Crystal Lesbo, Committee Policy Analyst

Drennan A. Clark, Major General, The Adjutant General of Nevada, Office of the Military

Georgi Cody, Lobbyist, Nevada Motor Transport Association

Ray E. Bacon, Lobbyist, Nevada Manufacturers Association

David Going, Deputy Chief, Occupational Safety and Health Enforcement Section, Division of Industrial Relations, Department of Business and Industry

Peter D. Krueger, Lobbyist, Western Petroleum Marketers and Convenience Store Association

John Yezek, Assistant Chief, Right-of-Way Agent, Nevada Department of Transportation

Donald Morse, Landlord/Tenant Investigator, Manufactured Housing Division, Department of Business and Industry

Samuel P. McMullen, Lobbyist, Nevada Self-Insurers Association

John Wiles, Division Counsel, Division of Industrial Relations, Department of Business and Industry

James J. Jackson, Lobbyist, Associated Credit Bureaus

Stan R. Olsen, Lobbyist, Lieutenant, Las Vegas Metropolitan Police Department

Robert A. Ostrovsky, Lobbyist, Nevada Resort Association

John E. Jeffrey, Lobbyist, Southern Nevada Building and Construction Trades Council

Barbara Gruenewald, Nevada Trial Lawyers’ Association

Jack Kim, Lobbyist, Sierra Insurance Group

Fred L. Hillerby, Lobbyist, Associated Pathologists Laboratories

Scott M. Craigie, Lobbyist, Liberty Mutual Insurance Group

James L. Wadhams, Lobbyist, Nevada Independent Insurance Agents

Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry

Cliff King, Supervisor, Property and Casualty Section, Division of Insurance, Department of Business and Industry

Magda (Maggie) Karpuk, State Relations Director, National Council on Compensation Insurance Incorporated

Chairman Townsend opened the hearing on Assembly Bill (A.B.) 112.

ASSEMBLY BILL 112: Requires establishment of standards and procedures for certain places of employment where explosives are manufactured. (BDR 53-780)

SENATOR O’CONNELL MOVED TO AMEND AND DO PASS AS AMENDED A.B. 112.

SENATOR SHAFFER SECONDED THE MOTION.

THE MOTION CARRIED. (SENATORS SCHNEIDER, AMODEI AND RHOADS WERE ABSENT FOR THE VOTE.)

SENATE BILL 54: Requires administer of division of industrial relations of department of business and industry to provide certain information to department of taxation upon request. (BDR 53-694)

SENATE BILL 64: Authorizes notice of civil action to recover damages for industrial injury to be given by attorney or representative of injured employee or his dependents. (BDR 53-1077)

SENATOR O’CONNELL MOVED TO CONCUR WITH AMENDMENT NO. 756 TO SENATE BILL 54 AND AMENDMENT NO. 755 TO SENATE BILL 64.

THE MOTION CARRIED. (SENATORS RHOADS AND AMODEI WERE ABSENT FOR THE VOTE.)

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ASSEMBLY BILL 110: Requires certain employees who work with certain explosives to be paid solely on basis of hours worked. (BDR 53-771)

At the last hearing on Assembly Bill [A.B.] 110, the committee brought up the issue of should the rate payment be extended to other manufacturers of hazardous chemicals. I talked to Ms. Lesbo and we decided we could extend it to all of the facilities that manufacture extremely hazardous chemicals that are covered under the cap program under environmental protection, and that would cover about 35 facilities. To my knowledge, none of those now pay on a piece-rate basis, but it would still be protection for those workers if there was an employer to come to Nevada, to make sure that they wouldn’t [would not] pay them on that basis. That was the discussion that I had with Ms. Lesbo.

SENATOR SCHNEIDER MOVED TO AMEND AND DO PASS AS AMENDED A.B. 110 WITH THE LANGUAGE OF REPLACING TRANSPORTATION WITH ON-SITE MATERIAL MOVEMENT.

SENATOR O’CONNELL SECONDED THE MOTION.

THE MOTION CARRIED. (SENATORS RHOADS, SHAFFER AND AMODEI WERE ABSENT FOR THE VOTE.)

ASSEMBLY BILL 111: Revises requirements for workplace safety programs. (BDR 53-772)

SENATOR O’CONNELL MOVED TO DO PASS A.B. 111.

SENATOR CARLTON SECONDED THE MOTION.

THE MOTION CARRIED. (SENATORS RHOADS, SHAFFER AND AMODEI WERE ABSENT FOR THE VOTE.)

ASSEMBLY BILL 8: Requires consumer reporting agencies to provide consumer reports at no charge under certain circumstances. (BDR 52-585)

ASSEMBLY BILL 39: Prohibits landlord of mobile home park from prohibiting tenant from exhibiting political sign within boundary of lot of tenant under certain circumstances. (BDR 10-1094)

SENATOR O’CONNELL MOVED TO DO PASS AND PLACE A.B. 39 ON THE CONSENT CALENDAR.

SENATOR SCHNEIDER SECONDED THE MOTION.

THE MOTION CARRIED. (SENATORS SHAFFER AND RHOADS WERE ABSENT FOR THE VOTE.)

SENATOR O’CONNELL MOVED TO AMEND AND DO PASS A.B. 39 WITH AMENDMENTS TO NRS 405.030 AND 405.110.

SENATOR SCHNEIDER SECONDED THE VOTE.

THE MOTION CARRIED. (SENATORS SHAFFER AND RHOADS WERE ABSENT FOR THE VOTE.)

* * * * *

Senator, as we were discussing the amendment that Mr. Yasek wanted on A.B. 39, it was brought to our attention that you would be creating a situation where the mobile home parks owned by the state would be the only mobile home parks where you could not post a political campaign sign. I asked Mr. Yesek if it was all right if we changed his amendment, and simply exempted mobile homes owned by NDOT [Nevada Department of Transportation] from the prohibition against signs, and he said that was fine with one exception. He thought that if you have political signs on state highway property that is visible from a public highway that violates one of the federal acts. What I would like to do, is to be able to verify that; it would perhaps be more appropriate to exempt NDOT from the sign provision rather than keep those people from having the ability to express their political sentiments.

ASSEMBLY BILL 107: Makes various changes concerning manufactured housing. (BDR 43-624)

SENATOR O’CONNELL MOVED TO DO PASS A.B. 107.

SENATOR CARLTON SECONDED THE MOTION.

THE MOTION CARRIED. (SENATORS RHOADS AND SHAFFER WERE ABSENT FOR THE VOTE.)

ASSEMBLY BILL 195: Makes various changes to provisions governing mobile home parks. (BDR 10-516)

ASSEMBLY BILL 334: Provides for industrial insurance coverage for domestic workers. (BDR 53-86)

I did alert my insurance person to be aware of this, so we can get this coverage as soon as possible. Although all the people we employ are from companies, I want to make sure that could not change without my knowing, and I want to make sure for a small amount of money, these people have coverage.

SENATOR O’CONNELL MOVED TO DO PASS A.B. 334.

For the record, the amendment is Exhibit C, tab D; basically this clarifies it is a homeowner’s exemption, and that everybody that is in business has to have somebody covered if they do this work for them on a regular basis.

Yes, I want to just put that on the record, but I did not want to interrupt. We had a conversation that same day with Lenard Ormsby for about 1-1/2 hours, and it is my understanding that he understands and supports this amendment in its current form.

Madame Chair, we are not opposed to this amendment as it is written, but it seems like it is unclear because it is defining independent enterprise; if you look at the amendment, as a person who enters into a contract with another person or business, and employees to perform services on residential property at which he resides; that would seem to limit it to a homeowner situation.

Mr. Chairman, the concern was raised that the system had talked to Mr. McMullen about this, and there was no problem. For the record, Mr. McMullen had talked to Mr. Ormsby, and there is no problem with the language. So, Scott [Young] wanted to clarify that. Are you comfortable with this statement, Sam [Mr. McMullen]?

Yes, basically. We did have a long conversation with Lenard about it. The point is, if you provide services at a residence, clearly the residential owners are not an employer. This was something Scott [Mr. Young] reminds me, of course, that was addressed in 1991, but I believe the correct interpretation of all of the other statutes still applies and we have seen this interpreted to actually change the intention that we were trying to create in earlier laws; so frankly, we are just trying to make sure that is not unclear anymore.

SENATOR O’CONNELL MOVED TO AMEND AND DO PASS A.B. 334 WITH EXHIBIT C, TAB D.

SENATOR SCHNEIDER SECONDED THE MOTION.

THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)

Let me suggest this, if you could amend and do pass it, but let’s [let us] just hold it while I make sure that Scott’s [Mr. Young’s] concerns; I just want to talk about the statutes with him and make sure that he understands it, because evidently, we have not had a chance to do that.

It should go on the record, before we move the bill, that this is geared to the specific interest of making sure that those people who may not be covered are covered by industrial insurance, and not in any way aggregates any employer’s responsibility to provide workers compensation. Is that fair?

Right, and just one more thing for the record. Basically, the interpretation of the same trade business or profession has been construed to mean if you are not doing exactly what that same business is that hired you, you do not gain the benefit of the principal contract or other provisions, so I just want to talk that through with your staff and make sure we do not adjust anything unintentionally.

We should also be very aware, committee, and we are going to need to know this; I do not know if anyone remains here from DIR [Division of Industrial Relations], but we should be sensitive to this, Mr. McMullen, that no companies who perform these services now use this statute to get out from under that, and make their employees suddenly independent contractors, and then the homeowner becomes responsible. I do not want to see a massive shift in responsibility here; I do not think that is the goal. This is one of the reasons, in my personal case, that it is a company that we do that through, to make sure they have it; but although I am going to get coverage in case there is a problem, we do not want any wholesale changes and everybody running out creating problems.

ASSEMBLY BILL 8: Requires consumer reporting agencies to provide consumer reports at no charge under certain circumstances. (BDR 52-585)

ASSEMBLY BILL 477: Makes various changes concerning mobile home parks. (BDR 10-1290)

THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)

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ASSEMBLY BILL 489: Establishes section for enforcement and section for safety and health consultation, education, information and training. (BDR 53-1546)

SENATOR O’CONNELL MOVED TO DO PASS ON A.B. 489.

SENATOR CARLTON SECONDED THE MOTION.

THE MOTION CARRIED. (SENATOR SHAFFER WAS ABSENT FOR THE VOTE.)

ASSEMBLY BILL 109: Makes various changes regarding deceptive trade practices. (BDR 52-292)

A.B. 195: Makes various changes to provisions governing mobile home parks. (BDR 10-516)

SENATOR O’CONNELL MOVED TO AMEND AND DO PASS A.B. 195 WITH THE AMENDMENT IN EXHIBIT C, TAB C.

SENATOR CARLTON SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

ASSEMBLY BILL 470: Makes various changes concerning provision of benefits for workers’ compensation. (BDR 53-1298)

The promise of three-way [insurance] was the promise of a competitive market and in the beginning what we were heading toward. We wanted to set up a competitive market and everyone in the market offers the best services for the best prices. Two years ago, we agreed to a change in the competitive market goal when we agreed to A.B. 609. [Assembly Bill (A.B.) 609 of the Sixty-ninth Session]

ASSEMBLY BILL 609 OF THE SIXTY-NINTH SESSION: Makes various changes to provisions governing industrial insurance. (BDR 53-1502)

It was for two primary reasons; the most important one was the State Industrial Insurance System [SIIS] is the state fund that had a huge unfunded liability. There was concern if the other companies could under price them, they would drive their revenues down; they would be in a position where they would still have that depth and they would not be able to survive it. In addition, there was the hope there would be stability in the marketplace, cutting away from the level of confusion having 200 companies where there had only been 1. The bottom line of A.B. 609 was, we wanted a level playing field, but we agreed to fix our prices so that SIIS was not stuck at a higher price level. We would undercut them again and take their stock away. The level playing field has been put together by players more distant from each other than a committee . . . . Each of the actions of those groups has changed and shifted the level of playing field we were trying to create, and the confusion factor. In terms of confusion, it has not been as simple going into this market as we had hoped it would be. The system has 860 class votes; they are going down to 430. We have a major appeals process that we are putting together because of the confusion and difficulty with doing that. . . .

This sheet explains for some of the groups; the first two lines are the SIIS codes and National Council on Compensation Insurance Incorporated [NCCI] codes, which gives the prices for the rate level . . . . These do not tell the actual price difference, but they do indicate right now that they are able to quote a lower rate on many of these groups our company will ever be allowed to do in this new marketplace. What we would like to propose goes beyond the proposed amendments. This is not an even playing field; an unconfused environment. We would like to encourage open rating as soon as we can. An open rating by itself is not the only answer, but it is the only answer Liberty Mutual Insurance Group has asked me to put on the table.

In California, it is an open rating market that is a price market focused on getting the best price. There are a number of people who are underpricing in order to buy market share. We would propose avoiding predatory pricing. In terms of dealing with the two objectives that drove us to A.B. 609; on the confusion side, one of the good things about this kind of market is, our insurance companies could sell insurance based on a price. It would not be driven on the formulas. In the end, we could quote them a price, and they could go shop somewhere else and maybe get a different price. It should be important when they are quoted a price; it should not be a predatory price, which is defined as not being below cost. The open rating is predatory priced. One of the concerns is Liberty [Mutual Insurance Company] could afford to lose money. In general, we had hoped for no confusion and a level playing field; we have gotten neither.

We need to think about how the mechanism would impact the timeline issue. Lost-cause environment is where a benchmark rate is filed. Each carrier would analyze their own internal mechanism of business practices and financials. They would file a component that either would bring it higher or lower than the multiplier than the filed benchmark rate; the commissioner would approve that. In open rating, there is no review process and it is called a file-and-use state, so the mechanism of the checks and balances for financial stability does occur. Carriers can get very aggressive if they want marketshare and financial change. They may be very sound on the going-in basis, but decide to be aggressive on the marketshare, and can change their profiles. That is why a an A-rated company could be downrated to a C. There are ramifications as well. The residual market could end up looking more attractive to the small employers than the voluntary market, and we want to keep the residual market low.

It was designed to reduce the erosion of the marketshare of Employers Insurance Company of Nevada [EICON], but when I indicated some of the change factors between 2 years ago and today, there are three that are extremely important. One is the reinsurance program. We know we are going to dispose of the lingering debt through an $800 million reinsurance program that covers $2 billion worth of long-term debt. Secondly, EICON is going to focus on a market with a minimum premium of $4,800. We proposed to help the small folks get in; EICON is moving on to the competitive market. That is a smart move for them. The third factor is, we know from looking at their financials, they are going into this private market as healthy as you can be. They have a huge reserve, they need it in this market, but they are very healthy and fully prepared to compete. I want to respond to one other thing, I want to be candid about this. The program that we offer will increase the rate shot for minimum payers.