SENATE COMMITTEE ON COMMERCE AND LABOR

MINUTES OF THE

SENATE Committee on Commerce and Labor

Seventy-First Session

May 4, 2001

The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 7:30 a.m., on Friday, May 4, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Dean A. Rhoads

Senator Mark Amodei

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

GUEST LEGISLATORS PRESENT:

Assemblyman Douglas (Doug) A. Bache, Clark County Assembly District No. 11

Assemblyman David E. Goldwater, Clark County Assembly District No. 10

Assemblywoman Merle A. Berman, Clark County Assembly District No. 2

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Crystal M. McGee, Committee Policy Analyst

Jan K. Needham, Principal Deputy Legislative Counsel

Sharon T. Spencer, Committee Secretary

OTHERS PRESENT:

Jeanette K. Belz, Lobbyist, Associated General Contractors, Northern Nevada

Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada

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

James L. Wadhams, Lobbyist, American Insurance Association

Donald Jayne, Lobbyist, Nevada Self-Insured Association No. 200

Roger L. Vogel, Lobbyist, American Civil Liberties Union of Nevada

Glenda A. Lisle, Lobbyist, Construction Trust

Danny L. Thompson, Lobbyist, Nevada State American Federation of Labor-Congress of Industrial Organizations

John E. Jeffrey, Lobbyist, Southern Nevada Central Labor Council

Raymond Badger, Concerned Citizen

Leslie Bell, Concerned Citizen

Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry

Raymond Bacon, Lobbyist, Nevada Manufacturers Association

John K. O’Conner, Lobbyist, International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, Allied with the Communications Workers of America, Local 1177

Theresa Greely, Concerned Citizen

Dave Buntemeyer, Concerned Citizen

Martha Tittle, Lobbyist, Clark County School District

L. Steven Demaree, Assistant General Counsel, Clark County School District

Eloise Koenig, Self Insurance Coordinator, Self-Insured Workers’ Compensation Section, Division of Insurance, Department of Business and Industry

Kevin Chadwick, Safety Officer, Risk Management, Washoe County

Royal Byron III, Concerned Citizen

Sue Dunt, Risk Manager, Risk Management Division, Department of Administration

Mark A. Marsh, Attorney

Lucille Lusk, Lobbyist, Nevada Concerned Citizens,

Chairman Townsend opened the hearing on Assembly Bill (A.B.) 47.

ASSEMBLY BILL 47: Makes various changes concerning policies of industrial insurance. (BDR 53-769)

Jeanette K. Belz, Lobbyist, Associated General Contractors, Northern Nevada, requested an amendment to section 1 of the proposed legislation (Exhibit C) to require proof of insurance which she presented to the committee. Chairman Townsend explained the proposed amendment would require a copy of an employer’s insurance policy or a copy of the certificate of qualification issued by the insurance commissioner to a self-insured employer or an association of self-insured public or private employers be provided at the employers’ principal location or at its resident agent’s location for a foreign corporation, and not at each location where the employer has directed his employees to work. The chairman said testimony by the state’s fraud unit determined there was no problem with the amended language.

Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada, said he wanted to confirm the proposed changes to the bill would be met with approval from the Division of Industrial Relations (DIR), the Fraud Division of attorney general’s office, and representatives from the insurance industry. Chairman Townsend asked if representatives from those organizations were present to testify on this issue. Ms. Belz explained that James Wadhams had spoken to the attorney general's office and she had conferred with the DIR. She said the DIR had requested additional language be included which would add the words, “principal place of business in the state of Nevada.”

John F. Wiles, Division Counsel, Division of Industrial Relations, Department of Business and Industry, confirmed the inclusion of that language would be amenable to all concerned parties.

Chairman Townsend asked whether the passage of the measure along with the new provisions would not be used to capture or relieve someone of their responsibilities prior to the act becoming law, to which both Mr. Ostrovsky and Ms. Belz responded in the affirmative.

Chairman Townsend asked whether there was any additional testimony or any further questions and there were none. Chairman Townsend called for a vote on the measure.

SENATOR O’CONNELL MOVED TO AMEND AND DO PASS A.B. 47.

SENATOR AMODEI SECONDED THE MOTION.

THE MOTION PASSED.

*****

Chairman Townsend closed the hearing on A.B. 47 and opened the hearing on A.B. 48.

ASSEMBLY BILL 48: Makes various changes concerning policies of industrial insurance. (BDR 53-768)

James L. Wadhams, Lobbyist, American Insurance Association, explained in the handout provided by the Legislative Counsel Bureau (LCB) Committee Policy Analyst Scott Young (Exhibit D), the proposed amendment would leave in place the current system of assessing self-insured workers’ and self-insured groups’ assessments based upon claims made for reported injuries. He said the portion attributable to insurance companies would be prorated based upon premiums, which are more stable and predictable, rather than basing them on claims. The system also simplified the budgeting process, he said.

Chairman Townsend asked who the representatives were for self-insured groups, to which Mr. Wadhams responded Daryl Capurro and Mary Lau. The Chairman called for testimony from a representative specifically from the self-insured group.

Donald Jayne, Lobbyist, Nevada Self-Insured Association No. 200, said he could not speak directly for the self-insured groups; however, within his organization there were some members of the self-insured groups who had concerns regarding language suggested by Mr. Wadhams for the proposed amendment. As for the self-insured groups, he said, the proposed language was satisfactory after several minor changes.

Roger L. Vogel, Lobbyist, American Civil Liberties Union of Nevada, pointed out the amendments proposed by Mr. Wadhams represent the will of the self-insured groups. Also, he added, it kept the self-insured groups’ assessment allocation in the same manner as they are today which is, from the group’s standpoint, a better reflection of the group’s positions on maintaining loss control. Mr. Vogel said the new language was a better reflection for their budgeting purposes as opposed to the standard of basing the budget on assessments.

Glenda A. Lisle, Lobbyist, Construction Trust, said her organization supported the proposed amendment, particularly the assessment standard for self-insured associations.

Danny L. Thompson, Lobbyist, Nevada State American Federation of Labor-Congress of Industrial Organizations, said his organization did not have a problem with the proposed amendment only if it did not impact the subsequent-injury fund. Chairman Townsend said this particular amendment did not impact the subsequent-injury fund.

Mr. Wiles stated the mechanism for assessments was a conversion mechanism for the private carriers which takes the expected annual expenditures for claims and converts those into a premium-based system. He said in the amendment proposed by Mr. Wadhams, the subsequent-injury fund for self-insured employers contained no conversion mechanism; therefore, the subsequent-injury fund for private carriers would be fully converted to a premium-based system with no conversions. The conversion mechanism would only affect the other funds, such as the uninsured employers claim fund, he said. In summary, Mr. Wiles pointed out, the proposed amendment would change the assessment system for the subsequent-injury fund but it would not change any of the qualifications of or assess to, the fund.

Mr. Thompson stated his organization was in disagreement with the proposed amendment because any change to the subsequent-injury fund would be unwelcome. He requested further time before the committee ruled on the legislation. Chairman Townsend temporarily suspended the work session on A.B. 48 and opened the hearing on A.B. 338.

ASSEMBLY BILL 338: Makes various changes concerning workers’ compensation. (BDR 53-711)

Assemblyman Douglas (Doug) A. Bache, Clark County Assembly District No. 11, sponsor of the proposed legislation, explained the bill was a result of a desire to correct a problem in the workers’ compensation system. Assemblyman Bache said a particular problem he was continually confronted with from injured workers was the complaint that they could not receive medical treatment from medical providers of their choice, but were instead directed for medical treatment to doctors they did not prefer. Assemblyman Bache stated the basic premise of the bill was to ensure injured employees had a right to choose physicians or chiropractors of their preference.

John E. Jeffrey, Lobbyist, Southern Nevada Central Labor Council, introduced Raymond Badger, Concerned Citizen, who stated he was an attorney who represented injured workers in Nevada. Mr. Badger provided the committee with two handouts, one of which was an outline of the proposed legislation organized by topics which would assist in clarifying and consolidating language and provisions within the proposed legislation (Exhibit E). The second handout provided by Mr. Badger (Exhibit F) was case law from 1993 pertaining to choice for injured workers, as described by Assemblyman Bache. The case law cited was Maxwell v. State Industrial Insurance System, 109 Nevada 327, 849 P.2d 267 (1993). He said this case law established the right of injured workers to choose doctors from the managed care list provided by the employees’ insurer, as well as clarifying the right of injured workers to change doctors within 90 days. Also, Mr. Badger explained, the case law provided that an injured worker who was referred to a specialist also had a right to choose a doctor. Mr. Badger pointed out there was a provision in the proposed amendment stating if an injured worker is denied a claim or a specific form of medical treatment, and if that worker appealed to the workers’ compensation court and won, the provision would require the insurer to reimburse the injured employee for all out of pocket expenses.

Senator O'Connell asked if it would be the insurer or the medical provider who would be responsible for reimbursing the injured worker for out of pocket expenses.

Mr. Ostrovsky said under current law medical providers are not allowed to bill an injured worker as long as that case has not met final determination. He said it was wrong for an injured worker to pay for medical services out of pocket and then have to fight for reimbursement. On the other hand, health care providers who contracted to care for injured workers through the workers’ compensation system would run the risk of having to wait for their payment, Mr. Ostrovsky pointed out.

Chairman Townsend said he did not read anything in A.B. 338 that would require medical facilities to provide informational pamphlets disclosing the rights of workers under the state’s workers’ compensation law, to which Mr. Badger responded in the affirmative.

Senator O'Connell requested clarification on this point, particularly if there was pending legislation that would require information pertaining to an injured worker’s appeal to the workers’ compensation court be provided to a contracted health care provider. Crystal M. McGee, Committee Policy Analyst, responded in the negative.

Chairman Townsend said health care providers who accepted contracts to provide workers' compensation services to injured workers cannot turn people away nor should injured workers have to pay for their medical bills out of pocket. The health care provider cannot bill the injured workers until the claim has gone through the administrative process. Mr. Ostrovsky agreed with Chairman Townsend, adding a method must be provided to avoid an injured worker from every having to pay for medical treatment out of pocket; however, a mechanism should be provided in the event that were to happen.

Leslie Bell, Concerned Citizen, testifying from Las Vegas, suggested two possible solutions to the issue of out of pocket expenses, one of which was that injured workers could not be billed until final resolution on disputed claims. The other possible solution, Ms. Bell continued, was, upon resolution of a disputed claim, the provider must fully reimburse injured workers for out of pocket expenses within 30 days if the insurer’s denial is overturned.

Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry, pointed out, in view of the dilemma of doctors possibly having to wait long periods of time before they received payment for treating injured workers, the worst-case scenario would be that doctors would elect not to treat injured workers or bid on workers' compensation contracts. She said this could have far-reaching ramifications.

Raymond Bacon, Lobbyist, Nevada Manufacturers Association, said A.B. 338 provided no effective date; therefore, he said he would assume the effective date if the measure passed would be October 1. He continued, regardless of the effective date, that date would not necessarily be the effective date for injury claims. Without this point of clarification, he said, the omission of an effective date could possible mean that previously closed claims could be reopened under existing law, thereby establishing a benefit for which premiums were never collected. Mr. Bacon suggested adding criteria to the proposed legislation that specified it would only apply to claims submitted after a specified effective date for injuries. The earliest effective date would have to be sometime after rate hearings were concluded which would be July 1, 2002, he said. In addition, Mr. Bacon speculated, if the bill were to become law the state should expect an approximate rate of increase of 8 percent to the workers' compensation system and at least as much to the self-insured groups as well for medical costs.

John K. O’Conner, Lobbyist, International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, Allied with the Communications Workers of America, Local 1177, provided the committee with a summary plan description for short-term disability benefit payments as described in Lockheed Martin’s operations support services manual (Exhibit G). He said his organization supported the proposed legislation. In addition, he added, the union wanted to include benefits to injured workers for follow-up treatment for medical expenses, reimbursement for mileage expenses to and from health care providers, and payment for time off from work for follow-up medical treatment. Two concerned citizens, Theresa Greely and Dave Buntemeyer, both of whom are members of (IUE-CWA Local 1177) who were injured while on their jobs, concurred with the testimony of Mr. O’Conner.

Chairman Townsend asked Mr. Ostrovsky if the issue of injured workers receiving benefits for follow-up treatment, in addition to time off from work and mileage reimbursement for traveling to and from health care providers, was an issue under negotiated contract agreements which were made on an individual basis. Chairman Townsend added injured workers in rural areas suffered the most regarding out of pocket expenditures for mileage due to long traveling distances in order to receive follow-up medical treatment. Mr. Ostrovsky said the issue, as it pertained to current structure, had never been fully addressed.

Ms. McGee offered into the record the estimated cost and quantifying analysis impacts of A.B. 338 according to the National Council on Compensation Insurance, Incorporated (NCCI) as per that organization’s Actuarial and Economic Services Division (Exhibit H).

Martha Tittle, Lobbyist, Clark County School District, stated her organization had concerns regarding the proposed legislation. She introduced L. Steven Demaree, Assistant General Counsel, Clark County School District, to voice those concerns. Mr. Demaree, testifying from Las Vegas, stated Clark County School District opposed the measure due to the fiscal impact it would have on the school system. He said money should be spent on education rather than on treating injuries that were possibly preconditions in addition to other expenses not particularly necessary.

Ms. Bell, continuing her testimony from Las Vegas, stated it was a problem if injured workers were not receiving the appropriate information by being provided with pamphlets explaining their rights. She said employers throughout the state were required by law to post information pertaining to the rights of injured workers under workers' compensation along with notice of injury forms. Health care providers who were contracted to provide medical care to injured workers under the workers' compensation system were also required to provide all pertinent information to injured workers.

Mr. Jayne said he disagreed with several of the testifiers; however, he was willing to work with all concerned entities to resolve the various issues pertaining to the proposed legislation. Chairman Townsend agreed to continue the discussion in a work session to be held in the near future.

Chairman Townsend asked whether there was any additional testimony and there was none. The chairman closed the hearing on A.B. 338 and opened the hearing on A.B. 345.

ASSEMBLY BILL 345: Revises provisions governing claims for compensation under industrial insurance for certain occupational diseases. (BDR 53‑1267)

Assemblyman David E. Goldwater, Clark County Assembly District No. 10, explained his purpose for sponsoring the proposed legislation was due to a specific problem that had been brought to his attention pertaining to occupational diseases affecting firefighters and policemen. Assemblyman Goldwater explained industrial insurance claims submitted by firefighters and policemen for serious illnesses resulting from their employment were being denied. Local governmental agencies and insurance providers were routinely denying legitimate claims regardless of conclusive presumption in statute. Assemblyman Goldwater said most of the claims that had been denied public servants were for heart and lung disease as well as for cancer and certain infectious diseases. He said the debate had been continuing for too long a period and would continue if not dealt with through suggested legislation. Assembly Bill 345 was an attempt to address the issue by collecting the necessary data to determine how these industrial compensation claims can be handled in the future. Assemblyman Goldwater said the highlights of the measure were simple and included specifying the nature of the claim, refer the claim to the appropriate governmental entity, provide details pertaining to the nature of the claim, and describe whether it was approved or denied. By next session, he concluded, there would be more clarity on the issue resulting in responsible management of occupational disease claims.

Mr. Wiles stated the impact to his agency from A.B. 345 would be minimal. He said it would be important to hold workshops in order to gather information and to define the scope of the information to be submitted. Representing self-insured groups, Mr. Jayne said the proposed legislation was acceptable to his organization. Assemblyman Goldwater said there was only one self-insured group and that was the rural group, and he said regulations could be adopted to include those people in the data-gathering process.

Eloise Koenig, Self Insurance Coordinator, Self-Insured Workers’ Compensation Section, Division of Insurance, Department of Business and Industry, expanded upon the statement of Assemblyman Goldwater by stating her support of the bill by adding nurses should be included in the data-gathering process due to that professions’ propensity to contract occupational diseases. Chairman Townsend and Assemblyman Goldwater both agreed the measure would include nurses as well as other occupations within the data-gathering process.

Kevin Chadwick, Safety Officer, Risk Management, Washoe County, noted the Truckee Meadows Fire Department is covered by Employers Insurance Company of Nevada (EICON); therefore the wording of the bill needed to reflect that fact in order to capture the data from that agency. Chairman Townsend explained the proposed legislation was intended to instill a sense of awareness in evaluating occupational disease claims as well as to collect pertinent data for review in the next legislative session. He said it would be good to capture 100 percent of the claims, but that was not necessary because studying 75 to 80 percent of occupational claims would gather enough information to determine a trend the Legislature could act upon. Chairman Townsend said a work session to continue the discussion on the proposed measure would be held in the near future.

Chairman Townsend asked if there was any additional testimony and there was none. The chairman closed the hearing on A.B. 345 and opened the hearing on A.B. 192.

ASSEMBLY BILL 192: Revises provisions relating to barber schools. (BDR 54‑735)

Royal Byron III, Concerned Citizen, explained he was Nevada’s first and only barber instructor in the state. He said in its current form A.B. 192 would do his efforts to establish the first and only barber school in the state more harm than good. He presented the committee copies of his handout describing the laws, rules, and regulations of the state as they pertain to governing the practice of barber school operations (Exhibit I). Mr. Royal also expressed his concern over a substantial increase in the cost of an instructor’s licensing fee to $250 annually from the previous amount of $75, an amount provided for in section 643.167 of Nevada Revised Statutes.

Chairman Townsend said the measure appeared to be a constructive device for improving the barbering profession in the state. However, the chairman asked Mr. Byron if he approved of the provision that would require a sign be posted at the doors stating, “Work performed exclusively by students.” Mr. Byron suggested the sign be reworded to clarify school policies by adding “There is no charge for service rendered by students, the tipping of students or instructors is not allowed, and there is no charge for material or linens used by the student.” Chairman Townsend said a work session will be held in the near future to discuss the matter further and he requested Mr. Byron prepare and deliver to the committee his proposed language changes for the bill.

Chairman Townsend closed the hearing on A.B. 192 and reopened the hearing on A.B. 48.

Mr. Wadhams said he would not be proposing language changes to the measure, an initiative that Mr. Thompson supported because it did not impact the subsequent-injury fund.

Sue Dunt, Risk Manager, Risk Management Division, Department of Administration, offered into the record her agency’s proposed amendment (Exhibit J) which was intended to correct an existing problem pertaining to the processing of injured worker claims. She said the suggested language changes would specifically require private carriers to credit employer accounts when a recovery is received from the subsequent-injury fund.

Mark A. Marsh, Attorney, said he supported the proposed legislation and amendment. He said the measure would expedite the processing of claims. Mr. Wadhams said his organization did not support the proposed amendment offered by Ms. Dunt because current statute already addressed the issue of crediting recovered funds back to employer accounts, a procedure that was a well-established regulatory principle. He said the additional language would only serve to complicate the application of current law. Ms. Dunt said that language had previously existed for private carriers but had been removed. The language she was proposing would only serve to clarify the regulatory process. Mr. Ostrovsky said his organization would not support Ms. Dunt’s proposed amendment because the language specifically requiring private carriers to credit employer accounts had been deliberately removed. He said the change in current regulations had come about because the state was no longer the only insurer for injured workers within the state. Mr. Ostrovsky said Nevada was becoming an open rating state, meaning the process for evaluating risk and premiums for individual employers. He said the removal of the language was done specifically because the appropriate way to handle crediting of accounts was through the insurance commissioner’s rating system currently in place.

Chairman Townsend said a work session would be held in the near future to further discuss the matter. Chairman Townsend closed the work session on A.B. 48 and opened the hearing on A.B. 74.

ASSEMBLY BILL 74: Prohibits employment of children under 16 years of age in certain activities relating to commercial sales. (BDR 53-659)

Assemblywoman Merle A. Berman, Clark County Assembly District No. 2, introduced the proposed legislation. Jan K. Needham, Principal Deputy Legislative Counsel, spoke on her behalf. She explained the measure pertained, in part, to the employment of children. Ms. Needham suggested the labor commission could exempt further activities on the basis that the health and welfare of children would not be endangered.

Senator Rhoads asked if the proposed legislation would affect children going door to door soliciting money for their high schools or for rodeos. Ms. Needham said that was covered under A.B. 74 in the provision allowing children the right to solicit funds for nonprofit activities and organizations. Senator Rhoads asked if a population requirement could be added to the proposed legislation, to which Ms. Needham responded in the affirmative.

Lucille Lusk, Lobbyist, Nevada Concerned Citizens, said she was concerned about this issue throughout the state, not just in rural communities; however, she agreed that including that language was acceptable. Ms. Lusk added the concerns of her organization were satisfied with the inclusion of language already contained within the measure stating children could work for charitable organizations.

Chairman Townsend asked Ms. Needham what the population break-off point was in order to distinguish between urban and rural communities throughout the state. Ms. Needham responded the population break-off point was 100,000.

Scott Young, Committee Policy Analyst, submitted language for a proposed amendment (Exhibit K) intended to clean up language within A.B. 74.

Chairman Townsend asked if there was any additional testimony and there was none. The hearing was adjourned at 10:47 a.m.

RESPECTFULLY SUBMITTED:

Sharon T. Spencer,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

DATE: