ASSEMBLY COMMITTEE ON COMMERCE

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Commerce and Labor

Seventy-First Session

April 2, 2001

The Committee on Commerce and Labor was called to order at 3:45 p.m., on Monday, April 2, 2001. Chairman Joseph Dini, Jr. presided in Room 4100 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Joseph Dini, Jr., Chairman

Ms. Barbara Buckley, Vice Chairman

Mr. Morse Arberry Jr.

Mr. Bob Beers

Mrs. Dawn Gibbons

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. David Humke

Ms. Sheila Leslie

Mr. Dennis Nolan

Mr. John Oceguera

Mr. David Parks

Mr. Richard D. Perkins

STAFF MEMBERS PRESENT:

Crystal McGee, Committee Policy Analyst

Vance Hughey, Committee Policy Analyst

Ann M. VanNostrand, Committee Secretary

OTHERS PRESENT:

John M. Vergiels, Consultant, Brokers Association of Nevada

Renny Ashleman, Nevada Government Relations representative

Robert Barengo, Nevada Consumer Financial Association

Jim Knasiak, President/CEO, The NBF Group, Inc.

Douglas E. Walther, Chief, Department of Business and Industry, Office of Business Finance and Planning

Susan Dunt, Risk Management, State of Nevada

Bob Bryant, Deputy Attorney General, Commerce Section

Ron Dreher, Peace Officers Research Association

Timothy Hay, Deputy Attorney General, Attorney General’s Office

Rusty McAllister, Professional Fire Fighters of Nevada

Mark Krueger, Deputy Attorney General, Attorney General’s Office

Rod Barbash, CEO/owner, Collection Services of Nevada

Merle Julido, Credit Bureau Central

Alice A. Molasky-Arman, Commissioner of Insurance

Kevin Hagens, Chief Deputy Attorney General, Attorney General’s Office

Chairman Dini opened the hearing on A.B. 324.

Assembly Bill 324: Revises various provisions regarding regulation of mortgage brokers, mortgage agents and mortgage companies. (BDR 54-491)

Assemblyman Goldwater presented his bill to the committee, indicating it was a bill worked on during the interim. The genesis of the bill reflected on the enactment of safeguards and regulatory reform because the financial institutions division was not properly handling the enforcement of those reforms. It was not because they lacked intelligence, were not hard working, were not efficient, but because the financial institution or the bank ran differently than a mortgage investment company. He felt they lacked the expertise and detailed knowledge and ability to handle rather complicated, labor-intensive cases. The purpose of the bill was to set up a commission similar to what had happened in real estate allowing self-regulation and an executive director that knew what was happening on a day-to-day basis. A verbatim narrative of Assemblyman Goldwater’s continuing testimony is Exhibit C.

Chairman Dini addressed the protections within the bill for appeals if an individual was turned down by the commission, and asked if existing law provided for such. Assemblyman Goldwater answered in the affirmative.

John Vergiels, former Nevada State Senator and lobbyist for the Nevada Mortgage Brokers Association, stated the bill was the direct result of the work Assemblyman Goldwater included in A.B. 64 of the Seventieth Session. The Mortgage Brokers Advisory Committee and the Mortgage Brokers Association suggested improvements for enforcement, affording the opportunity for Assemblyman Goldwater to make necessary changes to keep the industry on the right track. Mr. Vergiels stated those he represented supported Assemblyman Goldwater’s efforts and A.B. 324. He offered any assistance to the committee and/or work session as needed.

Assemblyman Goldwater indicated that A.B. 64 of the Seventieth Session was a good bill when passed during the 1999 legislative session. There was a very large mortgage company examined, seized by the state and the assets were still to be disbursed, though criminal investigations were ongoing. He felt A.B. 324 strengthened and protected citizens from an industry through which there were millions of dollars at risk.

Renny Ashleman, representative for Integrated Financial Associates, presented narrative testimony (Exhibit D) from Mr. Tom Lea. The testimony dealt with the suggested amendment alluded to by Assemblyman Goldwater that people who did not qualify as investors under Regulation D of the Securities Act were therefore exempt in this area. His suggestion was the companies dealing exclusively with those investors be exempted as companies. The narrative defined a credit investor and pointed out problems that developed when the exemption was not available. The exemption could be easily written in if it included a “notwithstanding” clause at the end.

Robert Barengo, representing the Nevada Consumer Financial Association, had previously indicated to Assemblyman Goldwater his position regarding the bill, specifically Section 64, page 35. NRS 645E dealt with people lending their own money. During the 1999 legislative session, that category was removed from A.B. 64 of the Seventieth Session, and a separate chapter was created for them because they were not the ones using investors or public money and causing losses. This bill made them competitive with other types of mortgage companies, as well as being regulated by the same commission. Their interests and goals were different from the other companies because they did not lend investor money. They did not want lenders of their own money to not be part of the commission. Assemblyman Goldwater asked if they were currently listed under financial institutions or were they exempt. Mr. Durango stated there were several companies, some under financial institutions because they had not chosen to exercise the exemptions allowed under NRS 645E. Those he represented chose to be regulated by the financial institutions because it allowed periodic interaction and overview of records. Even so, the lenders still used their own money, not those of investors.

Assemblyman Hettrick understood Mr. Barengo’s request to leave Section 64, as well as NRS 654E that applied to those lending their own money, leaving the word as “commissioner” instead of changing it to “commission.” Mr. Barengo stated that was their request. He stated also that the NRS 645E companies were not included in the interim study and review.

Doug Walther, Deputy Director, Department of Business and Industry, stated the agency was neutral on the central policy of the bill, which was to transfer the regulatory function to a new commission, allowing the industry to regulate itself. However, they had comments regarding implementation. When questioning self-regulation of the industry, they asked the committee to consider whether the sponsors of the bill represented all of the players in the industry. One of the problems seen when considering A.B. 64 of the Seventieth Session, as well as implementation, was a widely varied industry, ranging from small businesses lending other people’s money to fairly large agencies lending their own or that of institutional lenders. Because of that great variety, there were many issues concerning whether certain parts of the law should apply to that particular segment of the industry. He questioned if it was a fair representation of the entire industry affected.

Mr. Walther asked for consideration of the fact that the real estate industry had a long history of self-regulation, a fairly homogeneous industry, unlike the mortgage industry. The Financial Institutions Division had prepared a fiscal note at the request of the staff. Commissioner Walshaw was unable to appear due to subpoena directing him to appear at a civil trial. Mr. Walther stated the commissioner would best answer all questions regarding the fiscal note.

Mr. Walther addressed Section 3, which redefined a loan secured by real property to include any loan associated with a mobile home, manufactured home if the loan was secured in whole or in part by a lien on real property. Under existing law a mobile home was personal property and the authority to lend on mobile homes as collateral was limited to an installment lenders license under NRS 675. Many of the businesses that provided lending on mobile homes and land combined actually held dual licenses, under NRS 645B. He stated Section 3 changed that and allowed mortgage brokers to lend on personal property as long as there was a real property lien involved. He thought that might raise an issue if those types of transactions were still regulated under NRS 675, and should be clarified.

Section 6 enabled the appointment of a loan agent as a commissioner on the new commission, to which Mr. Walther pointed out a person could become a loan agent with little experience in the mortgage industry. He cautioned the committee on the wisdom of allowing someone with virtually no experience in the industry sit on a board that regulated the activities of that industry.

Section 10 proposed to delegate the authority of the commission to the executive director to impose disciplinary action and any other powers of the commission. He pointed out there was authority in the bill to delegate authority to the executive director to exercise the authority granted by the bill to the commission itself, unlike the real estate arena, where much of that authority and discretion had already been delegated by statute to the administrator, a full-time state employee. The bill granted all of that authority to the commission and allowed the commissioner discretion to decide what authority it wished to delegate to the executive director. It also raised an issue when considering a connection with Section 91, which amended NRS 232.520, the statute defining the power of the director of a department over the member agencies. Section 91 amended the statute to provide the director supervisory responsibility over the new commissions; however, it stated the chief of the commission was considered the chairman of the commission itself. That raised issues if the director had, and the statute provided, such broad authority in the director’s office to exercise powers of member agencies in the department. It raised a question as to how that supervision would be exercised when the chief of the agency was the chair of a multi-member commission that could only act through a majority vote of a quorum present at a public meeting. How that authority was to be exercised over a multi-member commission was unclear in the bill and should be clarified.

Section 13 required the mortgage industry commission, the executive director, and the commissioner of the financial institution to cooperate, share records and assist each other to the extent necessary to carry out the provisions of the chapter. They understood there would be a period of transition and requirement to share records. Their concern with the section was the way it was written and did not want it to be interpreted as requiring the division to provide ongoing staff support and personnel to the commission.

Section 29 addressed or established procedures for appealing results of an audit. It stated the information in an audit was confidential until the appeal was resolved. The issue raised by the language in Section 29 was the commission would have to hear the matter at a public meeting, which was subject to the open-meeting law and appeared to create ambiguity about how to keep the subject of that audit confidential. Ratings of individual mortgage companies were to be held confidential to avoid having members of the industry use them in a competitive way to harm each other. It would not further the purpose of the audits. The implication of the language was the rating system provided the mortgage companies could be made public or was otherwise public if not made confidential pursuant to the bill.

Section 31 required the commission to employ one CPA to conduct independent audits and examination of brokers though not of the mortgage company’s license under NRS 645E. The licensees were required to pay an assessment to cover costs associated with the performance of the audits and examinations. Section 29 retained the requirement for annual examinations, raising the question of how a single CPA would be able to examine all mortgage broker licensees within a 12-month period. It also raised the question of whether the NRS 645E licensee would be subject to that annual examination. If the authority existed to hire additional employees and examiners to perform the audits, that should be made clear in the bill.

Section 44 stated the provision for deposit of fees for background investigations into the investigative account created per NRS 232.545 was retained, but the authority to conduct the investigations, with respect to mortgage brokers and companies, was transferred to the commission. That implied the division was required to process applications and perform background investigations. They asked for clarification. If the intent was that the commission or executive directors were to perform the background investigations, that function should be transferred as well.

Section 91 stated the commission was within the Department of Business and Industry and the chairman of the commission was the chief of the commission. A director’s supervisory authority was very broad and inclusive of the power to exercise any power any chief of any agency within the department was able to exercise. How did that authority conform to the idea that a multi-member commission could only act through a majority action? How was the director of the department to exercise supervisory authority over the activities of that commission?

Section 96 established a transition period between takeover by the commission and passage of the bill. The concern was the period of time the bill was in effect and the transition was not yet complete, it would have a negative effect on the division to enforce the law when conducting examinations. Basically a lame duck situation would materialize where the authority passed to another body. The authority of the existing entity might not be respected as it might have been because of the transition. They suggested there was a more efficient type of transaction where the authority was transferred all at once to eliminate any difficulties.

Section 97 transferred to the commission any contracts to which the division was a party to involving mortgage companies. The division had a contract with the Gaming Control Board to perform the background investigations. They wanted it clarified that the bill provided for the transfer of contract responsibilities, and wrote to the new commission with respect to background investigations for mortgage brokers and agents. Also, that there remained contractual relations between the financial institutions division and the Gaming Control investigator with respect to all the other licensees that remained under the jurisdiction of the division.

With respect to the proposed amendments, there was not a problem with less regulation for the investors that were able to watch out for themselves; however, they pointed out that a blanket exemption eliminated any possible regulation in favor of the consumer and borrower. The focus was on protecting the investor, but the law also served to protect against abusive practices against borrowers and the consumer. When an area of the law was completely deregulated, that oversight ability was lost.

Assemblyman Hettrick asked about someone who owned his or her home free and clear, sold it and carried the paper. Would that person be regulated under this bill? Mr. Walther stated there was an existing exemption for a person lending money or granting credit on his or her own account, thus they would be exempt under the existing law and under the proposed amendment. Assemblyman Hettrick asked if the lien on real property issue mentioned in Section 3 would affect that person. Mr. Walther stated he did not understand the existing exemptions to be amended, even if it picked them up in the general definition, it would exempt them.

Mark Krueger, Deputy Attorney General with the Attorney General’s Office, stated Attorney General Frankie Sue Del Papa was neutral on A.B. 324, and they were present to answer any question regarding fiscal notes.

Assemblyman Goldwater answered he had received assurance from the industry, to which Mr. Vergiels agreed that funding of any increase in the fee or transfer from financial institutions on their own account would be by increasing their own fees. He then confirmed Mr. Walther was formerly the Attorney General for financial institutions, and there were issues with the interpretation of the law. The bill drafter, Kevin Powers, would be able to clarify some of the questions addressed. Remaining questions could then be posed during a work session. Assemblyman Goldwater referenced several regulations the financial institutions were to have developed through A.B. 64 of the Seventieth Session, asking if they had been completed. Mr. Walther stated they were done with the exception of the examination procedures. Assemblyman Goldwater asked if he felt A.B. 324 would be better addressed under some other regulatory scheme than financial institutions. Mr. Walther stated that was a legislative policy decision.

Mr. Walther stressed the fiscal note submitted by the financial institutions office pointed to the fiscal impact on that division transferring the functions out of the division. It did not address fiscal issues raised in starting up the new commission.

Chairman Dini closed the hearing on A.B. 324 and opened the hearing on the amended version of A.B. 152.

Assembly Bill 152: Revises provisions governing trade practices. (BDR 52-485)

Timothy Hay, Attorney General’s Office, stated the original provisions of the bill provided that in deceptive trade practice matters the Attorney General’s Office could receive attorney’s costs and fees. The amendment clarified and made explicit the ability of the Attorney General to review mergers and acquisitions, an implied authority exercised under federal law. They believed specific state authority would eliminate confusion as to whether there was the ability to review mergers. The issue arose recently in connection with one of the oil company mergers, with instances of a merger transaction being so localized that the federal law did not apply. They needed the specific authority to look at those types of circumstances. In light of the Public Utilities Commission’s decision not to review the Portland General Acquisition by Sierra Pacific, that essentially negated the Attorney General’s ability to look at it independently. The amendment would correct what they believed was a loophole in the law.

Chairman Dini requested a legal definition of Section 2 on page 3, subsections (e) and (f). Mr. Hay stated (e) and (f) were provisions that would essentially provide in state law the corresponding language existent in the Clayton and Sherman Acts at the federal level, allowing specific state authority to review mergers otherwise covered under the Clayton and Sherman Anti-Trust Act. The latter made monopolizing trade a felony, the Clayton Act applying to transactions that were acquisitions of one corporation by another. Those activities, in and of themselves, were not unlawful, but were considered unlawful, particularly in an era of tripling acquisitions and mergers at the federal level. The provisions allowed the state explicit statutory authority to review, in state law, circumstances where it was thought monopolization was occurring, or if the acquisition of one corporation by another would have the effect of inducing market competition or other sorts of anti-competitive behavior. The bottom line was to ensure consumers were not victims of those practices that would inflate prices or restrict markets if the activities were not reviewed. In essence, they mirrored the federal provisions and made it explicit in state law the state had the authority to review those sorts of transactions.

Chairman Dini asked if that would also put the Attorney General’s Office in a position to review the merger of large gaming companies. Mr. Hay had not considered that question because the Gaming Control Board and Gaming Commission had independent merger authority to review those transactions. He felt the bill would allow the Attorney General’s Office to peer into them and stated most would be interstate in nature and probably covered under the federal law with federal agencies holding primary jurisdiction.

Chairman Dini closed the hearing on A.B. 152, and opened the hearing on A.B. 335.

Assembly Bill 335: Requires commissioner of financial institutions to take certain actions against unlicensed persons who engage in activities relating to collection of debts for which license is required. (BDR 54-782)

Assemblyman Lynn Hettrick, Assembly District 39, stated A.B. 335 imposed some requirements on the commissioner of financial institutions, which allowed them a fining ability not covered in present statutes. At present the commission could issue cease and desist letters, but if the company did not comply and continued functioning without a license in the state of Nevada, there was little they could do. The bill gave them the freedom to impose more restrictions:

Section 1, subsection 1, allowed them to conduct an investigation if they received a verified complaint;
Section 2 allowed them to issue and serve a cease and desist order; and
Section 3, provided for a fine, as amended.

Assemblyman Hettrick said he had spoken with the Attorney General’s Office and learned that with the proposed amendments, the proposed fiscal note, which amounted to $33,000 the first year and $39,000 the second year, would be significantly reduced. He felt the bill would have positive impact in terms of regulating some agencies illegally collecting money while acting under the auspices of collection agencies within the state of Nevada.

Jim Knasiak, owner, National Business Factors, a licensed collection agency in the state of Nevada, also represented the Nevada Collectors Association, an association that self-governed licensed collection agencies and other collection agencies within the state. Mr. Knasiak provided a general overview, verbatim testimony as shared in Exhibit E.

Bob Bryant, Deputy Attorney General, Commerce Section, represented the Financial Institutions Division. Both the Division and the Attorney General’s Office were neutral on the bill and after reading the bill he submitted a fiscal note authorizing a half-time deputy position. The position was needed for authority to settle disputes; the financial commissions were not given that authority within the bill. It meant problem cases would be settled through administrative hearings with subsequent appeals in the administrative realm, and possibly the filing of district court actions. His proposed amendments are available in Exhibit F. Assemblyman Hettrick asked Mr. Bryant to comment, for the record, on the fiscal note. Mr. Bryant felt the fiscal note would decrease from 50 percent to 10 percent, the latter being an area in which the funds were absorbed within the current budget.

Rod Barbash, CEO and owner of Collection Services of Nevada, stated he had been in business for 48 years. He stated the competition from out-of-state agencies that did not have to pay for licenses, registration, managers, audits, bonds, and CPA fees created many problems for established businesses. Those agencies solicited business for lesser fees and he felt that A.B. 335 would put all on an equal playing field. He urged passage of the bill with amendments.

Merle Julido, President of Credit Bureau Central, voiced support of A.B. 335. Ms. Julido stated her company had operated in Nevada as a reporting and collection agency since 1928. She stated she was also president of the Nevada Collectors Association. She supported the two previous speakers and added that within Nevada there were companies listed in the Yellow Pages who advertised as judgment-recovery companies, thus avoiding the licensure and bonding required by state law. She wondered how the individual or business contracting with a judgment-recovery company knew their money was being held in trust as was mandated by state and federal statutes. The problem had been ongoing for many years with the Federal Institute of Banking (FIB) having no actual enforcement power.

Chairman Dini closed the hearing on A.B. 335 and opened the continuation hearing on A.B. 392.

Assembly Bill 392: Revises certain fees for licensing contractor. (BDR 54-373)

Chairman Dini asked for a motion to Indefinitely Postpone A.B. 392.

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO INDEFINITELY POSTPONE A.B. 392.

ASSEMBLYMAN NOLAN SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY. ASSEMBLYMAN ARBERRY, ASSEMBLYWOMAN BUCKLEY AND ASSEMBLYWOMAN GIBBONS WERE NOT PRESENT FOR THE VOTE.

Chairman Dini asked the subcommittees to report on previously heard bills, beginning with A.B. 203, asking Vance Hughey, Policy Analyst, to provide the overview.

Assembly Bill 203: Revises provisions governing manufactured housing. (BDR 43-560)

Mr. Hughey introduced the subcommittee members assigned to review the bill:

Assemblywoman Barbara Buckley

Assemblywoman Sheila Leslie

Assemblyman Bob Beers

Their meeting was held April 2, 2001, at 1:00 p.m. The subcommittee recommended to Amend and Do Pass with amendments as presented by Renee Diamond, Administrator, Manufactured Housing Division, Department of Business and Industry, and Charles W. Joerg, Nevada Manufactured Housing Association (Exhibit G).

Chairman Dini called for discussion and then voiced readiness to accept a motion.

ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 203.

ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

THE MOTION CARRIED. ASSEMBLYWOMAN BUCKLEY, ASSEMBLYWOMAN GIBBONS AND ASSEMBLYMAN ARBERRY WERE NOT PRESENT FOR THE VOTE.

Chairman Dini closed the subcommittee report on A.B. 203, and opened A.B. 135, calling for the subcommittee’s report, presenting the narrative from the subcommittee:

Assemblyman David Parks

Assemblywoman Sheila Lesley

Assemblyman Bob Beers.

Chairman Dini called upon the Attorney General’s representative for confirmation that the Insurance Commissioner had accepted the amendments as presented by the subcommittee. He received an affirmative answer from Alice A. Molasky-Arman, Commissioner of Insurance, who was seated in the gallery. Kevin Hagens, Chief Deputy Attorney General from the Office of the Attorney General, shared the results of the subcommittee meeting as reported in Exhibit H. He stated the major change addressed the area of subpoena of business records when dealing with insurance fraud.

ASSEMBLYWOMAN LESLIE MOVED TO AMEND AND DO PASS A.B. 135.

ASSEMBLYMAN NOLAN SECONDED THE MOTION.

THE MOTION CARRIED. ASSEMBLYMAN GOLDWATER, ASSEMBLY-WOMAN BUCKLEY, AND ASSEMBLYWOMAN GIUNCHIGLIANI WERE NOT PRESENT FOR THE VOTE.

Opening the work session on A.B. 217, Chairman Dini called upon Crystal McGee, Policy Analyst, to review the work session document with the committee.

Assembly Bill 217: Repeals certain provisions that prohibit payment of death benefit under industrial insurance to surviving spouse who remarries. (BDR 53-1251)

Crystal McGee reviewed each section in the work session document as pertained to A.B. 217 (Exhibit I).

Assemblyman Hettrick said he had received e-mail from a gentleman who covered the hearings on this bill via the Internet. One thing the gentleman noted not discussed were the additional benefits received by public safety officers from the U.S. Department of Justice, the Public Safety Officers Benefit Program having been enacted in 1976 to assist in the recruitment of police and firemen. Basically, if the public safety officer was killed or rendered permanently disabled, the eligible survivors were entitled to the benefit. For death, the benefit was $143,943 as of fiscal year 1999. Further, there was a Public Safety Officer’s Education Assistance Program from the Department of Justice that provided educational benefits for spouses and children up to $404 per month for full-time students for up to 45 months. Assemblyman Hettrick felt that information should be weighed during resolution of the bill.

Speaker Perkins commented that if someone had given his or her life in that particular situation, he was not sure the committee should handicap that by changing the formula. Also, all industrial insurance areas were dealt with by way of premium and were taken collectively in terms of premiums versus benefits. He understood the gentleman’s concern, though he felt they were two separate issues and benefits for two separate reasons. He was happy with the amendments as presented.

Ron Dreher, representative of the Peace Officers Research Association in Nevada, previously asked the committee to support and sponsor the bill. Since reviewing the amendments, he pointed out areas that were not addressed before. He referenced the suggestion of not having the bill go into effect until the year 2002. When looking at Index C, only two individuals out of 563 listed had remarried. Actuarially, most of the people impacted by that amendment would not remarry if the penalty continued to exist. When the bill was first heard, Mr. Dreher presented several survivors of officers who had died in the line of duty, and they asked that the bill remain retroactive as was written because there was no increased premium on a retroactive judgment. The families received 66 2/3 percent of the officer’s last wage with no cost of living increases over their lifetime. Therefore, there would be no financial impact on any of the survivors. Spouses who remarried would not qualify under the bill because they had already waived their right and received their lump sum contribution as addressed in NRS 616. They asked the committee to accept the language as originally presented, eliminate the remarriage penalty, and affect the spouses currently not remarried effective July 1, 2001.

Mr. Dreher stated the actuary more than reinforced what was shared with the Industrial Insurance Commission several weeks ago when they said the worst-case scenario was presented. It seemed to him there was an indication the bill as written would have a negative impact financially. If they did not eliminate the remarriage penalty, the spouses who wanted to remarry would not, continuing to draw in the area of $7 million [2000 figure] and up per year.

Assemblyman Beers stated he had heard that because none of the spouses were remarrying, actuarially they received a lifetime benefit, the expiration date being the actuarial expiration of the spouses. Therefore, allowing them to remarry and keep the benefit had no affect on rates. Mr. Dreher answered in the affirmative.

Chairman Dini called for a motion.

ASSEMBLYWOMAN GIBBONS MOVED TO DO PASS A.B. 217.

Chairman Dini announced the motion died for lack of a second, and called for another motion on the bill, asking Ms. McGee to clarify the amendments for the committee. Ms McGee stated everyone understood the extension of the effective date by pushing it out a year, however the cover memo stated the bill would be effective for claims occurring on or after July 1, 2001. She said that was incorrect. According to the written document under Tab A of EXHIBIT I, it would be applicable only to claims that were accepted on or after July 1, 2002. The actual accident resulting in a death may have occurred before that time, though the bill only addressed claims accepted after July 1, 2002.

Chairman Dini stated the bill then only bought one year to bring the actuarial on everyone affected together. Ms. McGee stated if the claim was accepted to the date proposed by Mr. Ostrovsky, lobbyist, the bill would not affect it. The provisions of the bill would not affect old claims accepted prior to July 1, 2002.

Assemblyman Hettrick asked if the actuarial would be affected. Ms. McGee answered in the affirmative to Assemblyman Hettrick’s question. The widows that testified before the committee at the original hearing, should Mr. Ostrovsky’s, amendment be accepted, would not have their benefits continued should they remarry. Assemblyman Hettrick felt that would also be true for July 1, 2001. Ms. McGee again answered in the affirmative.

Chairman Dini felt there was no need for the date amendment. Assemblyman Hettrick reviewed the work session document, pointing out Tab A was the date amendment and Tab B the actuarial table. Speaker Perkins asked how many were involved. Assemblyman Hettrick stated all listed in the actuarial table, showing where 2 of the 563 had remarried, as stated earlier. Speaker Perkins stated if they wanted to return to the original motion he would second it. Chairman Dini asked for a withdrawal of Assemblywoman Leslie’s motion, as well as the second.

Assemblyman Beers referenced the discussion of the existing liability of SIIS that adding benefits retroactively would cause some charge against the state from the group to whom the liability was sold and asked if that area was directly addressed in the amendments. Ms. McGee answered the matter referenced was the reinsurance transaction. According to Mr. Ostrovsky’s attachment, it stated if the bill was passed there would be no impact on the reinsurance transaction.

SPEAKER PERKINS MOVED TO DO PASS A.B. 217.

ASSEMBLYWOMAN GIBBONS SECONDED THE MOTION.

THE MOTION CARRIED. ASSEMBLYWOMAN BUCKLEY, ASSEMBLY-MAN GOLDWATER, AND ASSEMBLYWOMAN GIUNCHIGLIANI WERE NOT PRESENT FOR THE VOTE.

Chairman Dini moved forward with the work session addressing A.B. 313.

Assembly Bill 313: Creates conclusive presumption that hepatitis is occupational disease for certain employees. (BDR 53-843)

Ms. McGee referenced Chairman Dini’s proposed amendment, which expanded the scope of the bill to include volunteer fire fighters, therefore creating the same conclusive presumption that existed in the bill for all fire fighters. Tab D of Exhibit I was presented on behalf of Don Jayne of the Nevada Self-Insured Association (NSIA) and included several amendments that were described by Ms. McGee.

Assemblyman Oceguera had no objections to the amendment proposed by Chairman Dini. Under Mr. Jayne’s amendment there were workable areas but without removal of the “conclusive presumption.” The amendment proposed by Mr. Carlson, fire fighter/instructor, basically deleted the entire bill as written; therefore, Assemblyman Oceguera voiced no support for those amendments. He noted also the fiscal note changed dramatically.

Assemblyman Hettrick stated the understood the desire for the conclusive presumption, but referenced testimony about a hospital employee who had worked 18 months and came up with a verifiable needle stab wound, but under testing was shown to have contracted Hepatitis C ten years prior. He suggested “rebuttable presumption,” which provided 90 percent of the bill as presented by Assemblyman Oceguera, as well as being covered by all OSHA rules. He would support the amendment using rebuttable presumption.

Assemblyman Oceguera felt the baseline was acceptable as listed in one of the amendments, an area addressed in Section 4, subsection 3, where it said:

A fireman or emergency medical attendant shall submit to a blood test for screening for hepatitis upon employment, upon commencement of coverage, and thereafter on an annual basis.

He had no difficulty with ruling out hepatitis; however, what concerned him greatly was Mr. Perkins’ testimony regarding the Hepatitis A contracted from his mother, and that he would not be allowed to make a claim for Hepatitis C at a later date, thus the entire group of Hepatitis would be ruled out. In fact, Mr. Perkins’ claim for Hepatitis C was in actuality denied. He had no problem with baseline testing, but wanted to assure the wording was correct to cover everyone fairly.

Ms. McGee understood that should the committee elect to adopt the amendment and the individual tested positive for Hepatitis C at the baseline, they would not be eligible for coverage.

Susan Dunt, Risk Management Office, State of Nevada, stated that when the recommendations were made to the exceptions for the conclusive presumption, those were the circumstances foreseen that would allowably consider the case was not a work-related injury. Those were three circumstances they could think of that put them in a position to where they would question whether or not it was a work-related injury.

Assemblyman Nolan asked if after the baseline an individual became exposed to HIV or Hepatitis, would that satisfy the language, making such a claim rebuttable. Ms. Dunt stated the experience gained had been through heart and lung claims that were conclusive presumption cases. In most circumstances, any kind of information that indicated a disease was in place prior to the actual claim was not considered. The conclusive presumption pretty much overrode whatever evidence was presented. She would not assume that would be an exception to the conclusive presumption as seen by the courts.

Assemblyman Nolan felt the purpose of taking the baseline study was to determine if the person had been exposed to HIV or Hepatitis. Unlike the heart and lung disorders, which were usually chronic in nature and in some cases acute, they were not contracted by exposure. If a baseline was drawn, the claim was accepted because the person had an exposure and the insurance carrier was going to pay for the initial treatment and any prophylactic treatment up front; however, when the baseline test was returned showing exposure that was a completely different scenario.

Ms. Dunt recommended the representative from PACT, an attorney, could provide a better perspective on the legal aspect of conclusive presumption. She knew from Risk Management’s experience, it was a very difficult presumptive theory to provide evidence to allow the conclusive presumption to not be present in that particular circumstance. Assemblyman Nolan felt that would be a helpful approach.

Rusty McAllister of the Professional Fire Fighters of Nevada had reviewed all of the proposed amendments as presented by Mr. Jayne, of PACT, and Ms. Dunt. The concern established was “framing in” the time period and no liability for someone who had the disease pre-employment. They wanted to “frame in” the end time period, so that after the required testing process was completed under NRS 616C.052, they would also be free of liability. He understood the need for the “frames,” and referenced Mr. Jayne’s amendment, number 2 under Section 4, “unless diagnosed prior to commencement of employment.” They were amicable to such as long as there was a pre-employment provision that applied only to a specific disease diagnosed prior to commencement of employment. An example was that of an employee starting the job with Hepatitis A and after being employed was diagnosed with Hepatitis C. He would not be covered for the Hepatitis A, but entitled to coverage for Hepatitis C. That “framed in” the initial employment period described by Mr. Jayne.

Continuing on to where it said, “or tests positive for Hepatitis after termination, if the diagnosis is made,” Mr. Jayne’s amendment stated, “after the time frames required post-termination testing in NRS 616C.052.” Mr. McAllister requested it be changed to say, “or tests positive for Hepatitis C after termination, if the diagnosis is made after 12 months post termination.” That meant after the 12 months and the required testing was done, if the employee did not have Hepatitis C after that 12-month period, he was no longer eligible for the benefit. That framed in from the beginning of his employment until 12 months after termination of employment. If he got the disease during that time, he was covered.

Mr. McAllister then referenced the recommendation for the removal of conclusive presumption, currently in statute for heart and lung disease. He stated those were discussed on a daily basis to the tune of $10,000 to $50,000 per claim, even with language that said “conclusively presumed.” Anything less than conclusively presumed, if rebuttable, invited the insurers to search for ways to deny the claim. Once the employee was tested, upon employment, for Hepatitis A, B, or C, and/or HIV, anytime after that there would be no way for the employer to absolutely prove the employee contracted the disease other than through employment. The odds were that if he had begun the job without the disease, it was contracted as a result of his employment. For example, an employee was admitted to a drug rehab program, providing no avenue for an employer to prove the employee had not contracted the disease on the job. The fire fighters believed conclusive presumption was very much needed. Less than that opened the doors for delayed claims. The recommendation was to retain conclusive presumption with the time frames of “upon employment” and “12 months post employment,” which controlled the time period the employee was covered.

He recommended Mr. Jayne’s Amendment 3 be retained as it included the time frames discussed above. The addressing of the fourth amendment and deletion of Section 4.5 removed the opportunity for an employee to elect a total disability. Currently the way it was written did not demand a total disability but had to first be rated as partially disabled, and then the employee “may” elect to accept. Mr. Jayne presented the fire fighters should invite rehabilitation into a job that paid 80% less than he/she was making as a fireman. If on a call, fire fighters were unable to pick and choose whether or not to treat an individual. They took risks daily, yet Mr. Jayne proposed they rehabilitate into a position that paid 80 percent less. Mr. McAllister asked, “Is that was the way to reward someone for taking such risks without choice?” Then, if one of the diseases was contracted, they would keep them working as a file clerk at 80 percent of the pay previously received. Also, if ten years or so down the road the individual became so incapacitated he or she could no longer work, plus having been rated out on a total permanent disability, did the person begin receiving what he or she was making as a fireman or at their current salary [as a file clerk]? Under the law now, the pay would be what he was making when the injury was suffered, which in all reality would be considerably less than present salary.

In essence, Mr. McAllister stated the fire fighters wanted to leave the language the way it was, as it was a small price to pay for someone whose entire life would be changed because of the diseases covered.

Assemblyman Beers stated it sounded as though one fundamental area of difference was the firemen’s contention there was a 12-month incubation period and Mr. Jayne’s contention there was a 30-day incubation period. Mr. McAllister did not believe that was what Mr. Jayne meant. The law stated when employment was terminated the employee was tested at that time, at six months, and again at 12 months for the diseases in question. If tests proved positive, the employee was eligible for compensation. Mr. Jayne, by changing that time period to 30 days, provided for someone who may have, within the last few days of employment, become exposed. That person would then not show antibodies for three to four weeks, thus by saying “post employment 30 days,” he was trying to provide for that employee who was exposed at the very end of employment. That individual would then be picked up as positive and could begin treatment earlier than at the 6-month timeline.

Speaker Perkins felt the wording should describe the disease, such a Hepatitis A, B, and C. Ms. McGee stated Hepatitis A, B, and C was already stated in the bill. Speaker Perkins said his concern focused on the language in a legal sense with someone who started employment with Hepatitis A and then contracted Hepatitis C, a denial could be made due to the previous history of Hepatitis.

SPEAKER PERKINS MOVED TO AMEND AND DO PASS A.B. 313 WITH CHAIRMAN DINI’S AMENDMENT AND WORKING FROM THE JAYNE AMENDMENT, THE 30-DAYS POST EMPLOYMENT FOR TESTING, BUT RETAIN CONCLUSIVE PRESUMPTION. IN SUBSECTION 1 OF SECTION 4, ALL LANGUAGE BE DISREGARDED AND INCORPORATED INTO SUBSECTION 4 OF SECTION 4 WHERE HE WANTED TO STRIKE “THE PROVISIONS OF THIS SECTION APPLY TO FIREMEN OR EMERGENCY MEDICAL ATTENDANT WHO IS DIAGNOSED WITH HEPATITIS AFTER THE TERMINATION OF THE EMPLOYMENT IF THE DIAGNOSIS IS MADE WITHIN ONE YEAR OF THE LAST DAY OF EMPLOYMENT.” LEAVE THAT LANGUAGE THERE AND ADD INTO IT “UNLESS HE IS DIAGNOSED PRIOR TO THE COMMENCEMENT OF THAT EMPLOYMENT” TO FRAME PRIOR AND POST EMPLOYMENT. ADD ALSO THE SPECIFIC HEPATITIS A, B, AND C.

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.

Chairman Dini requested Crystal McGee repeat the motion. Ms. McGee stated the motion was:

Amend and do pass to include Chairman Dini’s amendment, which would expand the scope of the bill to include volunteer fire fighters. In Section 4 of the bill with respect to Mr. Jayne’s amendment, it would retain the conclusively presumed language. We would eliminate the new language that he has in subsection 1 of Section 4, and add that concept into subsection 4 of Section 4, essentially framing the pre-employment and post-employment concepts, so that if you were diagnosed with the disease prior to employment, you would not be covered, and if beyond the one-year period you would not be covered. Within that time frame you would be covered. And also to make sure the strains of the viruses were not mixed, to the extent you were diagnosed with Hepatitis A, and the 30-day post in Section 3 as specified in Mr. Jayne’s amendment.

Chairman Dini asked for further discussion. Assemblyman Nolan commented the motion moved the bill forward and provided a very exceptional policy statement. While some of the insurers would find it difficult in some cases to deal with, the stories and testimony provided showed abuse and irreprehensible behavior toward some of the victims. Some of those providing testimony would die from the diseases contracted. He felt the numbers of contracted diseases of this nature would be very small in comparison to those who legitimately placed a claim and were protected by the bill. There also was rebuttable presumption maintained in statute when someone did, in fact, contract a disease the insurer felt was not legitimate. There were avenues of redress for the insurer as well.

THE MOTION CARRIED. ASSEMBLYMAN ARBERRY AND ASSEMBLY-WOMAN BUCKLEY WERE NOT PRESENT FOR THE VOTE.

Chairman Dini opened the work session on A.B. 152.

Assembly Bill 152: Allow a court to award reasonable attorney’s fees and costs in any action pertaining to deceptive trade practices. (BDR 52‑485)

Chairman Dini called upon Vance Hughey, Policy Analyst, to share amendments to A.B. 152. Mr. Hughey had no amendment. Chairman Dini stated they were looking at the reprinted bill and called for a motion.

ASSEMBLYMAN HUMKE MOVED TO DO PASS A.B. 152.

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Dini opened the work session and returned to A.B. 335, as heard earlier in today’s meeting.

ASSEMBLYMAN HETTRICK MOVED TO AMEND AND DO PASS WITH THE AMENDMENTS FROM THE ATTORNEY GENERAL’S OFFICE THAT ELIMINATED THE FISCAL NOTE.

ASSEMBLYMAN HUMKE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Dini appointed a subcommittee for the mortgage broker legislation:

Assemblyman Goldwater

Assemblyman Oceguera

Assemblyman Hettrick

All appointed voiced willingness to serve.

Assembly Bill 322: Limits payment of compensation for subsequent injuries from subsequent injury fund for private carriers to injuries that occur before certain date and eliminates fund upon occurrence of certain conditions. (BDR 53-787)

Not Heard.

Chairman Dini expressed appreciation to the committee members for their hard work and adjourned the meeting at 5:49 p.m.

RESPECTFULLY SUBMITTED:

Ann M. VanNostrand

Committee Secretary

APPROVED BY:

Assemblyman Joe Dini, Jr., Chairman

DATE: