The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:10 a.m., on Wednesday, April 14, 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 M. Lesbo, Committee Policy Analyst

Ardyss Johns, Committee Secretary

OTHERS PRESENT:

Chairman Townsend announced that today’s hearing would be a work session on various bills. He started with Senate Bill (S.B.) 495.

John D. Madole Jr., Lobbyist, Nevada Association of Mechanical Contractors, and Nevada Chapter of Associated General Contractors, told the committee the amendment to S.B. 495 removes the $36,000 wage cap from section 3. He said the contractors are opposed to that amendment as they feel they are paying the full cost of insuring those individuals and that it is borne at the $36,000 level. He stated that perhaps someday the wage cap might need to change but for the time being, he said, his clients recommended it be left as is and give them a chance to work on it. He asserted if it needed to come back at the next session, it could be considered at that time.

James L. Wadhams, Lobbyist, American Insurance Association, US Bank Plaza, told the committee the issue here was pretty straightforward in terms of allocation of premium in accordance with risk. He said this committee sees that routinely in areas of auto insurance where young drivers pay a higher premium than older drivers do because they have a higher likelihood of loss. Nevada is the last state in America, he stated, to have a limitation on the wages upon which the premium is calculated. To make it simple, he declared, if you have a contractor who has an average wage of $42,000 and another with an average wage of $86,000, and both have the same number of employees, they will pay exactly the same insurance premium. He claimed this is true even though the losses for the $86,000 employer will be statistically higher than those for the $42,000, because benefits tend to track payroll. So what happens if you have a cap of $36,000, he continued; the lower paying employer is subsidizing the higher paying employer. He explained that in the auto industry, it would be like the older, safer drivers, subsidizing the youthful drivers that have higher losses. So the reason to eliminate this, he declared, is not a subsidy between, for example, store clerks and contractors, but eliminates the subsidy among contractors from lower pay to higher pay.

Mr. Wadhams stated that within class codes, the rates will not change, but within employers within those class codes, they might. Therefore, he said, to use his example of the two contractors, if the total dollars they needed to cover those two contractors was $10, today each contractor will pay $5. If this amendment were to pass, he continued, the lower paying contractor will pay $4 and the higher paying contractor will pay $6. He explained the reason it would shift, is because the losses would be higher for the higher paying contractor. It puts the premium proportionate to the risk, he added, without changing the overall dollars collected from all contractors. He said this applies not only with contractors, but also with any other category of business where the pay differential may, in some cases, exceed $36,000. He stated further, it is a clear subsidy within classes and it discriminates between employers who have lower paid employees in that category, in favor of those who have higher paid employees.

Mr. Wadhams reiterated this was a public-policy question that has been eliminated in every other state in America, save and except Nevada. He said the insurance industry is supporting it because many of these employers are multi-state that would be covered in this area and it makes their pay premium consistent with what is being done in other states.

Clark Knauss, President, Lucky Concrete Inc., said in regard to construction, other people, such as professional people in an office, percentage-wise, could be affected by maybe 50 percent. But their rate, he claimed, is 45 cents now, and if it doubled, their rate is 90 cents. He stated his company, alone, would see a 22 percent increase resulting in a $109,000 for one year. In addition, he declared, it seemed like a punishment for the higher compensating companies. He pointed out that even though a carpenter he hires is working the same hours and taking the same risks as the carpenter working for a competitor, because Mr. Knauss pays his carpenter a higher wage, Mr. Knauss will have to pay a considerably higher premium. He asserted there was no parity with any of the other trades or businesses.

Mr. Wadhams claimed Mr. Knauss’ comment illustrated a misunderstanding in that this is not a contractors versus non-contractors issue. In this context, he explained, it is contractors versus contractors. He stated if a contractor’s payroll averaged $42,000, that contractor would be subsidizing the contractor whose payroll averages $86,0000 because there is no distinction within that class. He claimed the principle applies in categories of businesses, not category versus category.

Chairman Townsend suggested the proper place for this debate should have been in the interim, which was where the decision was made to raise the cap from $24,000 to $36,000. He told the committee one of the things they had to look at, because Nevada seems to be the only state that has this, is how will they treat these folks fairly, and still find a way to eventually become like the remainder of the country. He said he was a little uncertain at the moment, on this proposal, but said a rather substantial-length consideration of a phase-in by the interim committee might be appropriate.

Danny L. Thompson, American Federation of Labor-Congress of Industrial Organizations, stated he was here in support of the Associated General Contractors of America (AGC) and was concerned about the impact on that industry. He said he concurred with Senator Townsend regarding working with an interim committee to discuss and come to a workable agreement regarding this issue.

Norman L. Dianda, President of Q and D Construction Inc., said it was unfair that just because he paid a decent wage so people could make a good living, he would be penalized with higher cap rates. He claimed it would cost him in excess of $104,000 per year. He wanted to know where that money was going and what it would do differently than it was doing today. He declared he totally disagreed with Mr. Wadham’s philosophy.

Patricia Bullentini, Safety/Worker’s Compensations Manager, Martin Iron Works Inc., gave an example of how this amendment would have actually affected Martin Iron Works in 1998. With the cap, she stated, Martin Iron Works owed $494,000 in premiums. She said for every $100 her employer pays an ironworker, $21.16 is paid in premiums to Employers Insurance Company of Nevada. Since ironworkers are paid $28.44 per hour, she claimed, it does not take long to reach the $100. She claimed if there were no cap in 1998, Martin Iron Works would have paid $935,000, a difference of over $440,000.

Martin R. Giudici, President, American Ready-Mix Inc., stated the proposed amendment would increase American Ready-Mix’s costs by approximately 25 percent for workers’ compensation. He claimed as a material supplier, his company is committed to pricing for typically, a minimum of 1 year with some contracts of 2 and 3 years. Therefore, he said, a phase-in period would allow for ample warning enabling him to reflect any increase in the pricing of materials.

Chairman Townsend closed the work session on S.B. 495 by stating this would be a key issue in starting the next interim committee. He turned the committee’s attention to S.B. 210 and Amendment No. 588 (Exhibit C. Original is on file in the Research Library.).

Chairman Townsend explained the essence of the bill takes the current certification process for alcohol and drug counselors from a large advisory board to a regular licensing board. All of those now certified will be granted a license, he stated, and anyone entering this field subsequent to the passage of this bill, must meet one of two standards. He said that individual must have a bachelor’s degree for which he or she can be certified, or they must have a master’s degree for which he or she becomes licensed.

Dorothy B. North, Lobbyist, Nevada Association of Alcohol and Drug Counselors, said she had been working very closely with social workers, the nursing board and with marriage and family therapists. She said those individuals will be able to continue doing what they do under their current licenses, but if they want to be a full-blown alcohol and drug abuse counselor, licensed in Nevada, they still have to obtain a license for that.

Marilynn K. Morrical, Lobbyist, submitted to the committee a BUDGET JUSTIFICATION prepared by the Board of Alcohol and Drug Abuse Counselor Examiners (Exhibit D).

Senator Rhoads asked Ms. North if she could foresee a hardship for the rural communities because of the educational requirements of this bill. Ms. North said that had been taken into account and was reflected in the bill in the fact that interns could be brought in who are working towards that higher education. She pointed out that it is getting easier for individuals to get higher education.

Chairman Townsend referred to S.B. 357 and told the committee there had been a misunderstanding after a debate between athletic trainers and physical therapists. He stated he wanted to give D. Keith Kleven, L.P.T., State Board of Physical Therapy Examiners, who had been unavailable to testify at the prior hearing, a chance to voice his concerns.

SENATE BILL 357: Provides for regulation of athletic trainers. (BDR 54-1194)

Mr. Kleven noted that the state board told the athletic training committee 2 years ago when licensure was first attempted, they would be happy to work with that committee to help draft a bill. For whatever reason, he explained, that did not take place and the board was not contacted by these individuals and neither was he as an athletic trainer and physical therapist. He said his colleagues throughout the city also were not contacted and told the committee he thought this was important to note.

Mr. Kleven stated that while he was in favor of licensing athletic trainers, he did not think it was possible at this time. He said the physical therapy examiners board was having problems regulating their own board without having to regulate another board that has multiple problems in its standards. He acknowledged the goal was to protect the public, but claimed there was an overabundance of athletic trainers, and now an overabundance of physical therapists. He asserted there was no way the physical therapy examiner’s board could take another board under its direction at this time. He noted it would require opening his board’s laws and making major changes in order to mandate and regulate another board.

Mr. Kleven told the committee another problem he had with the bill was that the scope of practice was too broad in that it does not limit and assure the setting and the direction the trainer must take. In addition, he claimed, the educational standards are a major problem since the practice of health care is being broadened by this discipline far beyond the athletic trainer’s training. He read from a letter from the National Athletic Trainers’ Association in reference to the changes in their program:

Mr. Kleven maintained the last sentence was critical and pointed out that was not included in this bill.

Pamela C. Hogan, President, Nevada Physical Therapy Association, told the committee the University of Nevada, Las Vegas (UNLV), athletic trainer’s program was no longer accredited. Therefore, she pointed out, Nevada has no accredited athletic training program.

Alex Delgado, Manager, NovaCare Inc., stated he was currently employed by the State Board of Physical Therapy Examiners and had been associated with that board for the last 8 years. He said the major concerns he had with S.B. 357 is that it is taking a group of individuals who are trained in emergency medicine with athletes, and who are now going to start working in general medicine. He noted he did not see any safeguards for potential problems arising because of this. In addition, he stated, athletic trainers typically work under the supervision of a physician, and that was not provided for in this bill either. He told the committee he was not sure the educational background was sufficient for the tremendous step being taken toward professional autonomy.

Mr. Delgado stated he was also very concerned with the cost it would take to run a board. He claimed it would be extremely expensive for 75 individuals to support a board just administratively; not to mention the cost of regulating that board.

Bryan L. Leipper, Lobbyist, Nevada Chiropractors Association, told the committee the chiropractors were in agreement with the physical therapists in that the bill is too broad. He said he was very concerned about the liability and the safety of the public.

Chairman Townsend said the purpose of discussion was not to retry the bill, which had already been heard and had passed out of this committee. He claimed it was to allow the people who had not seen the original amendments to voice their opinions.

Mr. Kleven stated there were two areas in the bill that must be given consideration. He said the term "mobilization" was not appropriate; nor was the term "performing arts," which opens up an arena where the level of training, background and expertise needed in these areas is not supplied specifically by the educational program of an athletic trainer.

Chairman Townsend turned the committee’s attention to Amendment No. 481 (Exhibit E), to S.B. 131.

Chairman Townsend read the amendment and then asked if the term "public utility" was being misused in this bill. "Public utility" as defined in this amendment, he stated, is Sprint, MGC, MCI Worldcom, Nextlink, etc., and that there are other people who buy this paging equipment on the wholesale market, and sell it. The way this bill is written, he pointed out, there would be no control over those individuals, and so perhaps public utility should be better defined, or removed.

Alfredo Alonso, Lobbyist, Page Net, said since a lot of those businesses lease to other entities who then lease or sell to individuals, he thought Chairman Townsend’s concern was a viable one.

Chairman Townsend instructed Scott Young, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, to draft the bill to meet the intent that anyone who sells to the end user needs to be responsible for the information addressed in the bill. He told the committee Amendment No. 481 would be disposed of and a new amendment would be forthcoming. He then drew attention to Amendment No. 292 (Exhibit F), of S.B. 45.

Senator Schneider said there was an agreement between the Clark County licensing division and Las Vegas Metropolitan Police Department to work with the antique dealers there and not require that they have special licensing.

Chairman Townsend directed the committee’s attention to S.B. 452, Amendment No. 470 (Exhibit G).

Chairman Townsend pointed out the amendment deleted the word "lien" and replaced it with "lien upon the owner’s net proceeds." He said this language says that all encumbrances, all liens and all taxes come out of the proceeds before a claim can take effect. He claimed S.B. 452 was now ready to take to the Senate Floor.

Chairman Townsend referred to S.B. 75, Amendment No. 480 (Exhibit H).

SENATE BILL 75: Makes various changes regarding insurance. (BDR 57-336)

Chairman Townsend told the committee this bill was part of the bill that had been passed on the insurance-fraud issue and had to do with the file-and-use rates. He read the amendment and said it will put the burden of monitoring the marketplace, back on the commissioner. He stated it gives the commissioner, in an open market, an opportunity to review things that could affect the viability of the financial condition of an insurer. He told the committee the insurance commissioner had reviewed the amendment.

Chairman Townsend opened discussion regarding S.B. 132, Amendment No. 613 (Exhibit I).

Chairman Townsend stated S.B. 132 had to do with someone who might have inadvertently, in the scope of their duties, been exposed to a contagious disease as a result of battery by an offender. He explained if the employment of a police officer or fireman is terminated voluntarily or involuntarily, the employer of the police officer or fireman shall provide a blood test to screen for contagious diseases. If that police officer or fireman is found to have a contagious disease, he continued, he is covered under the industrial insurance.

Senator Rhoads wanted to know if the definition for fireman included volunteer fireman. Crystal Lesbo, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, replied volunteer firemen were not included in that definition.

Lenard Ormsby, General Counsel, Employers Insurance Company of Nevada, said one of the concerns he had with S.B. 132 was not the public-policy issue, but the effective dates. He stated the rates had already been established, filed by the National Council on Compensation Insurance Inc. (NCCI) and adopted by the insurance commissioner to go into effect on July 1. He urged the committee to make the bill effective on January 1 so NCCI would have the opportunity to have the rates reflect the benefits.

After some discussion regarding the effective date, it was decided that a trailer bill would prevent the problem of having to adjust every bill individually. Chairman Townsend turned the committee’s attention to S.B. 38, Amendment No. 106 (Exhibit J).

Mr. Ormsby said the intent of this bill was to transfer the responsibility for employee leasing companies from Employers Insurance Company of Nevada (EICON) to the Department of Industrial Relations (DIR).

Chairman Townsend asked the committee to turn their attention to S.B. 133, Amendment No. 133 (Exhibit K).

Scott M. Craigie, Lobbyist, Alliance of American Insurers, and Liberty Mutual Insurance Group, said his clients are extremely concerned about allowing the subcontractors to exempt themselves from this package.

Daryl E. Capurro, Lobbyist, Nevada Motor Transport Association, said his clients had no problem with coordinating their safety program with that of the consolidated insurance program. He stated one of the reasons the self-insured groups had been successful was because of their very comprehensive safety program. He claimed the language in the bill did exactly what had been adopted by this committee.

Mr. Craigie said there was one word change that was substantial. He claimed that in the proposed amendment, as it was drafted, it referred to subcontractors rather than contractors. He stated adding the word "contractor" would broaden the groups who feel they could bid outside of the Owner-Controlled Insurance Programs (OCIPs) bidding process.

Ms. Lesbo said this issue was discussed with the bill drafter who saw no distinction between a contractor and a subcontractor. In order to go back and distinguish it so that it only says subcontractor, she explained, a lot of drafting would be necessary.

Chairman Townsend said the committee would process the amendment as is and discuss the issue with the Assembly before the bill comes before them. He said the next bill to be discussed was S.B. 334, Amendment No. 253 (Exhibit L).

Mr. Alonso told the committee that all the amendment said was within the practice of employment screening and in the cases of tenant screening, as long as those folks are not delving into the area of the private investigator, they are exempt.

Amy Halley Hill, Lobbyist, Las Vegas Chamber of Commerce, and Retail Association of Nevada, said she was in complete concurrence with the amendments to S.B. 334.

David L. Howard, Lobbyist, Northern Nevada Apartment Association, and Silver State Apartment Association, told the committee his clients also endorsed the amendments.

Chairman Townsend stated for the record, "My wife is a property manager and is exempt under this amendment."

Chairman Townsend told the committee they would have a short recess to give everyone time to read the amendments to the workers’ compensation bills that would be the next item of discussion.

The meeting recessed at 10:15 a.m. and reconvened at 10:40 a.m. with Chairman Townsend directing the committee’s attention to S.B. 374, Amendment No. 246 (Exhibit M).

Gary E. Milliken, Lobbyist, Nevada Contractors Network, said section 1 of the bill simply states who can sell insurance and also clarifies that the insurance commissioner will be provided a copy of the advertisements.

Chairman Townsend said the next issue to be addressed would be S.B. 44, Amendment 107 (Exhibit N).

Mary F. Lau, Lobbyist, Retail Association of Nevada, stated the amendment read as the Retail Association of Nevada had requested.

Mr. Capurro concurred with Ms. Lau and added that the amendment included the request of the insurance commissioner to provide information with respect to new members coming into the association.

The next order of business was S.B. 55, Amendment No. 176 (Exhibit O).

SENATE BILL 55: Makes various changes regarding industrial insurance. (BDR 53-387)

Samuel P. McMullen, Lobbyist, Las Vegas Chamber of Commerce; Nevada Self-Insurers Association, and Retail Association of Nevada, stated Amendment No. 176 was perfect.

Chairman Townsend asked if anyone was present to comment on S.B. 42, Amendment 175 (Exhibit P). When nobody responded, he stated he had read it and told the committee it was definitional.

Chairman Townsend stated that due to the lateness of the hour, a work session on S.B. 37 would be scheduled for the following week on April 21 and `April 22 and said it had to be out of committee by April 23. This, he said, would give the committee 3 full days to deal with all of the issues of that bill.

SENATE BILL 37: Makes various changes regarding industrial insurance. (BDR 53-382)

Carol A. Jackson, Director, Department of Employment, Training and Rehabilitation, expressed her compassion for the employees of the State Industrial Insurance System (SIIS). She said her department would assist with those employees affected by the privatization of that system. She stated she would sit down with them individually to assess their skills, knowledge and abilities to decide what type of training programs they should have. She claimed it was not the intent of the employment department to provide college degrees for those individuals. But, she added, if someone needed just a couple of credits to get a degree that would allow them to get a job paying a livable wage, the department could assist under those circumstances.

Ann Nelson, Associate General Counsel, Employers Insurance Company of Nevada, told the committee that one of the things she and Ms. Jackson were working on was identifying jobs both within the state and within the private sector. She said the services Ms. Jackson’s department would be providing were to train for both state and private sector jobs.

There being no further business, the meeting was adjourned at 10:55 a.m.

RESPECTFULLY SUBMITTED:

Ardyss Johns,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

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