The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:15 a.m., on Tuesday, May 11, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was video conferenced to the Grant Sawyer State Office Building, Room 4401, Las Vegas, 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

GUEST LEGISLATORS PRESENT:

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Crystal Lesbo, Senior Research Analyst

Crystal Suess, Committee Secretary

OTHERS PRESENT:

Lenard Ormsby, General Counsel, Employers Insurance Company of Nevada

Mary F. Lau, Lobbyist, Retail Association of Nevada

Ray E. Bacon, Lobbyist, Nevada Manufacturers Association

Lawrence E. Hannon, M.D., Ophthalmologist

Chairman Townsend opened the work session on Assembly Bill (A.B.) 633, A.B. 634 and A.B. 636 contained in the work session document (Exhibit C.)

Senator Margaret (Maggie) A. Carlton, Clark County Senatorial District No. 2, stated A.B. 633 and A.B. 634 will follow S.B. 423 in language and neither A.B. 633 nor A.B. 634 will be in conflict with S.B. 32.

Senator Carlton continued the amendments to A.B. 636 have been agreed upon, although there was some concern regarding the fee issue. Senator Carlton advised she was unaware of anyone actually voicing opposition on the fee issue of A.B. 636.

Chairman Townsend suggested Kim W. Gregory, Chairman, State Contractors’ Board, contact the Governor’s Office regarding the fee issue as the Governor will be looking to the State Contractors’ Board as the representatives regarding the fees. Mr. Gregory agreed to contact the Governor’s Office in the very near future on the fee issue of A.B. 636. Chairman Townsend asked Mr. Gregory if he was comfortable with the way in which the issues in A.B. 633 were drafted. Mr. Gregory said he believed the language in A.B. 633 had been cleaned up fairly well. Chairman Townsend asked if the Legislature had shifted the appropriate authority to the Nevada State Contractors’ Board so the burden is on the licensee. Dennis Haney, Counsel, State Contractors’ Board, replied yes.

Chairman Townsend asked Margi A. Grein, Lobbyist, Executive Officer, State Contractors’ Board, to contact the southern Nevada members of the Senate Committee on Commerce and Labor on a monthly basis to keep them apprised of the effectiveness of A.B. 633. Ms. Grein said she would be happy to comply with Chairman Townsend’s request. She added if the constituents of any members of the Senate Committee on Commerce and Labor have complaints on this issue, the matter will be reinvestigated.

Chairman Townsend asked if the State Contractors’ Board had a process in place for educating the licensees on the result of S.B. 32, S.B. 423, A.B. 633, A.B. 634 and A.B. 636. Ms. Grein responded the State Contractors’ Board was in the process of developing a quarterly newsletter regarding the new laws; a new contractors’ licensing law book would be issued to every licensee at no cost; and a telephone number would be set up for the licensees to call with questions on the new laws. Chairman Townsend asked when the next newsletter would go out. Ms. Grein replied she thought the next newsletter would go out in June. Chairman Townsend asked if the State Contractors’ Board would be able to have a legislative alert piece in the newsletter. Ms. Grein replied the basic groundwork was there provided the bills pass.

Chairman Townsend asked Senator Carlton if she was comfortable with the language in the amendment on A.B. 634 which is not impinged on the integrity of either S.B. 32 or S.B. 423. Senator Carlton replied A.B. 633 and A.B. 634 were processed together in order to assure consistency. She added these bills could not be consolidated because of different subject matters. Chairman Townsend further asked Senator Carlton if she was comfortable with the changes to S.B. 636 offered by Assemblywoman Barbara E. Buckley, Clark County Assembly District No. 8. Senator Carlton replied yes in that Assemblywoman Buckley had told her everyone involved was comfortable with these changes.

Ms. Grein said she had not been through the recent amendment, but stated Assemblywoman Buckley had spoken with her about it. Ms. Grein stated she was in agreement with item 3, attachment J (Exhibit C). Chairman Townsend said it was crucial the Senate Committee on Commerce and Labor be kept abreast of the accounting of the administrative funds. Mr. Haney interjected there may be some administrative issues arrangement made to maintain a continuous reporting arrangement with the committee members.

Chairman Townsend asked for a motion on A.B. 633, A.B. 634 and A.B. 636.

*****

Chairman Townsend closed the work session on A.B. 633, A.B. 634 and A.B. 636 and opened the work session on A.B. 470, stating A.B. 470 was an extension of A.B. 156 of the Sixty-ninth Session extending into the area of workers’ compensation.

Robert A. Ostrovsky, Lobbyist, Nevada Resort Association, stated the proposed amendment under attachment A (Exhibit C), sets forth an injured worker would be referred to a competent medical professional for the particular condition of the injured worker, not relative to any cause of the medical condition.

Samuel P. McMullen, Lobbyist, Nevada Self-Insurers Association, represented attachment A (Exhibit C) was a clarifying amendment compared to the amendment previously rejected by the Nevada Trial Lawyers’ Association.

Chairman Townsend inquired if attachment F (Exhibit C) had been cleared with Assemblyman David E. Goldwater, Clark County Assembly District No. 10. Mr. Ostrovsky stated Assemblyman Goldwater was agreeable to the amendment set forth in attachment F (Exhibit C).

John F. Wiles, Division Counsel, Division of Industrial Relations, Department of Business and Industry, stated attachment G-1 (Exhibit C) was the basic foundation for plugging in what was perceived to be a hole in Nevada Revised Statutes (NRS) 616D.120 remedies. Mr. Wiles said with respect to attachment G-2 (Exhibit C), two elements addressed were the additional amount of money and the plugging of the hole perceived in the benefit penalty mechanism. He indicated attachment G-2 (Exhibit C) added another subsection to NRS 616C.065. He explained he had left the amount of money to be imposed blank because it would be up to the committee to determine the appropriate amounts. Mr. Wiles pointed out attachment G-3 (Exhibit C) provides for an appeal mechanism.

Chairman Townsend clarified the goal of A.B. 470 was to deter inappropriate behavior of an insurer who inappropriately denies or delays workers’ compensation claims, not to penalize anybody. He stated hopefully if the penalty is high enough, people will be more apt to do the right thing.

Dean A. Hardy, Lobbyist, Nevada Trial Lawyers’ Association, testified promoting positive claims administration is positive for everyone involved. He said he felt limiting the legislation to claim denial, or claim acceptability and claim reopening was an unnecessary limitation. Mr. Hardy exclaimed in the vast majority of instances claims administration is done in an appropriate fashion, but there are instances where an increased medical problem results due to lack of an appropriate referral.

Mr. McMullen opined there should be an overarching scheme for handling these issues and that the bill drafters should not have to be making a plug or a specific fix for each portion of the claims process.

Chairman Townsend pointed out attachment B (Exhibit C) was the proposal to have administered pricing for the first year. He indicated attachment C (Exhibit C) would have benchmark administered pricing in the first year followed by a variance of 10 percent, and then 20 percent in the fourth year. He stated attachment D (Exhibit C) came from James L. Wadhams, Lobbyist, Nevada Independent Insurance Agents, which provides a private carrier may use any rate and experience modification factor for industrial insurance for any employer which is approved, legally used, charged or assessed for industrial insurance. Chairman Townsend added attachment E (Exhibit C) was supplanted by the handout (Exhibit D) supplied by Scott M. Craigie, Lobbyist, Liberty Mutual Insurance Group.

Scott M. Craigie, Lobbyist, Liberty Mutual Insurance Group, stated there were two different amendments in his handout (Exhibit D). He said the first amendment would have administrative pricing with a 25 percent variance for the first year. He stated the second amendment would exempt consolidated insurance programs from administered pricing.

James L. Wadhams, Lobbyist, Nevada Independent Insurance Agents, submitted an amendment (Exhibit E) replacing attachment B (Exhibit C). He indicated his amendment (Exhibit E) did not compete or conflict with Mr. Craigie’s amendment (Exhibit D). Mr. Wadhams stated his amendment was a direct approach to allow the price to slow down to the level currently being legally charged to any employer. He said this would give an employer a choice of insurers at the price legally available.

Lenard Ormsby, General Counsel, Employers Insurance Company of Nevada, said he was surprised initially by some of the proposed amendments to A.B. 470. He said he thought the administered pricing issue had been resolved with S.B. 37. He declared A.B. 609 of the Sixty-ninth Session was to provide the stability sought after in A.B. 470. Mr. Ormsby recommended shortening the administered pricing from 4 years to 2 years with no price deviation below the floor the first year the rates have been filed and stated it has to be assumed the rate filing is accurate. He continued the Employers Insurance Company of Nevada (EICON) would agree to leaving the administered pricing at 4 years for the first year. If the Senate Committee on Commerce and Labor wants to increase the deviation from 5 percent to 10 percent below the floor the second year, EICON thinks that is reasonable. Mr. Ormsby furthered if the committee wants to do away with administered pricing after the second year, EICON is not disagreeing with that concept. He stated the passage of S.B. 37 would give EICON 2 years to get on a level playing field with its competition. If EICON comes out as a private insurance carrier January 1, 2000 or stays as a state fund, administered pricing will allow EICON to survive. He said EICON vehemently opposes Mr. Wadham’s amendment. Senator Carlton agreed with Mr. Ormsby’s comments.

Mr. Craigie stated that currently the market is awash in 25 percent discounts. He said Liberty Mutual Insurance Group committed to A.B. 609 in order to not undercut the pricing of EICON. He indicated Liberty Mutual Insurance Group only wants the opportunity to go in on an equal basis.

Mary F. Lau, Lobbyist, Retail Association of Nevada, said she was also in agreement with Mr. Ormsby. She stated the Retail Association of Nevada supported the amendments under attachment C (Exhibit C) and did not support Mr. Wadham’s and Mr. Craigie’s proposed amendments.

Ray E. Bacon, Lobbyist, Nevada Manufacturers Association, agreed with Ms. Lau with the exception of a stipulation into the amendments offered by Mr. Craigie and Mr. Wadhams that their amendments would apply only to mono-line carriers. Mr. Ormsby stated that would be fair.

Cliff King, Supervisor, Property and Casualty, Division of Insurance, Department of Business and Industry, clarified Nevada has statutes preventing free insurance. He pointed out there are some pricing flexibilities within health insurance which could be varied up to the scheduled limits.

Gary E. Milliken, Lobbyist, Nevada Contractors Network, said he also supported Mr. Ormsby’s statements. He agreed a 2-year period would be workable. Mr. Milliken said the Nevada Contractors Network was opposed to Mr. Craigie’s and Mr. Wadham’s amendments.

Chairman Townsend asked the people representing health insurance groups why they feel downward pressure of market forces is negative and if they do, is it because members of those groups are being subsidized by other members of the group. He disclosed his company is the member of a group.

Ms. Lau said she did not believe members within groups subsidize themselves. She stated the purpose of a self-insured association is to enable employers to come together in a homogeneous environment. Each member is underwritten in a 3-step underwriting process where they are not truly subsidizing each other, but rather joining together. She continued the insurance commissioner and the outside auditors have to review each group for proper rate adequacy which is of a homogeneous nature. Ms. Lau furthered the Retail Association of Nevada is in no way opposed to any marketplace that is a level playing field.

Chairman Townsend stated A.B. 470 would be addressed again at a later work session and opened the hearing on A.B. 108.

Frederick Schmidt, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, stated the Governor’s Office communicated to the attorney general’s office a concern with A.B. 108 in that the attorney general could control 50 percent of the tobacco settlement money directly. Mr. Schmidt said the attorney general’s office agreed with the Governor’s Office to change the dollar amount in section 3, subsection 3, in the first reprint of A.B. 108 from $30,000 to $200,000, and supported the governor’s addition of section 3, subsection 4, in the first reprint of A.B. 108 which provides some additional flexibility.

There being no further testimony, Chairman Townsend closed the hearing on A.B. 108 and opened discussion on A.B. 109 which the committee had already passed.

Mr. Schmidt stated the attorney general’s office drafted A.B. 109 in an effort to clean up provisions in NRS chapter 598. One intent of A.B. 109 was to provide for disclosures to be made public of assurances of discontinuance of certain deceptive trade practices. The other intent of A.B. 109 was definitional changes which changes the scope of to whom this statute applies. Mr. Schmidt said there was opposition from a variety of business organizations who were concerned striking and changing the sections of A.B. 109, as proposed, would discourage settlements or businesses from entering into assurances of discontinuance practices. He stated that was not what the attorney general’s office had intended. Therefore, Mr. Schmidt offered removing sections 1 and 2 of A.B. 109.

Mr. McMullen thanked Mr. Schmidt for the courtesy he had shown in explaining the bill to those who did not understand it well enough earlier.

Chairman Townsend asked for a motion to do pass the first reprint of A.B. 108.

*****

Chairman Townsend asked for a motion to amend A.B. 109 by removing sections 1 and 2.

*****

Fred L. Hillerby, Lobbyist, Nevada Optometric Association, stated the first reprint of A.B. 432 narrows the provision of section 2 to three controlled substances. He pointed out sections 3, 4 and 5 of the first reprint of A.B. 432 dealt with the treatment of glaucoma. He continued section 6 of the first reprint of A.B. 432 added to the definition of "prescription" and section 7 of the bill expands the available therapeutic pharmaceutical agents. Mr. Hillerby explained section 9 of the bill allows optometrists for the first time, under controls set by the board, to use a fictitious name. Section 10 allows optometrists to order lab tests. Sections 11, 12 and 13 add optometrists to those individuals who are able to utilize controlled substances which is consistent with the first part of the bill. Mr. Hillerby submitted a packet of information in support of A.B. 432 (Exhibit F).

Helga F. Pizio, M.D., testifying from Las Vegas, said she was a board-certified general ophthalmologist practicing in Las Vegas since 1996 and was an associate clinical professor at the University of Nevada School of Medicine, Las Vegas, involved in the education of medical students and internal medicine residents regarding treatment of ophthalmic disease and related matters. Dr. Pizio said she sees a high volume of patients referred by optometrists or primary care physicians for the treatment of glaucoma. She explained most glaucoma patients can be properly treated via medications without the need for surgical or laser intervention. She indicated optometrists in the State of Oklahoma have had the prescribing right to treat glaucoma with topical medications since 1984. She continued optometrists in Oklahoma have also been able to prescribe oral medications and controlled substances for pain relief since 1994. Dr. Pizio stressed the need for optometrists in Nevada to have the same medicinal prescribing rights as optometrists in Oklahoma. Dr. Pizio’s testimony was submitted as Exhibit G.

Douglas K. Devries, O.D., Nevada Optometric Association, testified in support of A.B. 432 and stated he has practiced optometry in Nevada for the past 10 years. He pointed out optometrists are currently responsible for the detection of glaucoma and he asked for the right to be able to treat glaucoma patients with topical medications. He stressed A.B. 432 was in the interest of patient comfort and was also an effort to reduce costs to patient by avoiding re-referrals. Dr. Devries’ testimony was submitted as Exhibit H.

Jeffrey K. Austin, O.D., Nevada Optometric Association, testified in support of A.B. 432 and stated he currently practices optometry in Las Vegas, has been licensed in Nevada for the past 13 years and has practiced optometry in Nevada and New Mexico for the past 13 years. He said he believes A.B. 432 provides for very reasonable clinical optometry privileges. Dr. Austin’s testimony was submitted as Exhibit I.

Senator Amodei asked Mr. Hillerby if "before and after the implementation of therapeutics" as set forth in a letter from Nevada Insurance Agency Company in Exhibit F was a reference to the prescription provision in A.B. 432. Mr. Hillerby replied yes. Senator Amodei asked Mr. Hillerby if there was any available statistics on malpractice claims from the states which allow the practices set forth in A.B. 432. Mr. Hillerby said it was his understanding the risk factor has not increased to the extent it is referenced in the premiums charged in the 42 states allowing the practices set forth in A.B. 432.

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association, testified in opposition to A.B. 432 and submitted an April 30, 1999 letter from John G. Scott Jr., M.D., President, Nevada State Medical Association, addressed to Senator Townsend in opposition of A.B. 432 (Exhibit J).

Lawrence E. Hannon, M.D., Ophthalmologist, testified in opposition to A.B. 432. He stated he has been a board-certified ophthalmologist for about 23 years. Dr. Hannon said treating glaucoma was a very significant part of his practice and requires clinical judgment. He said he believed the need to prescribe the types of pain medications set out in A.B. 432 is quite rare and not necessary.

William J. Durant, M.D., Nevada Ophthalmologic Society, testified in opposition to A.B. 432. He stressed glaucoma is not a single disease, but is a group of neurological diseases which have in common a characteristic pattern of optic nerve damage associated with visual field loss. Dr. Durant stated only 6 states specifically allow unrestricted treatment of glaucoma by optometrists. He continued 14 other states restrict the treatment of glaucoma by optometrists by mandating referral, consultation or collaboration with an ophthalmologist or medical physician. Dr. Durant also objected to A.B. 432 permitting optometrists to prescribe certain controlled substances. He stated allowing optometrists to prescribe controlled substances would likely lead to masking of misdiagnosed conditions, thus delaying appropriate treatment.

Marietta Nelson, M.D., Ophthalmologist, testified from Las Vegas in opposition to A.B. 432, stating she has been practicing ophthalmology for 12 years and is board certified in pediatric ophthalmology.

There being no further testimony, Chairman Townsend closed the hearing on A.B. 432 and opened the hearing on A.B. 326.

Danny L. Thompson, Lobbyist, Nevada State American Federation of Labor-Congress on Industrial Organizations (AFL-CIO), stated A.B. 326 represents the Nevada State AFL-CIO’s answer to the benefits which were taken from injured workers in 1993, but pointed out the bill does not represent a full reinstatement of those benefits. He said he believed the first reprint of A.B. 326 represents a fair and equitable settlement for those who have paid the price in paying off the industrial insurance deficit. Mr. Thompson clarified the first reprint of A.B. 326 does not represent an increase in benefits.

Dean A. Hardy, Lobbyist, Nevada Trial Lawyers’ Association, stated the 1993 changes were necessary as the State Industrial Insurance System was faced with a huge deficit. He said he was a member of the consensus group in 1993 to come to an agreement on the reduction of benefits so as to "save the system." Mr. Hardy continued the agreement on the reduction of benefits was done in good faith with the promise that once the State Industrial Insurance System debt was resolved, these benefits would be reinstated. He echoed Mr. Thompson’s view that A.B. 326 does not reinstate benefits to the extent the benefits existed in 1993, but the bill moves in that direction on some of the benefits.

Mr. Hardy pointed out there were significant changes in the language pertaining to accepting preexistent conditions. He indicated section 4 of the first reprint of A.B. 326 attempts to shift the burden from the claimant to the insurer to show through medical evidence the primary cause of a current medical condition is a preexistent condition. He stated if the burden is shifted to the insurer to prove the primary cause of a current medical condition is a preexistent condition, it may reduce litigation. Mr. Hardy explained with regard to the deleted language in section 8, subsection 3, of the first reprint of A.B. 326 the original statute existed at a time when the system was inundated with claims and administration of the claims was not done proactively but reactively because there were not enough people to handle the claims. Thus, some individuals were on vocational rehabilitation for months and months and not meeting with rehabilitation counselors. Mr. Hardy stated at that time it was a situation where there needed to be some kind of time frame. Mr. Hardy expressed dissatisfaction with the proposed language in section 10, subsection 1, of the first reprint of A.B. 326 in that he thought the language should include "or dispatched out of the union to come to Nevada to work." He stated section 11 of the first reprint of A.B. 326 was a section traded off in 1993 and needed to be reinstated. Mr. Hardy introduced S. Andris Lannon, a concerned citizen, who had testimony to present to the committee as to the hardship brought about by the omission of the provision in section 11 of the first reprint of A.B. 326.

S. Andris Lannon, Concerned Citizen, testified his mother was injured while employed at a casino in Nevada. He said his mother lived in squalor and degradation throughout the investigation of her injury. He said he could not see how the new administrator could have had time to review his mother’s entire case because his mother at that time had seen upwards of 100 doctors. He stressed the foremost medical professionals had indicated his mother warranted collection of the injured worker’s benefits, yet the new administrator assigned to his mother’s case denied the benefits be paid. He said his mother eventually took her own life rather than to fight the battle for her benefits all over again. Mr. Lannon concluded because of the 1993 deletion of the provision proposed in section 11 of the first reprint of A.B. 326 the system’s administrators are working in a completely consequence-free environment.

Chairman Townsend asked Mr. Hardy if the administrator had not been changed what were the responsibilities of the administrating agency. Mr. Hardy said Ms. Lannon had been declared permanently and totally disabled. He continued as a consequence of that declaration, Ms. Lannon received $582 per month plus medical care related to her industrial injury. Mr. Hardy pointed out under the current statutory scheme a case such as this could be revisited once a year if the administrator/insurer so desires.

Chairman Townsend inquired if a case can be reevaluated based on a file alone or if the patient is also required to be reexamined. Mr. Hardy replied he thought the patient was required to be reexamined, but he was not sure. Chairman Townsend stated he believed it should be required a patient’s medical condition be reassessed when reevaluating a case.

John E. Jeffrey, Lobbyist, Southern Nevada Building and Construction Trades Council, said the underlying problem is third-party administrators and the system itself knows a claim and medical treatment can be put off for an indefinite period of time. He stated there have even been times when a judge has ordered a claim to be paid and third-party administrators have refused to make the payment.

Crystal Lesbo, Senior Research Analyst, Research Division, Legislative Counsel Bureau, stated subsection 3 of NRS 616C.440 provides "An employee is entitled to receive compensation for permanent total disability only so long as the permanent total disability continues to exist. The insurer has the burden of proving that the permanent total disability no longer exists."

Chairman Townsend asked if an insurer would not have to have new medical evidence to prove that the permanent total disability no longer exists. Mr. Hardy said the burden was put on the insurer so the insurer would not take a case simply.

Chairman Townsend announced he would like to take this issue up again at a later date and closed the hearing on A.B. 326. Chairman Townsend asked for a motion on A.B. 432.

*****

Chairman Townsend recessed the meeting at 12:02 p.m. and reconvened the meeting at 4:50 p.m. Chairman Townsend opened the hearing on A.B. 194.

Assemblywoman Gene Wines Segerblom, Clark County Assembly District No. 22, presented A.B. 194. Senator Amodei said there is no doubt economy is a scale inherent in urban health care markets. He continued in the Truckee Meadows and in the urban areas of Clark County services can be provided at a cheaper rate because of the large number of beds and facilities. He pointed out managed care organizations, as part of the health care delivery system, should recognize the importance of rural health care facilities. He said if this type of rural health care infrastructure goes away, rural community assets will be very significantly affected. He stressed it should be a priority to make sure every opportunity is provided to maintain the rural health care infrastructure as it now exists. Senator Amodei stated these issues had already been dealt with during this legislative session in Nye County, and in Elko County last legislative session, which had a very significant impact on how health care is delivered or not delivered in that area and to where people have to be transported. Senator Amodei recognized the similar protections provided in A.B. 194 to the protections provided in A.B. 156 of the Sixty-ninth Session.

Senator Amodei said the focus from A.B. 156 of the Sixty-ninth Session to A.B. 194 is the smaller health care providers in terms of hospitals. He said he thought perhaps some of the protections specifically being provided in A.B. 194 could probably already be inferred from the existing language in chapter 695G of NRS.

Senator Mike McGinness, Central Nevada Senatorial District, asked for an amendment to A.B. 194 which would cover the Pahrump area. He indicated he and Assemblyman P. M. "Roy" Neighbors, Esmeralda, Lincoln, Mineral, and Nye counties Assembly District No. 36, had a bill to this effect, but felt their bill could be accomplished by including the language in A.B. 194. He also suggested adding after the word "hospital" in A.B. 194 "or other licensed health care facility" as that added language would cover the Pahrump Medical Center and would require that managed care organizations reimburse those procedures which can be done in a rural setting. This proposed amendment to A.B. 194 was submitted as Exhibit K.

Senator Amodei explained the decision whether to contract or not is a business decision made between the hospital, or in the case of the amendment, the clinic at the rate for which it has been contracted. He said a person is going to get a cheaper rate at a larger facility because of the economy of scale.

Roy E. Barraclough, Lobbyist, Pahrump Medical Center, echoed what has been stated to this point with regard to A.B. 194. He added A.B. 194 would level the playing field by requiring managed care organizations to reimburse procedures which can and are being done in rural settings.

Assemblywoman Segerblom narrated a problem of having a senior citizen in Boulder City with an emergency situation who goes to the Boulder City Hospital and is then requested to seek medical attention in Las Vegas, but the senior citizen chooses to stay in Boulder City. In this instance the managed care organization will not reimburse the hospital or the patient.

Senator McGinness offered Senator Porter was chairing the Senate Committee on Legislative Affairs and Operations and had wanted to be at this hearing in support of A.B. 194, on behalf of the Boulder City Hospital.

Marie H. Soldo, Lobbyist, Nevada Association of Health Plans, and Sierra Health Services, said the organizations she represents believe A.B. 194 interferes with the existing contractual relationships between the parties. She stressed it is increasingly difficult for the organizations she represents to meet their obligations to go into the rural communities and service people who want some of the benefits and insurance covered by these organizations.

Chairman Townsend asked what in A.B. 194 interferes with the right to contract. Senator Amodei said he knew the issue of negotiations and what contracts are negotiated and consummated was something he had spoken about with Ms. Soldo and other people in the health care industry. Senator Amodei stated A.B. 194 is not an attempt to make somebody agree to a contract in which they do not want.

Chairman Townsend said before making a policy decision on this issue he wanted to confirm with Assemblywoman Segerblom, Senator Amodei and Senator McGinness that the language in A.B. 194 addresses exactly the problems addressed in this hearing. He said he also welcomed the input of the hospital administrators. He furthered if the language of A.B. 194 does not address exactly the problems brought up in this hearing, he wanted to have language as soon as possible which addresses the concerns.

Written testimony in support of A.B. 194 was submitted by Steve Smith, Chief Executive Officer, Carson Tahoe Hospital (Exhibit L) and Todd A. Pitts, M.D., Carson Surgical Group (Exhibit M).

There being no further testimony, Chairman Townsend closed the hearing on A.B. 194 and opened the hearing on A.B. 293.

Assemblyman Dennis Nolan, Clark County Assembly District No. 13, presented the first reprint of A.B. 293. He explained A.B. 293 provides where an individual is injured or requires some type of medical care, once that medical care has been provided, the medical provider would then bill the insurance company. He continued the insurance company would have 30 days in which to accept or deny the claim and if the claim is denied, the insurance company must notify the claimant within the 30-day period. Assemblyman Nolan furthered A.B. 293 also provides the insurance company to notice, within 10 days of making its determination not to pay a claim, the insured individual that the claim is being denied. This would give the insured individual the opportunity at a much earlier stage in the process to contact his insurance carrier.

There being no further testimony, Chairman Townsend closed the hearing on A.B. 293 and opened the hearing on A.B. 64.

Assemblyman David E. Goldwater, Clark County Assembly District No. 10, stated A.B. 64 came about because of a mortgage company’s failure resulting in investors losing upwards of $23 million, much of which to date has still not been recovered. He highlighted key points of A.B. 64 being the administrative sanctions and criminal penalties, requiring investigations, and power-of-attorney provisions. Assemblyman Goldwater pointed out A.B. 64 creates a new chapter of NRS in that it separates mortgage bankers from mortgage brokers. He submitted a report of the subcommittee to study mortgage investments with regard to A.B. 64 and A.B. 72 (Exhibit N. Original is on file in the Research Library.). He added A.B. 64 also requires the full funding of loans in order to protect the investor, the mortgage company, and the borrower.

Chairman Townsend stated he would like to continue working on A.B. 64 over the next couple of days because the bill relates to too complex of an issue to rush through. Assemblyman Goldwater offered A.B. 64 was reviewed pretty thoroughly in the Assembly.

Assemblyman Tom Collins, Clark County Assembly District No. 1, praised Assemblyman Goldwater for his outstanding job on the interim committee and expressed his support for A.B. 64.

John P. Sande III, Lobbyist, Nevada Bankers Association, stated the Nevada Bankers Association was exempt from A.B. 64, under section 10. Mr. Sande submitted a proposed amendment to section 122, subsection 2, of the second reprint of A.B. 64 (Exhibit O).

Mendy Elliott, Vice President, and Director of Community and Government Relations, Wells Fargo Bank, stated NRS 657.120 mandates how Nevada banks process checks. She said Wells Fargo Bank prefers to process its checks sequentially as it best serves its clients by processing the checks in the order the checks are written. She stressed Wells Fargo Bank would like the flexibility to choose how to process its checks. For this reason Wells Fargo Bank is in support of Mr. Sande’s proposed amendment. Ms. Elliott submitted her written testimony (Exhibit P).

Dean Heller, Secretary of State, submitted a question and answer sheet setting forth the secretary of state’s belief as to why NRS 90.530, subsection 21 should be repealed (Exhibit Q). Mr. Heller stated the passage of A.B. 64 would raise the standards of the mortgage industry. He said he felt it was in the best interest of the consumers in the State of Nevada to adopt the provisions of A.B. 72 into A.B. 64. Assemblyman Goldwater interjected A.B. 64 regulates the mortgage industry and A.B. 72 regulates each individual investment deal. Mr. Heller also submitted the secretary of state’s fiscal note on A.B. 64 (Exhibit R).

L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry, stated the second reprint of A.B. 64 attempts to create a new chapter which was similar to a proposal his office had pending in the Assembly Committee on Commerce and Labor (A.B. 676).

Mr. Walshaw continued the intent of A.B. 676 was to create a new licensing chapter for those mortgage companies referred to as mortgage bankers. He said another aspect of A.B. 64 was to put changes in the mortgage company act as it now exists. He explained A.B. 676 had a slightly different approach in that it would make changes to the mortgage company act. Mr. Walshaw stated there were a number of provisions in A.B. 64 that were essentially the same as in A.B. 676 and some provisions which were very different.

Chairman Townsend asked Mr. Walshaw how he interpreted the financial institutions division’s role in the statute. Mr. Walshaw replied with regard to the current statute the Division of Financial Institutions is charged with determining who needs to be licensed and who does not need to be licensed. He continued once the determination is made, the Division of Financial Institutions is required to process an application to determine if an applicant is suitable to have a license. Mr. Walshaw said once that determination is made and the license is issued, the financial institutions division’s responsibility is to examine mortgage companies at least annually to determine compliance.

Chairman Townsend asked Mr. Walshaw how he saw the financial institutions division’s role relative to the public policy applied to all self-funded licensing boards. Mr. Walshaw replied the purpose of examining the mortgage companies is to ascertain whether or not they are in compliance with statute and regulations. Mr. Walshaw added the statute and regulations run the gamut from requiring the mortgage companies to do certain things for the benefit of the health of the industry to protection of the consumer.

Chairman Townsend asked Mr. Walshaw if there were provisions in A.B. 64 which were impractical to the Division of Financial Institutions such as the secretary of state’s fiscal note. Mr. Walshaw responded the secretary of state’s issues are separate from the financial institutions division’s issues. Mr. Walshaw stated the fiscal impact of the second reprint of A.B. 64 was covered in the fiscal note given to the Assembly Committee on Ways and Means. He said the fiscal impact revolves around the licensing requirement for so-called mortgage loan agents of licensed mortgage companies. Mr. Walshaw concluded the Division of Financial Institutions is set up in the way that whatever it expends from the General Fund, it is expected to bring back in the form of revenues and for this reason A.B. 64 provides for licensing and investigation fees.

Douglas E. Walther, Senior Deputy Attorney General, Commerce Section, Civil Division, Office of the Attorney General, submitted the Office of the Attorney General’s fiscal note to the second reprint of A.B. 64 (Exhibit S). Mr. Walther stated the purpose of submitting the fiscal note was to place on the record the fact there will be an impact from some of the provisions in the second reprint of A.B. 64. He said there has never been primary criminal jurisdiction in the attorney general’s office over the mortgage act as primary criminal jurisdiction in this regard has been left to the counties and district attorneys. Mr. Walther said he obtained from the criminal deputies of the attorney general’s office input on what it would cost to implement a criminal enforcement program in a white-crime type of area. He offered the reasons for the civil fiscal impact is A.B. 64 creates civil jurisdiction where there was none before and creates mandatory duties on the part of the financial institutions served by the attorney general’s office as counsel.

Further written testimony was submitted by the Nevada Association of Mortgage Brokers (Exhibit T), Loretta A. Eichelberger (Exhibit U), the owner and president of Southwest Escrow Company (Exhibit V), Russell Best of Home Financial Mortgage (Exhibit W) and John F. Royce of Royce Capital (Exhibit X).

There being no further testimony, Chairman Townsend closed the hearing on A.B. 64. There being no further business, Chairman Townsend adjourned the meeting at 6:35 p.m.

RESPECTFULLY SUBMITTED:

Janice McClure,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

DATE: