paid.

Mr. Goldwater asked if S.B. 145 would apply to reimbursement claims. Chairman Buckley asked if it addressed patient claims as well as doctor claims.Mr. Matheis answered affirmatively, and noted it referred to a health provider.

Jim Wadhams, representing the Nevada Association of Health Underwriters, testified last. He noted S.B. 145 should be put into context of the larger body of the law. A provision with which the committee dealt regularly was the Unfair Trade Practice Act, NRS 686A. There was a section in that act that had a list of actions insurance companies could be punished for committing. In addition the commissioner had adopted regulations over the course of time, which fit into that larger body of "claims payment law" which he thought gave some satisfaction to Mr. Hettrick’s question. In response to Mr. Goldwater’s question, he noted the language of those various sections were related to claims under policies of group health insurance, such as HMOs, so pharmaceuticals would fall under the provisions of the section.

Chairman Buckley closed the public hearing on S.B. 145, and adjourned the meeting at 6:45p.m.

The following day, Ms. Wong submitted Exhibit H, concerning her testimony on S.B. 133. She had determined NRS 161D.033, which precluded causes of action against insurers or third-party administrators was more narrow than NRS 161D.120, which allowed the administrator of DIR to impose administrative fines against insurers, managed care organizations, health care providers, third-party administrators, and employees.

RESPECTFULLY SUBMITTED:

Meg Colard,

Committee Secretary

APPROVED BY:

Assemblywoman Barbara Buckley, Chairman

DATE:

RESPECTFULLY SUBMITTED:

Meg Colard,

Committee Secretary

APPROVED BY:

Assemblywoman Barbara Buckley, Chairman

DATE: