SENATE COMMITTEE ON COMMERCE AND LABOR

MINUTES OF THE

SENATE Committee on Commerce and Labor

Seventy-First Session

February 14, 2001

Chairman Randolph J. Townsend called the Senate Committee on Commerce and Labor to order at 8:00 a.m., on Wednesday, February 14, 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

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Silvia Motta, Committee Secretary

OTHERS PRESENT:

Robert A. Cashell, Jr., Concerned Citizen, Chairman, Nevada Casino Network Self-Insured Groups

Doug Ellington, Vice President, Underwriting Services, CHSI of Nevada

Joseph Bridges, Regional Vice President, Finance, CHSI of Nevada

James S. Leftwich, CEO and Chairman, Finance, CHSI

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

Eloise Koenig, Coordinator, Chief Examiner, Self-Insured Worker’s Compensation Section, Division of Insurance, Department of Business and Industry

Steve G. Holloway, Lobbyist, Executive Vice President, Associated General Contractors-Las Vegas

Gail F. Gibson, Lobbyist, President, Associated General Contractors-Las Vegas

Jesse C. Paulk, Lobbyist, Director, Workers’ Compensation Group, and Associated General Contractors-Las Vegas

Daryl E. Capurro, Lobbyist, Managing Director, Nevada Motor Transport Association, and Nevada Transportation Network Self-Insured Group

Richard Staub, Attorney, Nevada Auto Network, Nevada Transportation Network, Nevada Retail Network, Builders Association of Western Nevada, Pro-Group Management Incorporated

Robert A. Ostrovsky, Lobbyist, Nevadans for Affordable Healthcare, and Nevada Resort Association

John P. Sande III, Lobbyist, Nevada Franchised Auto Dealers Association, and AON Risk Services

Mary Lau, Lobbyist, Executive Director, Retail Association of Nevada

Wayne Carlson, Lobbyist, Public Agency Compensation Trust

Danny L. Thompson, Lobbyist, Political Director, Nevada State American Federation of Labor-Congress of Industrial Organizations (AFL-CIO)

Gary E. Milliken, Lobbyist, Associated General Constructors, Centennial Group LLC

Cheryl Blomstrom, Lobbyist, Government Affairs Director, Nevada Association of Mechanical Contractors, Nevada Chapter Associated General Contractors

Mike McGrovery, Lobbyist, General Counsel, Construction Industry Workers’ Compensation Group, Nevada Contractors Association

Glenda A. Lisle, Lobbyist, Construction Trust

James L. Wadhams, Lobbyist, American Insurance Association, and Nevada Independent Insurance Agents

Samuel P. McMullen, Lobbyist, President, AIG Claim Services Inc.

Clifford King, Chief Insurance Examiner, Appeals Panel for Industrial Insurance, Division of Insurance, Department of Business and Industry

Samuel Sorich, Lobbyist, Vice President, National Association of Independent Insurers

Kevin Sullivan, Allstate Insurance Company

Robert B. Feldman, Lobbyist, Nevada General Insurance Company

Chairman Townsend opened the hearing on Senate Bill (S.B.) 3.

Senate Bill 3: Revises provisions governing qualification as association of self-insured private employers. (BDR 53-305)

Robert A. Cashell Jr., Concerned Citizen, Chairman, Nevada Casino Network Self-Insured Groups, said he was testifying on behalf of several organizations representing Nevada businesses: Nevada Restaurant Self-Insured Group, Nevada Casino Network Self-Insured Group, Preferred Builders Self-Insured Group, and Preferred Transportation Self-Insured Group. Mr. Cashell presented, in detail, his written statement (Exhibit C), suggesting the language of S.B. 3 be reinstated with the language of Nevada Revised Statutes (NRS) 616B.350, subsection 7, which would empower the Division of Insurance (DOI) to regulate and control the certification and operation of self-insured groups. Mr. Cashell noted the language changes his group suggested, to increase rather than reduce the DOI’s scope of responsibilities with regard to self-insured groups (SIGs).

Doug Ellington, Vice President, Underwriting Services, CHSI of Nevada (Compensation and Health Strategies Incorporated), which is the program administrator for and represents the boards of trustees of the same groups as Mr. Cashell. Mr. Ellington commented in support of Mr. Cashell’s testimony. Mr. Ellington noted the original groups were given the self-insured concept in 1996. He stated one of the original, fundamental techniques of risk management was to combine industries and employers groups, reducing the level of risk. He claimed when crafting the original language of the bill, the proposal was given careful consideration to ensure that the DOI's role would not be diluted and affiliations within the trade associations (TAs) would be well-structured, allowing the affiliations and the TAs predictability, increased solvency, and safety of the old concept. Mr. Cashell said, in his view, the role of the DOI is to continue to be preeminent in making sure SIGs are a success in Nevada.

Chairman Townsend noted a proposed amendment to section 1, subsection 7 of S.B. 3, on page 2 of Exhibit D, submitted by the boards of trustees. He then moved to page 2, line 39 of S.B. 3, confirming the word “member” not to be stricken.

Mr. Ellington concurred, the primary point being that the criteria be the membership of the group. He mentioned DOI is involved from the time they grant a certificate of authority. He explained the most important mechanisms are already in place for risk, solvency, and operations of the group, with bylaws reinforcing safety inspections that would ensure solvency, safety, and continued success of the SIGs.

Chairman Townsend inquired if the changes had been discussed with the Commissioner of the Division of Insurance. Mr. Ellington confirmed there had been some discussions in the past week.

Joseph Bridges, Regional Vice President, Finance, CHSI of Nevada, emphasized the DOI’s capability and need to maintain its regulatory authority, full power to regulate self-insured groups. He claimed the bill is against the trade associations, and that the self-insured groups would not consider departing from their trade associations. He continued, the bill strictly creates a partnership, it is clear that what the service TAs provide is straightforward. He pointed out CHSI’s board members are very supportive of the concept, adding that SIGs need to operate on sound insurance principles, but their relationships with the TAs should be voluntary, just like in any other business relationship, basically, maintaining the needed and requested services provided by TAs and confidence there would be straight, direct communication between TAs and SIGs.

Senator Carlton requested clarification regarding the board of trustees representing the Nevada Restaurant Association Self-Insured Group.

Mr. Ellington explained the restaurant group has approximately 70 members, primarily restaurants including: chain restaurants, franchises, fast food restaurants within that industry, and some of the larger marquee properties (gaming), and many independent restaurants as well. Many of the larger casino and hospitality groups are stand-alone self-insured entities; some have as many as 500 or 1000 employees.

Chairman Townsend said he recognizes the bill has a clear purpose, however, he asked, what happens if the current self-insured groups were independent of one another?

Mr. Ellington said, in that case they are all separate entities. Each then maintains a separate board of directors and a separate contract for necessary services to fulfill the requirements in NRS. He specified the principle for the statutory change would be to make it accessible for all insurance groups that qualify under the statute.

Mr. Ellington requested administering the resources of each one the groups and complying with regulations. He stated his company would prefer to manage claims properly at minimum cost, and would prefer to maintain homogeneity of risk. He admitted his company’s responsibility and considerations when writing a check for $77,000 to a claim’s third-party administrator, as well as the responsibility to the board and each individual member who is jointly liable; expenditures need to be reviewed and changes to the statute need to be made. He noted for individual members to qualify and operate, they need homogeneity and the combination of risk, under the supervision of the DOI.

Mr. Ellington offered additional testimony, noting each board of directors has a function to perform, just as CHSI of Nevada and we as the administrator. To say that a merchant at risk is now combinable with a contracting risk that, in turn, is combinable with an institutional or manufacturing risk would be absolutely inconsistent with the current operations within the insurance industry. He said it would be much like classifying general liability, automobile, property insurance, and so on. A SIG is regulated, and its board of directors has the responsibility to deal with the service providers.

Senator O'Connell said she had reservations about managing the different groups, particularly, whether a group of secretaries would be considered the same as a construction group when a contract is written or penalties are imposed. In conclusion, Mr. Ellington said: “We are not talking about changing the nature of what the SIGs are doing in terms of expanding classifications.”

Mr. Bridges further explained there is no need to group different types of risk together, adding the board of trustees would not accept a member into their SIG who they felt would not make a positive contribution to the group. The applicants are studied to ensure they are sound businesses with good safety practices. He iterated the current regulatory processes, from an insurance standpoint, do work, but that the TA requirement is artificial, in terms of running a self-insured group. In his opinion, he said, there are some 13 to 14 self-insured groups in the state that would retain their relationships with trade associations for reasons of partnership. The proposal, he said, gives members a choice of whether they want a relationship with TAs or not, as opposed to mandating one.

James S. Leftwich, Chief Executive Officer and Chairman, Finance, CHSI of Nevada added that when the board of trustees meets on a quarterly or monthly basis to review the financials, one of the principal items of discussion is contributions to the trade associations. At least the four SIGs that CHSI represent, constantly raise the question of how the money is utilized; and as major contributors, they would like to have some say in the matter. He continued, that would be one of the major reasons to request the changes to the current legislation, and the second being that certain classifications for a group of employees, who asks that a SIG be organized after searching for a local TA, as required by statute, and realizing there is none, only a national trade association, not a local one.

Mr. Leftwich insisted the main issue is to change the language in S.B. 3 to give equal partnership status to SIGs with their TAs, and a say in how the money is going to be spent if they are going to be mandated, to hand it over. He noted that currently the DOI has no leeway.

Senator Rhoads asked if the bill was approved, as a member of the TA, would one have to join something else to be self-insured. Mr. Leftwich answered, “No. You can apply for SIG just like you would to any other insurance company, they would review the application based on underwriting standards.” He further said that each SIG operates a little differently although none of the SIGs represented by CHSI charge application or association fees, and the final determination is made by the board of trustees.

Mr. Bridges added, if the bill was to pass, SIGs would be available to employers whether or not they were part of a trade association.

Chairman Townsend asked to which trade association were the four organizations previously mentioned associated.

Mr. Leftwich offered, the restaurant group is associated with the Nevada Restaurant Association, and the Preferred Transportation Association is associated with the Nevada Restaurant Association; the Preferred Builders Association is associated with the Employers Association of Southern Nevada; and the Nevada Casino Network is associated with the Nevada Retailers’ Association.

Chairman Townsend asked, “In other words, if you can be associated without paying their fee, does the whole problem go away?” In response, Mr. Leftwich said there would be an awful lot of business denied, and that without the benefit of a local trade organization, the ability to participate in the benefits of SIGs would be denied as well. Mr. Leftwich said his organization would rather have the DOI make that determination, and give them some guidelines to regulate this by using the Standard Industrial Classification (SIC) code (from the Occupational Safety and Health Administration (OSHA) from the United States Department of Labor for risk classification. Otherwise, he noted, the Preferred Transportation group would continue to affiliate with the Nevada restaurant group.

Chairman Townsend asked for clarification: “You do not want to be associated with a trade group because you do not want to pay their fees; [and you want] the right to have non-trade-associations-associated groups be able to come together and provide their own self-insured group insurance.” Mr. Leftwich agreed, reiterating that the process should remain under the control of the DOI.

Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry, voiced concern over how the proposed amendment would impact existing associations of self-insured employers.

Eloise Koenig, Coordinator, Chief Examiner, Self-Insured Worker’s Compensation Section, Division of Insurance, Department of Business and Industry, said the current legislation, with its original language, would make the groups heterogeneous. She recalled back in 1995, Commissioner Molasky-Arman had testified there were major reasons to be concerned about “heterogeneous groups.” Ms. Koening noted the proposed changes appear to attempt to keep the groups similar, which alleviates some of the concerns. However, she said she did not have a chance to review the proposal in its entirety with the amendments and make a final judgment as to how it would work. There are some existing groups, she said, which were formed under the TA language, allowing affiliated members of the TA to join the group. She urged the committee to make sure the recommendations will allow members to form a group either under the TA criteria or under the SIG-code criteria. She said she recognized some of the existing groups could be out of compliance due to the broad codes in SIG; however, some of the groups actually have members that are not necessarily addressed in the same SIG code.

Chairman Townsend drew attention of those present to the amended language, “To accommodate and maintain a certain amount of control over the members of a group and their financial stability.” He expressed concern about the additional staff time that would be required for applications. Ms. Koenig stated there would be no problem in handling the matter with the existing staff.

Steve G. Holloway, Lobbyist, Executive Vice President, Associated General Contractors-Las Vegas, explained that the Associated General Contractors (AGC) is a nonprofit organization and one of the largest trade associations. He said the AGC receives a 2 percent fee as a trade association for sponsoring its own self-insured group, and not 5 percent as indicated in previous testimony. The 2 percent fee is allocated to safety and risk-management purposes. He pointed out 20 to 30 years ago, when SIG was initiated in Nevada, the legislation did not require that the groups be affiliated with a trade association or any other group that represented stability. He claimed that was one of the reasons for drafting the current legislation requiring self-insured groups be affiliated with a trade association that has been incorporated and doing business in the state for at least 5 years.

Mr. Holloway expressed concern about “deep pockets.” In the well-established self-insured group, there is “joint” and “several” liability, so if the restaurant association self-insured group goes “belly-up”, the full responsibility shifts on to AGC. He insisted there is no need for 20 or 30 more fly-by-night self-insured groups in this state. Since there is the joint and several liability for those groups, Mr. Holloway said he disagreed with the proposal. He claimed the only people that would profit from S.B. 3 are the administrators, and brokers, whose numbers have grown since lawmakers passed the legislation 6 years ago, when the AGC initially promoted the program. He emphasized, if the bill was approved, there would be many self-insured groups start in operation then fail, and AGC could be trapped paying for their losses. Mr. Holloway then noted, under the current statutes, there is not only joint and several liability within a self-insured group, there is also liability, collectively, amongst all the self-insured groups in this state.

Chairman Townsend inquired about trade associations asking for a fee. Mr. Holloway disagreed, he said the fee is negotiated, and the self-insured groups are on equal status when it comes to those negotiations. He reiterated, out of the 2 percent fees collected, 1 percent is an endorsement fee and 1 percent is for safety services provided. Mr. Holloway noted a complete safety audit is done on a new member, then job-site inspections are made periodically, and each year thereafter, an evaluation is made of the safety programs for the participating companies and self-insured groups.

Gail F. Gibson, Lobbyist, President, Associated General Contractors-Las Vegas, Gibson Construction of Nevada Incorporated, testified in opposition of S.B. 3. He concurred with Mr. Holloway’s concern, stressing safety is the most important issue, especially in construction. Mr. Gibson noted the guidelines have been set for AGC and the safety committee is expected to enforce the rules.

Chairman Townsend inquired if the “joint and several liability” clauses were to change, would the AGC still be in opposition of the proposal? In that case, Mr. Gibson admitted part of the bill would not be opposed, however, problems like membership and solvency would remain that would need consideration.

Chairman Townsend asked: “Is not the issue, as the proponents articulated, the Division of Insurance and the standards this committee or the Legislature will set for the purpose of constructing a SIG? If the ‘joint several’ clause was stricken, then perhaps the standard could be higher because they would no longer have the umbrella of the re-insurance of the total SIG.”

Mr. Holloway pointed out there are standards in place. He agreed that eliminating the “joint several” liability, keeping the trade association as an alternative, and having a new standard for non-affiliated SIGs would be the objective.

Mr. Gibson also disagreed on the higher percentage previously mentioned, stating his company negotiated for a lower price. He said the service received for the other 1 percent from the trade association is very important. “We use our trade association to our benefit, which is what it was set up for,” he said.

Chairman Townsend asked if the organization charges a different fee for affiliated members of the SIG. Mr. Holloway explained that if the member is not doing business in Clark County, the business pays a nominal fee of $750 dollars a year, compared to $350 paid by a contractor doing business in Clark County.

Chairman Townsend also asked if there were SIGs associated with Messrs. Holloway’s and Gibson’s trade associations, that are not construction-related or do not require an AGC license. Mr. Gibson said, according to his experience, rating modifications and types of work would factor into premium fees paid, otherwise there were no differences.

Jesse C. Paulk, Lobbyist, Director, Workers’ Compensation Group, and Associated General Contractors-Las Vegas, testified against the proposal. Mr. Paulk insisted the trade association should be involved. He agreed with prior testifiers that the 1 percent safety rate for services is a good rate, even if there is a full-time safety director with a vehicle and miscellaneous equipment needed to take care of the safety program.

Daryl E. Capurro, Lobbyist, Managing Director, Nevada Motor Transport Association, and Nevada Transportation Network Self-Insured Group (NTNSIG), stated the NTNSIG is the oldest certified SIG in Nevada, in operation since October 15, 1995, representing over 100 companies in the state of Nevada with combined networks and assets of $200 million. He clarified the original proposal was passed in 1993, effective as of July 1, 1995. He pointed out the Retail Association of Nevada and his company, Nevada Motor Transport Association, were involved in the negotiations with the State Industrial Insurance System (SIIS), in coordination with members of the insurance industry, allowing the Legislature and other members of the executive branch in Governor Miller’s administration to review the negotiation.

Mr. Capurro said some of the strong opposition to the formation of SIGs came from the insurance commissioner’s office (ICO). He noted one of the things that was insisted upon by the Legislature, was there had to be accountability, the Legislature requested that somebody be accountable. Because, Mr. Capurro continued, one of the prominent states mentioned, where SIGs have had problems, was Florida, due to no regulations in place when it originally allowed their self-insured groups, in addition to financial problems that arose when SIGs were formed only for the purpose of offering insurance, with no other homogeneous organization’s focus on safety and other issues involved in the SIG concept. He claimed this legislation was reviewed in 1993, 1995, 1997, and again in 1999, with solid standards to be implemented. He said there is no application fee collected by his organization, but to qualify, the group would have to be associated with a TA established by law and endorsed by NTNSIG. In his opinion, Mr. Capurro said, he believed the intent of S.B. 3 is wrong, and it would breach the homogeneity standard set by the Legislature.

Mr. Capurro warned it is a long, slippery slope to insolvency to allow groups to come in simply for the purpose of forming industrial insurance groups, and other entities, including the insurance commissioner’s office would not agree with that decision. “We cannot resolve the insolvency fund failures of others,” he said. Mr. Capurro spoke of the excess coverage, saying if the issue were separated completely from the insolvency fund [NRS 616-B.309] and the subsequent injury fund [NRS 616B.554], “we would be left with the policy issue; is this good legislation? I am here to tell you it is not.”

Mr. Capurro declared he is not aware of any business in the state that does not have access to a trade association to represent its interest. He submitted that the requirement for TA affiliation is actually taken from the National Association of Insurance Commissioners’ model, and is what this committee should be focused on.

Senator Shaffer drew attention to the situation of the injured worker and the need of protection for the injured worker, asking if the bill was to be passed, could that protection be compromised if there was a failure some place along the line.

Mr. Capurro responded, the reason the protections exist is because of the nature of having to be a member of the TA for at least 5 years, which lends stability to the process.

Mr. Capurro continued, if changes were made to the homogeneity rule, and any waiting period or affiliation with an established TA were eliminated, it would allow fly-by-night organizations to make a commitment. He said he has serious concerns about whether claims would be paid promptly in some cases, obviously reverting it back to the State to take care of the situation. “We should not be put into the same insolvency fund with fly-by-night outfits.”

Chairman Townsend made reference to NRS 616B.350 section 1, subsection 2, line 8: “A group of 5 or more employers may not act as an association, unless each member of the group is a member or an associate of the bona fide trade association as determined by the commissioner, which is incorporated in the state and has been in existence for 5 years,” and noted it meant the trade association has to be in existence 5 years, not the member. Chairman Townsend stated Mr. Capurro, and Mr. Holloway seem to have different opinions on “joint several” and the responsibilities, “Mr. Holloway is stating that ‘joint several’ not only is within a group, but overall, [that] you are required to keep an insurance policy for all the groups for which you pay into, and you [Mr. Capurro] are saying that is not the case.” Mr. Capurro agreed with the Chairman’s assessment, then replied, “The insolvency fund and the matters involving our group can be covered with excess coverage and insurance, but [we] can not cover the insolvency of a group created as a result of passage of this legislation, or even if the retail group went out of business, there would be no way to ensure that our members are not unnecessarily affected.”

Mr. Holloway admitted he had misunderstood the chairman’s question and he concurred with Mr. Capurro’s last remarks.

Chairman Townsend called attention to “several” referring to “within” the group, not “all” the groups. Mr. Holloway added that there is liability under the statute for his group and other groups, which is the reason for the insolvency fund.

Chairman Townsend clarified there has to be some kind of liability if you are buying an insurance policy to cover all the groups you must pay into. Mr. Holloway pointed out that his group would not be able to buy re-insurance to cover the insolvency of Mr. Capurro’s group or any fly-by-night outfit, “We do have to pay, under the current law, into an insolvency fund; and we are technically, under the current law, liable for their claims if the [other] groups fail. [But] we pay into the fund only.”

Mr. Capurro added, it is “joint” and “several” liability with respect to members of the SIG in an insolvency situation if that group fails. However, he noted, the groups are [also] paying into the insolvency fund with the state, to cover insolvencies with groups outside of their own organization, with the potential of not enough money in the insolvency fund.

Chairman Townsend asked Mr. Capurro if he was equally concerned when Employers Insurance Company of Nevada (EICON) and Associated General Contractors (AGC) became associated, since under the insolvency rule Mr. Capurro’s company is responsible for them, too. Mr. Capurro replied, this Legislature holds us responsible for the industries we represent. He said, no, he had no concerns about the financial responsibility of the TAs that currently sponsor SIGs, but would be concerned about being put in the same pot with outfits that have no affiliation and are formed simply for the purpose of providing insurance. That, Mr. Capurro continued, as a matter of fact, was one of the reasons the head of the SIIS in 1993, and then in 1995, recommended the requirement be extended out to trade associations or expand for “more than 5 years.” In fact, Mr. Capurro said, virtually every one of the trade associations that has served as a sponsor has been around for a long time.

Chairman Townsend noted the head of the former State Industrial Insurance System had a very self-serving reason for not allowing that to happen. Then he asked if the difference between the Associated General Contractors and members of the fast food industry, like Burger King, McDonalds, or Taco Bell, is because the restaurants chose not to have a TA.

Mr. Capurro said he was not sure if businesses in the fast food industry had a trade association they could affiliate with, adding it is the issue of homogeneity. Chairman Townsend remarked the fast food industry should not have to create a TA and wait 5 years if they are no different. Mr. Capurro repeated he was not aware of any business or industry in this state that does not have access to a TA that could represent their interests, including the fast food restaurants.

Chairman Townsend asked, if they only have a national organization, of what benefit is it to those people who work very hard in fast food restaurants; perhaps they would benefit because costs can be reduced, prevention of injuries could be a focus of safety. Then, he asked, what if they came together without a trade association.

Mr. Capurro offered he believes it would be a question of focus. The TA representing a homogeneous group comes before the Legislature to address issues of safety, like OSHA (Occupational Safety and Health Administration), and other issues of impact to the SIGs. The SIGs, on their own, do not have that kind of legislative representation, they are organizations formed to administer and pay claims; many times they use the TAs to provide information to the Legislature on issues that come before committees like this one.

Chairman Townsend stressed the debate is focused on the issue of what an insurance company is. “We all know what it is, the longer they hold the money, the better off they are,” he said. As a result, it would mean the less someone is injured the better off the insurance company is, which has been a strong policy for this committee for a very long time. He said he wondered what would be in the interest of a group without a TA to provide the necessary safety.

Mr. Capurro proceeded, all of the groups are interested in safety, and it is one of the reasons why loss ratios are lower. He repeated, I am not aware of any business in the state of Nevada that would not have access to a TA of some kind that could form an SIG.

Richard Staub, Attorney, representing the Nevada Auto Network, Nevada Transportation Network, Nevada Retail Network, Builders Association of Western Nevada, and Pro-Group Management Incorporated, explained he has been representing self-insured employers and self-insured groups for as long as they have been in existence in the State of Nevada. He said both the board and self-insured employers are able to act as an insurance entity and assume the responsibilities they have to their clients, the employers, and their claimants, or injured workers. He recalled Senator Shaffer’s remarks, the ultimate reason is to protect the injured worker. He expressed opposition to the proposed amendments to S.B. 3. In his opinion, he said, the changes would only allow potentially non-homogeneous entities to band together merely in an effort to save as much as possible on premiums or assessments.

Due to the potential of this bill, Mr. Staub said, there could be virtually hundreds of groups banding together only for the purposes of providing insurance and saving money. He stated the purpose for his clients is to get the best use of their money, however, the fact that the TAs exist, they provide not only a sponsorship but also a variety of services to the members and to the self-insured entity that they sponsor. He brought up as an example, the state of North Carolina, which originally did not have the requirement of trade association sponsorship, and ended up, virtually overnight with 42 funds, 42 SIGs, in existence. Now, after they changed their legislation, they remain with 10. He talked about the NAIC model requiring that self-insured groups have a sponsoring entity. In his opinion, he said, sponsorship provides financial legitimacy to the groups, and because the members come from a loyal and homogeneous membership, the self-insured group is created with financial integrity and sufficient funds. He firmly maintained the last issue the commissioner of insurance would want to deal with is paying industrial claims out of the state insolvency fund for a self-insured group that has become insolvent.

He stressed the TAs have provided protection for their group members. Mr. Staub talked about TA regulations and how they intervene when there is a problem with their members, adding, the TA provides marketing on behalf of the groups, loss control services, safety services, even labor-management in some cases. He urged the committee to protect the safety and integrity of the self-insurance function for the benefit of the workers.

Mr. Staub concluded, the proposed changes would only result in more insolvent self-insured groups and substantial increases in applications to the insolvency fund, and would not be an appropriate insurance function under the Nevada Industrial Insurance Act. He added, there is no “joint several” liability between the SIG and the sponsoring TA.

Robert A. Ostrovsky, Lobbyist, Nevadans for Affordable Healthcare, and Nevada Resort Association, noted that to the best of his knowledge, the Nevada Resort Association does not operate SIG, most or all of their members are self-insured employers. He stated Employers Insurance Company of Nevada (EICON) and SIGs have been consistent in their efforts to bring together homogeneous groups. He said this bill would be an opportunity to build groups that lose the homogeneity provided when the SIG is formed by a group of five or more “employers engaged in the same or similar classifications of employment.” Looking at the SIG standard industrial codes, some of which could be very broad but it would be up to the insurance commissioner to determine, he said, any five employers can gather before the insurance commissioner and ask to be accepted as a group. If the commissioner approves the reinstitution of section 1, subsection 7 of the bill, he noted, anyone who is associated with any of the five employers may then go from there, even if they are not specifically from the same industry, while currently, a SIG could only accept members that are associated with its industry; so if a business is in the transportation industry, it might find businesses who supply tires or forklifts to load trucks to associate with.

Mr. Ostrovsky said a simple solution to the matter would be to go to the insurance commissioner and apply to become an insurance company in Nevada, based on the standards and appropriate reserves, and make sure that claims get paid. He said alternative financing and cost control has worked for EICON and other insurers in the state. He suggested it would be up to the insurance commissioner as to how many groups would be allowed to form and what businesses could associate with. He urged lawmakers to let the law remain as is, and other companies with opposition, who would like to participate in the TA business, could join in as insurance carriers.

John P. Sande III, Lobbyist, Nevada Franchised Auto Dealers Association, and AON Risk Services, voiced his opposition to the proposal.

Mary Lau, Lobbyist, Executive Director, Retail Association of Nevada, said she agreed with much of today’s testimony. She offered to be available to assist or answer questions from the committee.

Wayne Carlson, Lobbyist, Public Agency Compensation Trust, said his company also contributes to the insolvency fund, therefore solvency is a major concern.

Danny L. Thompson, Lobbyist, Political Director, Nevada State American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), indicated he had not been in support of the groups originally, then, when the “homogeneous and homogeneous” terminology was added to the bill, it improved matters. He also said he disagrees with the current proposal.

Mr. Leftwich said he felt assured relationships between TAs and SIGs would not be affected at all, if the bill was to pass, that both entities will continue to work together in the same fashion, however, the bill would put the TAs on notice that if they are not working in the best interests of their SIG membership, they could be voted out as a trade association. He pointed out that 30 years ago, there were comparisons drawn between health SIGs and worker’s compensation, yet they are two entities and their functions are entirely different: the worker’s compensation group has more control and statutory recourse than health self-insured groups.

Mr. Leftwich noted the lack of confidence that the DOI would regulate the SIGs, especially if they were allowed to form without trade association sponsorship. He pointed out, the DOI could be doing a better job if it had more support. Currently, he continued, the DOI is asking for financial support from employers who are forming a SIG, to make sure that the membership of the SIG has the financial resources and assets required in the event the group fails. There are a several measures that the DOI can extend to the financial solvency to make sure the SIGs are operating correctly. Mr. Leftwich said he disagreed with prior testimony of forming a SIG without the benefit of the TA. He maintained the businesses are capable financially; they use good business judgment for the SIGs also, because members of their management may sit on the boards of trustees. In conclusion, Mr. Leftwich stated, the TAs do not share any of the liabilities, if a SIG fails due to financial insolvency, the TA, in general, would not pay on the account; however, the TAs do share the profits from the SIGs.

Chairman Townsend said he recognized the complexity and controversy surrounding the issue. He called for a 2-week subcommittee review on the matter, appointing Senators Carlton, Rhoads, and O’Connell, with Senator O’Connell as the chairperson. Chairman Townsend then closed the hearing on S.B. 3 and opened the hearing on S.B. 44.

Senate Bill 44: Revises provisions governing consolidated insurance programs. (BDR 53-445)

Senator Schneider said some concerns regarding construction projects in Las Vegas were brought to his attention.

Making reference to his proposed language changes for section 6 of S.B. 44 (Exhibit E,) Mr. Holloway said his proposed change would also amend NRS 616B.710 to increase the threshold amount of the estimated total cost of a construction project to be equal to or greater than $250 million, before a consolidated insurance program may be established, up from the current $150 million base amount threshold. He said independent insurance companies state there are no significant savings to the owner of a consolidated insurance program on projects of less than $250 million, a finding, which was recently confirmed by the Washoe County School District. He stressed, as a matter of public policy, consolidated insurance programs should be restricted from contracting with a contractor who has a poor safety record. He suggested redefining the estimated total cost of a construction project to include nonconstruction-related costs, such as acquiring the real property on which the project will be built.

Mr. Holloway proceeded to outline other suggestions to amend section 1 of S.B. 44 (Exhibit E) to further define a construction project that may be covered by a consolidated insurance program. His suggested changes would require that each consolidated insurance program cover no more than one construction project, to preclude the aggregation of numerous construction projects at different sites in order to meet the threshold amount for a consolidated insurance program providing industrial insurance coverage.

Mr. Holloway continued, the current law, as written in NRS 616B.710, allows consolidated insurance programs for industrial insurance to cover more than one construction project as of October 1, 2001, and he proposed to repeal such language from the provision. He pointed out that four of the last six construction fatalities in this state have occurred on sites covered by consolidated insurance programs. The safety of construction contractors and subcontractors should be sufficient reason to preclude consolidated insurance program coverage, he said. He urged the committee to consider the administrative and economic burden imposed upon local contractors and subcontractors in order to inspire large international insurance companies. A separate construction contract would be required for each project involving a multitude of contractors and subcontractors, increasing not only the cost of consolidated projects but also, significantly, the administrative costs on each of the projects. While statute defines the estimated total cost of a construction project, it does not define the construction project, he said, a definition is needed to understand the estimated total cost. Mr. Holloway suggested the language of NRS 624.215 for correct definitions. In addition, he indicated the Nevada Legislature must note that each time a contractor or subcontractor is employed on a project covered by a consolidated insurance program, the industrial insurance coverage is disrupted, resulting in an increase in industrial insurance rates.

Mr. Paulk testified in support of the bill. He elaborated, when the first consolidated program was started there were several concerns, which proved to be valid. He made reference to his prepared statement (Exhibit F), stressing the possibility of S.B. 44 alleviating some of the administrative and economic burden a contractor would encounter when working on a project with an owner controlled insurance program (OCIP), by having two insurance providers for the same employee. He said he agreed with Mr. Holloway, the additional increase on non-OCIP projects, where a SIG does not allow for $36,000 annual cap, is not taken into consideration when the employer moves the worker to another project. If a construction project was to go beyond the allowed timeframe or below the allowed base threshold, it could increase the cost of the contractors’ insurance substantially, with the possibility of disqualification from the self-insurance group, due to premium reductions. He stated the current cost for worker’s compensation coverage (in Nevada) is the lowest in the construction industry, including the cost for the same coverage on projects with owner-controlled insurance programs.

Mr. Paulk recommended the committee approve the bill to reestablish the benefits for taxpayers and the contractors, and to “enact the Nevada Revised Statutes of several years ago, which would allow self-insured groups to provide worker’s compensation insurance coverage.”

Mr. Gibson testified in favor of S.B. 44. He stated that in 1995, he became a founding member of the Associated General Contractors-Las Vegas’ worker’s compensation management service, the Construction Industry Workers’ Compensation Group (CIWCG), and currently serves as the president of the board of trustees of that organization. He noted CIWCG filed for its charter in 1995, and commenced operations in February 1996, with a group of nine original members, for the only purpose of regaining control over the insurance program. Mr. Gibson added, the founding members of CIWCG felt that the State Industrial Insurance System (SIIS) was charging excessive rates and delivering poor service, particularly, safety claims were inadequate and inconsistent. He continued, SIIS controlled rates, claims management, safety, computer data and policy insurance service and “as contractors, we had no power over any critical matters.” He offered that, after a careful study, CIWCG decided to assume the fiduciary responsibility and financial accountability for workers’ compensation. The members were aware of the cost and risk involved, but also knew they had to do what was best for such parties as employees, customers and businesses, he said. He stated that, in collaboration with the Legislature and the insurance commissioner, many of the features needed to accomplish the job were provided, including establishing members to associate with a safe, secured, and well-operated company; to meet their goals and objectives, and they hired local insurance experts.

Mr. Gibson added, after 5 years, CIWCG has become the largest association workers’ compensation program in Nevada, covering over 100 companies, including general contractors, subcontractors, material and equipment suppliers, and service firms. The membership includes union and merit shop contractors, and CIWCG covers all members, including those members who are just able to meet the $15,000 minimum annual premium. He offered that CIWCG is sponsored by the Associated General Contractors-Las Vegas, and officially endorsed by the worker’s compensation representatives for the Associated Builders and Contractors-Sierra Nevada Chapter, as well as the Associated Builders and Contractors of Southern Nevada.

Mr. Gibson drew attention to the OCIP model, in which a third party administrator (TPA) is obligated to the insurance company and not the contractor; and the insurance broker’s duty is to represent the interests of his client, the owner, not the contractor. But, he said, CIWCG is responsible for keeping its members safe after the owner controlled insurance program is terminated. When a claim is reported to a different party, the injured worker is (often) forced to find medical care under a different provider list, which is followed by an investigation, which leads to the OCIP insurer discovering the worker has been under a different project, then CIWCG is deprived of the premium income, but still has the obligation to provide all the services to which the member is entitled.

Mr. Gibson remarked, in 2001, CIWCG will protect a work force whose payroll exceeds $100 million. Covered employees perform both public and private work all over the state and CIWCG delivers prompt high quality medical care to the injured workers through a statewide provider network. The vocational and rehabilitation providers have returned many members back to productive employment under modified-duty programs, achieving safety scores of 96.4 percent out of 100 (percent) in the fourth quarter of year 2000, alone. He added that the construction industry, the Department of Industrial Relations has not sanctioned the group for failing to meet workers’ benefits, and the Division of Insurance has not issued a single fine against CIWCG.

In conclusion, Mr. Gibson stated, consolidated insurance programs are disruptive at every level, the owner may select the insurance company for the OCIP that the contractor may have chosen not to do business with. These programs are promoted by public schools and public works as money savers by combining several projects too small for an OCIP. Brokers are not selected by low bid and the public may never know the true cost of the insurance and whether the entity got the lowest qualified bid or whether if the contractor furnished his own coverage, it would have been more cost effective. He stated his organization’s support for limitations on consolidated programs, the rights of private owners on large and single site projects. He indicated it is his opinion, an increase in the threshold would keep the number of OCIPs in a reasonable level, rolling wraps would only enrich a few brokers and carriers on the promise of saving.

Gary E. Milliken, Lobbyist, Associated General Contractors-Las Vegas, and Centennial Group LLC, gave some examples of how confusing OCIPs have become. In recent discussions with the Division of Insurance regarding the Fashion Show Mall, Mr. Milliken said he was under the impression the project was an OCIP, then he was informed that the project was no longer an OCIP, and later, that it had never been an OCIP.

He also pointed out a Summerlin project in which the Employers Insurance Company of Nevada, on January 7, 2000, filed a lawsuit against the Summerlin Resort for the sum of $1,171,000,200 for unpaid worker’s compensation insurance premiums.

Cheryl Blomstrom, Lobbyist, Government Affairs Director, Nevada Association of Mechanical Contractors, Nevada Chapter Associated General Contractors, mentioned she had served on a panel for the Washoe County School District (WCSD) that reviewed the use of an OCIP and maintenance program proposed over a 5-year period. In doing an evaluation, the WCSD determined that the OCIP offer of about $150 million for the entire project was not the savings that the school district anticipated. She said the district’s maintenance staff and risk management department later opted not to select an OCIP for their program.

Mike McGrovery, Lobbyist, General Counsel, Construction Industry Workers’ Compensation Group, Nevada Contractors Association, testified he has had experience with some OCIPs for about 2 years or longer, and said he could not think of a good reason to have an OCIP in Nevada. He outlined other problems: business relations between brokers from Las Vegas and Reno have been severely disrupted by the OCIP process, and there have been administrative difficulties with the department of insurance. An example, he said, entailed “OCIPs coming on board after the project started but before the contract is written, making it difficult for the DOI to properly regulate it.” The reason for consolidated programs is basically the money or commissions that go to out-of-state brokers and out-of-state insurance companies. He iterated OCIPs have proven to be very dangerous programs. He stated many Nevada contractors have been surprised with additional hidden charges for insurance coverage when their contract ends.

Senator O’Connell asked how many projects in the private sector are OCIPs.

Mr. Holloway said four or five at this time. He maintained the experiences that the contractors and subcontractors encounter with a consolidated insurance program on worker’s compensation are similar. He added OCIPs discourage good safety programs and create low workers’ compensation rates.

Senator O’Connell recalled Nevada as being one of the only states that did not allow OCIPs. Mr. Holloway stated Nevada was not, the OCIP law differs from state to state, and he did not remember how many of the states preclude OCIPs. He mentioned having talked to contractors in other states who have experienced some of the same or similar problems.

There was general discussion between Mr. Holloway and Senator Carlton who asked for elaboration on the four people killed on construction projects insured under the consolidated insurance program.

Mr. Holloway said:

Four of the last six construction fatalities in Nevada . . . occurred on projects with OCIPs. I think that is because . . . you are removed from the competitive bid process on these projects, the competitive advantage that a contractor or subcontractor has that maintains a good safety program. With OCIPs once they go on the project, they (the contractors) are no longer responsible for any of the injuries or any of the safety (problems) that occur on the project, it becomes the responsibility of the owner and the insurance company that is providing the insurance for the project. We are talking about some pretty immense projects. I do think these have mitigated towards the project’s being a little more unsafe than it normally might have been.

Senator Carlton asked, how many projects were covered under the OCIPs when the fatalities occurred, and if they were on the same property? Mr. Holloway stated no, at the time there were only three projects under OCIPs and they were spread out over the last 2 years, considering how many people were working on all of those projects, 80,000 people working on projects in Southern Nevada. Senator Carlton remarked: “ Four is till too many. Four more than there needs to be.” Mr. Holloway agreed, but said he did not know the exact percentage, because on any of the projects, at one time there might only be 5 people working, or 300, at any given point in time.

Senator Carlton persisted that the responsibility for safety falls upon the owner of the property where the project is going on. Mr. Holloway indicated that, under the statute, the overall safety responsibility falls on the owner, which requires maintaining a safety coordinator on the project. Senator Carlton said: “So it is not the program that is causing the problem, it is the owner who is not valuing what is going on. It is just that the program gets to opt out of the safety.

Mr. Holloway expanded, that there are two mitigating factors:

You have taken away a competitive advantage for the safer contractors to get the bids for the work, and as a result, you are going to have more contractors on these projects who do not have good safety programs, and those with poor safety records will continue on the projects. Even for the good contractor, you are taking away the incentive while they are working on that project (and most of these are big projects, as you know) . . . to maintain their safety programs, because they are not responsible for the claims or the accidents or any follow-up on them. I am not saying they do not maintain the program; they just do not have the focus or the emphasis.

Glenda A. Lisle, Lobbyist, Construction Trust, pointed out, in her experience with OCIPs and self-insured employers, safety is not continued, when individuals have “stopped at the gate,” so to speak, and have “left the safety,” at that point it becomes the OCIP’s responsibility. She explained that the experience then at that point, does go to the OCIP owner and not the owner of the construction company. “We feel it is a disadvantage over the years, so that you have a consistency with their experience, where the modification does follow the employer.” She said she agreed on the limit increase suggestions and changes on “rolling wrap-ups.”

Mr. Sande, indicated that, as a representative of AON Risk Services, he was under the impression that the current proposal reflected the same concerns as last session. He stated, all the private insurance companies that have dealt with OCIPs in Nevada since the bill was passed have been very successful and have saved millions of dollars, allowing larger projects to be completed. He pointed out from prior testimony that the problems in recent years occurred under the old law, prior to Senate Bill 133 of the Seventieth Session, which required several provisions to apply to OCIP policies. Additionally, he added, during discussions 2 years ago, all the organizations that have testified today agreed to live by the recommendations.

SENATE BILL 133 OF THE SEVENTIETH SESSION: Establishes provisions governing consolidated insurance programs. (BDR 15-384)

James L. Wadhams, Lobbyist, American Insurance Association, and Nevada Independent Insurance Agents, testified in opposition to S. B. 44. He said he concurred rolling wrap-ups and OCIPs are responsible approaches. Then he stated: “Workers’ safety is not a function of insurance, it is a function of employers’ responsibility. I am stunned by the suggestion that an insurance program causes deaths, the insurance program is there to reimburse people for those expenses; safety is not excused by purchasing insurance.” He added that the proposal should be considered as an insurance mechanism that allows public and private projects to save taxpayer dollars or to find efficiencies in the private sector.

Senator O'Connell inquired about the Washoe County School Project. Mr. Sande replied that he had no information.

Samuel P. McMullen, Lobbyist, President, AIG Claim Services Incorporated, said he remembered that the Logan and Boston tunnel wrap-ups (of Boston’s Central Artery Project) was done with a great safety record and good records for efficiency and cost effectiveness, the most important consideration was the safety of workers. He said he agreed that the issue is not whether the insurance program affects safety. Mr. McMullen reminded the committee that the last proposal reflected a negotiated compromise. He stated the issue of rolling wrap-ups was put aside for 2 years to allow for “this program to transition in.” He noted it would take time to implement, because there are obstacles in terms of people thinking this is good for their businesses or good for their self-insured groups. He reiterated not to lose sight of the fact that negotiated contracts work for employee safety, health, and prompt, efficient medical service. He called attention to the fact that the same issues are discussed in the Assembly just as strongly. He admitted a longer track record might be needed to evaluate whether or not there are real problems.

Senator Schneider asked: “If the negotiated program is working so well, why would the largest group of contractors find problems or put their companies at risk?” Mr. McMullen emphasized there are many parties affected: the owners, the developers, people who want to build projects in the most safe and cost-effective way, who need to be considered. If the safety coordination in the bill is not adequate, the specific points (of contention) would need to be worked out. He agreed to meet with interested parties, to help them compromise and come to a mutual agreement on the problems to ensure employee safety, and to take care of employees in every possible way.

Mr. Wadhams said he recognized the (primary) importance of workers’ compensation reimbursement and the safety of those people who are exposed to the risk. Second, he noted, are the people who purchase insurance, like the public works projects, the governments and private owners are also looking for some economy in the process. The insurance mechanism should conform to the marketplace, he said, the contractors who have difficulties might find their problems to be related to the competitive aspects of cash flow, since there seems to be no complaints from the owners. Mr. Wadams added what the marketplace needs, as long as workers are protected, is more important than whether his company is inconvenienced or not.

Clifford King, Chief Insurance Examiner, Appeals Panel for Industrial Insurance, Division of Insurance, Department of Business and Industry, explained that all of the deaths, referenced earlier, occurred on projects contracted prior to the current legislation, which was effective July 1, 1999. He clarified that the deaths occurred under the old Employees Insurance Company of Nevada contracts, which did not have the same safety standards that exist under the current law. He listed the three programs currently in effect and approved by the DOI: (Palms Hotel Casino) Fiesta Palms, Green Valley Ranch (master-planned community), and Turnberry Place (condominiums), and a fourth, which was mentioned previously, the Fashion Show Mall. However, it has been decided not to proceed with the mall under an OCIP, due to some problems with the written contract, safety program, and safety coordinators who were not qualified. Mr. King explained the safety programs and safety coordinators must be approved by the Department of Industrial Relations (DIR), which oversees the safety programs of each project. He noted the Summerlin project was approved prior to the current legislation. Under S.B. 44, all of the projects approved up until now would be eliminated because of their size.

Chairman Townsend closed the hearing on S.B. 44. He opened the hearing on BDR 53-306.

BILL DRAFT REQUEST 53-306: Eliminates exclusion of certain employees from provisions requiring additional compensation for overtime. (Later introduced as Senate Bill 136.)

Chairman Townsend explained that NRS 608.018 provides that an employer shall pay 1.5 times the employee’s regular wage rate, whenever an employee works more than 40 hours in a scheduled week of work or more than 8 hours in any work day, unless mutually agreed upon. He also noted the provisions of BDR 53-306 would strike out subsection 2, paragraph (a), which exempts “employees who are not covered by the minimum wage provisions.”

SENATOR SHAFFER MOVED FOR COMMITTEE INTRODUCTION OF BDR 53-306.

SENATOR O’CONNELL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

* * * * *

Chairman Townsend opened the hearing on S.B. 4 by saying: “This committee passed a number of bills to try to effectuate some changes in downward pressure on rates, and to improve the insurance cost for our consumers which, unfortunately, did not make its way out of the Assembly.”

Senate Bill 4: Makes various changes regarding insurance. (BDR 57-734).

Samuel Sorich, Lobbyist, Vice President, National Association of Independent Insurers, said his company was an association of property casualty insurance companies with 200 members doing business in Nevada. He said S.B. 4 will change the insurance rating provision for homeowners and automobile insurance, offering real advantages to consumers, insurance companies, the Division of Insurance, and generally, the markets.

Mr. Sorich introduced Exhibit G, a statement from the National Association of Independent Insurers, in reference to the proposal. He noted that under the existing law, insurance rates may not be “excessive, inadequate, or unfairly discriminatory,” and said S.B. 4 would maintain the existing standards. He outlined the important change in the bill would be the timing of the insurance commissioner’s exercise of authority. Senate Bill 4 will allow companies to continue filing rates, and introduce them into the marketplace without waiting for the insurance commissioner’s prior approval; at the same time, the excessive, inadequate, and unfairly discriminatory standards would stay in place. He reiterated the changes would bring advantages to consumers and the marketplace.

Mr. Sorich concluded the bill would expose insurance rates to competitive market forces in a more effective way, and would make the regulation of insurance more efficient.

Kevin Sullivan, Allstate Insurance Company, commended the committee’s efforts to try and modernize the regulation of the business of insurance in the state of Nevada. Expressing support for the bill, he noted the business of insurance is highly competitive, giving the consumer the advantage to chose insurance with competitive rates. He voiced concern with regard to the provision that relates to unfair discrimination. He said he recognized a dramatic increase in companies’ information and knowledge, along with the consumers’ ability to shop for insurance rates. He stressed the need to establish rates, eliminate set practices based on race, religion, or national origin, and allow the companies to develop and implement modern schemes of pricing and marketing in the best interests of the consumer. He urged the committee to consider the provisions of the bill.

Robert B. Feldman, Lobbyist, Nevada General Insurance Company, offered rates varied by as much as 400 percent among 20 companies, with the low-cost companies’ rates varying by 25 percent. In his opinion, he said, the companies would have to stop writing business or make the underwriting so tough that the consumer would have to switch to another company. In his opinion, S.B. 4 would provide a much more comprehensive law.

Chairman Townsend closed the hearing on S. B. 4 saying, “I want to make sure the committee is comfortable with a broader explanation, these issues are almost like deferred energy accounting.”

Chairman Townsend adjourned the meeting at 10:56 a.m.

RESPECTFULLY SUBMITTED:

Silvia Motta,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

DATE: