The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:45 a.m., on Thursday, March 18, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Mark Amodei

Senator Dean A. Rhoads

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Crystal Suess, Committee Secretary

OTHERS PRESENT:

Amy Halley Hill, Lobbyist, Nevada Self-Insured Association

Chairman Townsend opened the meeting noting the first order of business would be Senate Bill (S.B.) 439.

Todd Russell, Legal Counsel, Nevada State Board of Accountancy, outlined there were many major amendments that he proposed for S.B. 439 (Exhibit C). He directed attention to section 1 of the bill that defines "State." Section 2, subsection 3, expands on and includes limited-liability companies. Section 3, subsection 1, paragraph (d), adds the following language to line 32, "which conviction may be waived by the Board." He explained the reason for that added language is the Nevada State Board of Accountancy (NSBA) has licensed people who have been convicted of a felony. The board had one instance where a man hijacked a plane, and was convicted of a felony but he came to the NSBA with a very credible record, so the board would like to have the ability to waive some types of felony convictions.

Chairman Townsend questioned if this individual received his training as a Certified Public Accountant (CPA) after this aforementioned conviction. Mr. Russell replied that was correct.

Mr. Russell elaborated on the proposed amendment to section 4, referencing Nevada Revised Statutes (NRS) 628.230 and NRS 628.200. He proposed to amend NRS 628.325 of the bill by providing additional language as outlined in Exhibit C, page 2; and to add a new section by amending NRS 628.510 as outlined in Exhibit C, page 3 and 4.

Randy Walker, President, Nevada Society of Certified Public Accountants (NSCPA), stated the NSCPA fully endorsed both the bill and the amendments presented.

David Turner, CPA, Lobbyist, Nevada State Board of Accountancy, interjected that earlier in the year the NSCPA had several open hearings, where several licensees and non-licensees were invited to express their opinions and discuss possibilities on the legislation that has been brought before this committee.

Senator Amodei stated that since he is a partner in the law firm with Mr. Russell, he will abstain from the vote.

Shirley Petro, Compliance Officer, Real Estate Division, Department of Business and Industry, expressed her support for the bill. She stated she had sent Assemblyman Bob Beers, Clark County Assembly District No. 4, an amendment to change "broker" to "brokerage." She explained a broker can apply for a real estate license and acquire a name and then work under a "doing business as"(DBA).

Senator O’Connell stated she wanted to declare that her husband is a real estate broker, and that Senator Townsend’s wife is a real estate broker.

Pamela G. Roberts, Deputy Attorney General, Medicaid Fraud Control Unit, Office of the Attorney General, spoke on the purpose of the bill, stating the amendment with access through A.B.113 would allow the Medicaid Fraud Control Unit to have access to all patient records. She elaborated that NRS 200.495 is criminal neglect of patients statute. It was enacted in a past session and requires the department to investigate any caregiver that comes under suspicion. NRS 200.5091 through 200.50995 inclusive, are elder-abuse statutes. Those are the two statutes that the department uses when investigating any caregiver or home that receives Medicaid funds.

Ms. Roberts continued there is an additional amendment which would require a patient’s signature for access to records used in an investigation. It was discussed that it would require too much time to get patient signatures, and in most of these cases time is of the essence. Ms. Roberts further stated in most cases a signature is obtained when there is ample time and rapid action is not warranted.

Chairman Townsend opened the work session and stated the first order of business would be S.B. 45.

Senator Schneider stated the problem lies with people buying and selling used goods, from computers to lawnmowers. These people are breaking the law and the Las Vegas Metropolitan Police Department (Metro) does not have the manpower to investigate and license every one of these businesses.

Chairman Townsend asked if the premise of the problem is because Las Vegas is the trade-show capital of the world.

Stan R. Olsen, Lobbyist, Lieutenant, Las Vegas Metropolitan Police Department (Metro), stated every trade show incurs millions of dollars due to theft. It is not unheard of to have one of the huge trucks disappear. Most of the property that is stolen is smuggled out of the country. The problem lies with the fact that "collectibles" are hard to identify; not unlike the current rage, "Beanie Babies." He emphasized in Las Vegas, in cooperation with the antique dealers in the area, Metro has set up a phone watch. When a person steals from one store and tries to sell to another, the dealers call each other. This makes it difficult to move stolen items through legitimate stores, so the criminals find other avenues. The concern of Metro is the dealer must obtain some form of identification in case of theft; then Metro could backtrack the item. Lieutenant Olsen pointed out the other issue is the word "collectibles" as defined by NRS is broad. He said Metro recommends that another word must be found, or go the harder route by changing the NRS.

Chairman Townsend commented he was looking at section 2, subsection 1, which states that "secondhand dealer" does not include a person who engages in that business at a show or other event if the show or other event is not conducted more than 7 days. What that means is that a secondhand buy–sell license owner in Reno could come to a show under that criteria, for only the 7 days, thereby exempting the very people that you are trying to stop.

Lieutenant Olsen concurred and further stated some trade shows that come into Las Vegas, for example gun shows, are significantly regulated. He said it is possible that guns stolen at gun shows are also sold at them. He added that guns have serial numbers making it easier to trace the thief.

Chairman Townsend pointed out it sounds as if the department would like to see these travelers checking in, and having to fill out a stack of forms on what they brought. He emphasized the need for realism in dealing with these problems.

Lieutenant Olsen averred he was not implying the department was only worried about items stolen from trade shows. The majority of stolen items are from individuals and stores. He said trade shows are unwittingly purchasing a lot of stolen items, especially hard-to-identify items like jewelry. Thieves will often remove the stones, and melt down the gold; so that there is no way to identify if the items were stolen. The department has worked with several of the gold and silver buyers in Las Vegas, setting up sting operations. Every time something is put in place the crooks find a new way to off-load these items.

Chairman Townsend said he used to see individuals go into gold and silver buyer’s stores with a bucket full of chains and rings, knowing the value was just the current price of gold. He stated the jewelry store in which he was a partner would not buy those types of materials, because it was obvious the items were stolen. Stones on the other hand, have no identifying marks and there is no clue from where they originated. Chairman Townsend conveyed his understanding that stores should have to verify names and addresses for people selling merchandise. He stated he was not sure this bill gets to the heart of Metro’s problems. He commented the bill was Mr. Beinfeld’s concern about being able to produce his trade shows.

Alfredo Alonso, Lobbyist, Superpawn, stated that was correct. Because of the restrictions in Clark County, with respect to the secondhand licensing, Mr. Beinfeld was afraid many of the people that come to buy and sell at trade shows may not come because of the licensing.

Chairman Townsend asked whether the license was required by the county or Metro. Mr. Alonso responded, both. It is the secondhand licensing requirements within the state law and strict local licensing laws.

Senator Schneider said the City of Las Vegas does not require one of these buy-sell licenses, but the county requires a buy-sell license in order to do business.

Robert R. Barengo, Lobbyist, Nevada Collateral Loan Association, added that it is an enforcement issue.

Senator Schneider commented there were a couple of antique malls in his district that were making criminals out of good people. People want to sell the dealer merchandise, but the dealer cannot buy it inside their store. The law forces dealers to buy out of someone’s trunk. He pointed out the goal is to keep everybody legal. He offered that when people sell merchandise, make them give their picture identification. The information would have to be recorded and kept open for any law enforcement official to review.

Chairman Townsend questioned why this bill does not just address Mr. Beinfeld and leave everyone else alone so small businesses do not beat on Clark County representatives. This bill will exempt only show people that come to Las Vegas.

Lieutenant Olsen commented Metro has no problem with the shows coming to Las Vegas. There is an annual jewelry show at the Mirage Hotel and Casino that is a big target for theft. Part of the problem is the county really enforces their code and the city does not.

Mr. Barengo pointed out tab A, page 1 of the work session book (Exhibit D), entitled Beinfeld; that is Mr. Beinfeld’s amendment which would deal with Mr. Beinfeld’s problem. Essentially this would delete subsection 1 and make subsection 2 become subsection 1, then add new language to section 2.

Chairman Townsend queried Senator Schneider to see if he was still concerned, even with the Beinfeld amendment. Senator Schneider insisted he was still concerned about the little people who have to get these buy-sell licenses, just like the big pawnbrokers. These licenses are very heavy duty. The business has to have space leased before it can be issued a buy-sell license.

Chairman Townsend asked if that was what the county and city were doing to these small businesses. He questioned whether or not these small businesses could survive and if there really was that much of a crime problem.

Lieutenant Olsen responded; "Yes, there is a problem. On occasion these shops are knowingly buying stolen property; but more important, and more often, these shops are unwittingly buying this stolen merchandise."

Senator Schneider said he would like to see these people required to obtain their work card or sheriff’s card and keep a book of all the merchandise, including information on who sold it to them and the description of the item. I think that will be acceptable with Metro. The remaining problem is the word "collectibles."

Lieutenant Olsen explained the problem with the word "collectibles" is that an individual could open up a "collectible" type shop, and then just sell jewelry.

Chairman Townsend asked if everyone would agree on taking the word "collectibles" out and just letting it be. Senator Schneider said he did not have a problem with that.

Senator O’Connell queried how "collectibles" were being defined. Lieutenant Olsen stated the definition was based on the NRS, which made it very broad.

Lieutenant Olsen insisted the problem lies with the definition in the NRS. Chairman Townsend offered to change the definition of the NRS instead of wasting time on this type of discussion. Lieutenant Olsen iterated that would be fine by the department; it is just taking the time to get it done.

Chairman Townsend stated the committee would hold the bill until someone could talk to the county, and moved to S.B. 94.

Chairman Townsend asked the committee to look at the memorandum from Crystal Lesbo, Senior Research Analyst, Research Division, Legislative Counsel Bureau, to Senator Randolph J. Townsend, Chairman and Members, Senate Committee on Commerce and Labor (Exhibit E). He further stated the documents pertained to the "Breen Formula," which has been heard in this committee, as well as in Senate Committee on Government Affairs, dealing with the workmen’s compensation legislation. The Breen Formula was an attempt by the courts to define a very complicated issue with regard to recovery. The courts made a good-faith attempt which has stood a very short test of time; as a result, the hearings in the interim have brought forth a number of alternatives. The goal would be to find an alternative solution for those people who have administered medical care, legal counsel and any settlement to which the injured worker would be entitled.

Senator O’Connell inquired if the bill was designed to give the injured worker 50 percent while giving the attorney and the insurer 25 percent each.

Bill Bradley, Lobbyist, Nevada State Trial Lawyers’ Association, commented what Senator O’Connell proposed would make the worker’s compensation lawyers establish a set fee for all injured workers.

Senator O’Connell stated she was not into fixed contracts; but there are only so many ways to look at this formula, and the person we are trying to protect is the injured worker. Mr. Bradley concurred the injured worker was the interest of the trial lawyers.

Senator O’Connell asked Mr. Bradley how many times a law firm comes out above the client monetarily. Mr. Bradley responded that would have to be done on an individual law-firm basis, and in his law firm, never.

Senator O’Connell stated she felt the reason that this issue just keeps coming up time after time, is because the injured worker is not coming out ahead.

Mr. Bradley iterated he was not sure if that was the case, or if the insurer wanted to come out a little more ahead. The goal here is to make sure the insurer gets a fair recovery. In the Breen case the Nevada Supreme Court ordered the insurer to share the fees and costs. The public policy debate for this committee and the Legislature is to decide if they agree that the insurer shall, in fact, still share in the fees and costs. Once that is decided, what is really important here is protecting the injured worker. Then the injured employee and the insurer do not have the flexibility to negotiate on a case-by-case basis, which he believes currently exists. Mr. Bradley agreed Breen is not wonderful; but when you have Breen, that forces the parties to the table.

Chairman Townsend questioned if in the three-way world where a private insurance carrier may have been more aggressive, was it easier to work with an insurance carrier that would work with attorneys to find the best solution.

Mr. Bradley voiced that potential was there, but when looking at the law in Nevada, there is Breen and the right to intervene; those are hammers on both sides rather than accomplishing what is best for the individual.

Lenard T. Ormsby, General Counsel, Employers Insurance Company of Nevada (EICON) (formerly SIIS), offered a brief summation of subrogation. What the EICON sees is a conflict. He said Nevada law provides that an injured worker is entitled to benefits, and an injured worker may sue or retain an attorney to sue. Mr. Ormsby interjected a hypothetical injured worker story. He said, "I am at work, I am walking back across that very dangerous stretch of road between my office and here and I get hit by a truck. If that truck is negligent or the driver is negligent, I am going to receive workers’ compensation benefits because I am in the course of my employment." The law provides the EICON a subrogation right, meaning that the injured worker cannot have double recovery for the same injury.

Chairman Townsend asked if there is a jurisdiction that has a mechanism to address the issue or if there are 50 ways. Mr. Bradley stated he had been in contact with lawyers in other states. They say this formula never works, and end up negotiating around the formula.

Chairman Townsend commented the goal seemed to be to find the jurisdiction where there are more people who are unhappy. Mr. Ormsby stated the insurance companies always get their money first; their liens take precedence.

Chairman Townsend iterated he had a problem with trying to apply a formula to negotiation issues in general. He further stated when an individual walks into a law firm or an accounting firm, that individual has the right to negotiate their relationship.

Mr. Ormsby averred that if an individual walks into an accounting firm with a $500,000 tax lien asking for accounting services, the accountant should be able to take that amount into consideration when figuring the charge for such services. When the injured worker goes to a law firm, statutorily the injured worker is walking in with that lien.

Chairman Townsend inquired as to S.B. 64, which would help to take care of these problems about notification of liens.

Mr. Ormsby stated when the law firm has a statutory lien, they do not have to notify anyone; by law the lien exists. The injured worker's attorney then notifies the law firm that a settlement has been reached and negotiates settlement with the insurance carrier.

Mr. Bradley commented that Mr. Ormsby kept using the phrase "double recovery." SIIS pays out medical bills and lost wages, but there is no compensation for pain and suffering. That is where the attorney comes in, sues the "at-fault" company, and recovers funds for pain and suffering.

Chairman Townsend directed questions to Mr. Ormsby and Mr. Bradley as to whether or not they would share information about liens coming through the law offices to put each entity on notice.

Mr. Bradley acknowledged the insurance defense firm is very up front on what has been paid out, what has been received, and what funds are left to be used. This system allows the law firm a solid idea of what amount of settlement this individual is going to require to come out on the winning end.

Don Jayne, Lobbyist, Child Development Specialist of Nevada Inc., averred it would be the company’s desire to always have a settlement structure, but unfortunately, not everyone is willing to negotiate.

Mr. Bradley interjected it should be criminal not to notify all parties of a lien presence. He believed that under NRS 616C.215 the trial lawyers already have the obligation to notify.

Chairman Townsend commented the proposed amendment (Exhibit F), section 1, page 3, deletes lines 38-40 and inserts, "subsequent injury fund to recover on its lien; and (b) The probable amount the injured employee or his dependents is .…"

Mr. Bradley responded that was the obligation of a good attorney; to notify his client of any and all liens, but that there should be a disclaimer on the "C-4 forms" that the injured worker must fill out and sign. Mr. Ormsby noted the "C-4 form" is done in the doctor’s office right after the injury. The doctor signs and sends it in. He questioned whether the injured worker would understand or remember that he/she signed something regarding liens.

Mr. Bradley opined there was a statute of limitations of 2 years.

Chairman Townsend inquired if there was a reasonable time frame in which a notice could be sent to the claimant from the insurer that if monies are recovered as settlement, the state is entitled to be reimbursed. Mr. Ormsby reiterated notifying the injured worker of a lien was still the job of the attorney.

Chairman Townsend asked if there was a professional code of ethics that attorneys must notify the injured employee. Mr. Bradley agreed yes, any good attorney would notify.

Chairman Townsend stated he liked the idea of the attorney having to notify the injured worker, but if for some reason, said attorney did not notify the injured worker, what recourse does the injured worker have. Mr. Bradley concurred he felt the same, and that some criminal action could be taken against that attorney.

Don Jayne, Lobbyist, Child Development Specialist of Nevada Inc., observed even if the notification was put on the "C-4 form" or on the back of compensation checks, it would be hard to believe that a person would have recollection 18 months later.

Chairman Townsend wanted to know once an attorney is notified of a tort action when a lien is going to be filed, what would prevent the insurance company from notifying the injured worker. Mr. Ormsby iterated that was attorney-client privilege, and all correspondence and negotiation would, by law, have to go through the attorney.

Mr. Bradley stated the insurance company, as of now, still writes and tells the injured worker to go to the doctor, and also informs him/her of the possibility of a lien. That makes the attorney important to explain and decide on litigation proceedings.

Chairman Townsend added he felt the attorney would not want to explain away the client’s right to a fair settlement, or scare the injured worker out of what he or she is entitled.

Chairman Townsend closed the work session and moved to S.B. 351.

Mark Teixeira, Lobbyist, Avis Inc., stated he and other lobbyists propose an amendment regarding section 2, subsection 1, paragraph (c). He said to replace that paragraph with the following language, "A person with a limited agent’s license issued under this paragraph may also authorize any employee of the short-term lessor of passenger vehicles to act individually on behalf, and under the supervision, of an individual with a limited agent’s license with respect to the kind of coverage in this paragraph".

Robert A. Ostrovsky, Lobbyist, The Hertz Corporation, said he spoke with John Sande in regards to the changes to S.B. 351.

Chairman Townsend inquired if there had been a letter sent to rental agencies regarding the necessity to be licensed from the state insurance division.

Mr. Ostrovsky answered it was his understanding this bill was brought to the attention of the rental agencies at the suggestion of the insurance division so the rental agencies could address the issue in this legislative session.

James L. Wadhams, Lobbyist, American Insurance Association (AIA), US Bank Plaza, stated regulatory industries are in the business to protect the consumers. The AIA does not have any dispute with the amendment.

Mr. Ostrovsky iterated the language was put in S.B. 351 because it was discussed with the Division of Insurance.

Chairman Townsend asked if Mr. Wadhams was comfortable with the language in terms of the statute. Mr. Wadhams replied he would like to see the committee hold the bill for one more week.

Chairman Townsend stated he would take the vote and hold the bill for further discussion at a later date.

SENATOR RHOADS MOVED TO AMEND AND DO PASS S.B. 351.

SENATOR SHAFFER SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman Townsend closed the hearing on S.B. 351, and moved to Senate Bill 354.

John M. Vergiels, Lobbyist, Nevada Physical Therapists Association, explained S.B. 354 is a licensed-care coalition bill. He further stated he did not feel that every injury would require more than six treatments; however, he does realize these contracts are signed to give at least six treatments although some cases require more treatments.

Amy Halley Hill, Lobbyist, Nevada Self-Insureds Association, stated the association is opposed to S.B. 354 and will not support the bill, as written.

Mr. Kim addressed Ms. Hill’s concern stating the insurance agencies are looking into the solutions.

Mr. Vergiels interjected he was hesitant to move forward without Senator O’Connell’s approval.

Senator O’Connell suggested the bill be narrowed down to the turnaround time of the doctors to call; the 14-day time period needs to be expanded.

Chairman Townsend closed the hearing on S.B. 354 and moved to Senate Bill 355.

Chairman Townsend asked if there was something changed in S.B. 355 that would affect public policy. Mr. Vergiels said he would follow the opinion of Senator O’Connell.

Senator O’Connell iterated her personal feelings that there needs to be a willing provider. It was not the feeling of the committee, in 1993, nor was it the feeling of the interim committee which undermined everything that was associated with managed care initially.

Mr. Vergiels stated if Senator O’Connell wanted to drop the issue, he would drop the issue.

Chairman Townsend closed the hearing on S.B. 355 and directed the committee to address two bill draft requests (BDRs).

There being no further comments or testimony, the meeting was adjourned at 10:25 a.m.

RESPECTFULLY SUBMITTED:

Crystal Suess / Laura Adler

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

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