MINUTES OF THE

SENATE Committee on Commerce and Labor

 

Seventy-First Session

April 4, 2001

 

 

The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Wednesday, April 4, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was video conferenced to the Grant Sawyer State Office Building, Room 4421, 555 East Washington Street, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau. 

 

COMMITTEE MEMBERS PRESENT:

 

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Dean A. Rhoads

Senator Mark Amodei

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

 

GUEST LEGISLATORS PRESENT:

 

Senator Raymond (Ray) D. Rawson, Clark County Senatorial District No. 6

Senator Jon C. Porter, Sr., Clark County Senatorial District No. 1

 

STAFF MEMBERS PRESENT:

 

Scott Young, Committee Policy Analyst

Silvia Motta, Committee Secretary

 

OTHERS PRESENT:

 

K. Neena Laxalt, Lobbyist, Nevada Podiatric Medical Association

Mark D. Rawson, D.P.M., President, Nevada Podiatric Medical Association

Cathy A. Bax, D.P.M. Treasurer/Vice President, Nevada Podiatric Medical             Association

Robert Barengo, Lobbyist, Nevada State Board of Medical Examiners, and             Nevada State Contractors’ Board

Robin L. Titus, M.D., Board of Medical Examiners

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association

John Ellerton, M.D., Las Vegas

Douglas S. Stacey, D.M.P., Las Vegas

Scott M. Craigie, Lobbyist, Sprint

Keith W. Macdonald, Executive Secretary, State Board of Pharmacy

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

Larry D. Lessly, J.D., Executive Director, Board of Medical Examiners

Fred L. Hillerby, Lobbyist, Nevada State Board of Pharmacy

Daniel C. Musgrove, Lobbyist, Southern Nevada Regional Planning Coalition

David L. Howard, Lobbyist, Nevada State Chamber Association

Jeff Hall, Mystery Shopping Providers Association

Daniel D. Crate, General Manager, Burns International Security Services

Gina Crown, Lobbyist, acting President, Nevada Investigative and Protective             Services Association

Andrea L. Boggs, Lobbyist, Professional Society of Investigators

Peter Maheu, Lobbyist, Professional Society of Investigators

R.T. Smith, President and Chief Executive Officer, Investigative Specialists             Incorporation, Las Vegas

Dorothy Williams-Jamal, Owner, Williams-Jamal Investigations, Las Vegas

James T. Russell, Lobbyist, Nevada State Board of Accountancy

Bruce Robb, Board Counsel, State Board of Professional Engineers and Land             Surveyors

Doug Walther, Chief, Office of Business Finance and Planning, Department             of             Business and Industry

Paula Berkley, Lobbyist, Chiropractic Physicians’ Board of Nevada

Vern Krahn, Board of Landscape Architecture

Rosalind Tuana, Executive Director, Board of Examiners for Social Workers

Kathy Apple, R.N., M.S., Executive Director, Administration, Nursing Practice,             Discipline and Monitoring, State Board of Nursing

Sharon Atkinson, Executive Director, Board of Examiners for Alcohol and             Drug Abuse Counselors

James L. Wadhams, Lobbyist, Nevada State Board of Architecture

Mary Manna, Executive Secretary/Office Manager, State Board of Cosmetology

 

Chairman Townsend: 

We have a bill left over from yesterday, Senate Bill (S.B.) 387, sponsored by Senator Porter, which we are going to have to postpone until the end of the agenda. 

SENATE BILL 387:  revises Provisions Governing Deceptive trade practices             committed by providers of telecommunications services.  (BDR 53-1103)

 

Chairman Townsend opened the hearing on Senate Bill (S.B.) 405.

 

SENATE BILL 405:  Makes various changes relating to practice of podiatry.             (BDR 54-38)

 

Senator Raymond (Ray) D. Rawson, Clark County Senatorial District No. 6:

I need to disclose that my son will be testifying on this bill today.  He is a podiatrist.  This is a bill I assisted in drafting to really address the problems in the practice of podiatry in Nevada.  Podiatrists are trained in specific skills, in most states they accomplish those skills.  However, in Nevada we have some difficulties regarding the amputation of toes.  I served on a surgery committee in one of the largest hospitals of the state, as a dentist, and have served on the general surgery committee. 

 

In collaboration with other physicians, we evaluated the work that was going on in the hospital.  All of the problems came through the committee that was also responsible for any disciplinary action taken by the hospital.  Basically the hospital gave privileges to those people that demonstrated the abilities for those privileges.  The fact that a person was a physician did not qualify him to be able to do surgery in the hospital, and the fact he might be an eye surgeon did not allow him to operate anywhere else on the body.  Podiatrists are physicians; they have doctoral level training; they have surgical residencies; and they limit their work specifically to the feet. 

 

There are states where their privileges go further than that.  In Michigan, I believe, they can work on hands, and in other states they were able to work up to the knee.  They are trained to be able to do the work, and it is all they are asking to be allowed to do.  I was assured this is not an attempt to do ankles or the knee.  There is the issue of safety, which goes beyond the training, the curriculum, or the residencies.  These procedures must be done in a hospital, essentially under the auspices of the physicians who control the surgery committee.  Every podiatrist who works in the hospital will have to be granted those privileges by a team of surgeons; those surgeons will be able to oversee the work and be able to prevent any errors, if they feel there is some scope that                       

is going beyond what is allowed by the law.  I feel strongly about this issue, and I understand it needs to be dealt with here in Nevada. 

Senator O'Connell:

Is it standard practice that every hospital has a committee to oversee all of the surgeons?  For example, a doctor could not just schedule surgery on his own.

 

Senator Rawson:

Every hospital has to have a staff and credentialing process set up by JCAH (Joint Commission on Accreditation of Hospitals) in order to be accredited as a hospital.  Just to be able to accept Medicare patients they must have medical staff and a credentialing procedure.

 

Senator O'Connell:

So, they are very well aware of the credential requirements prior to the operation.

 

Senator Rawson:

Yes. When a person applies for privileges at the hospital, he or she goes through an application procedure and interview process before the surgery committee, where everyone has their chart and credentials, including case reports of the work each has done, and letters from the mentors or the residency instructors.  

 

K. Neena Laxalt, Lobbyist, Nevada Podiatric Medical Association:

To my left is Cathy A. Bax, representing the podiatric association for the state of Nevada.  The provisions in section 1 of S.B. 405 are fairly easy to understand.  They allow the authority for qualified podiatric physicians to be able to perform amputations of the toe.  Amputations are a part of their curriculum, the podiatric medical school and their residency training.  Currently there are only seven states that prohibit podiatrists from amputating toes, including Nevada.  The second provision in this bill, section 1, subsection 3, allows “the board to adopt regulations that prescribe the requirements for the certification of a podiatric physician to amputate toes.” 

 

Chairman Townsend:

What are the implications for hospitals under sections 2 and 3 of the bill?

 

Ms. Laxault:

Actually, right now there are some differences in statutes, one where “podiatric physician” is defined in the current statute as an “allied health profession.”  Because of this language, some of the county hospitals in Nevada are not allowing podiatric physicians to practice in their profession with staff privileges.  This is inconsistent, since other hospital in the state do. 

 

Senator O'Connell:

Is this a procedure that can be done in the office, or do you have to go to the hospital?

 

Mark D. Rawson, D.P.M., President, Nevada Podiatric Medical Association:

Amputations of a toe are technically a very simple procedure.  Podiatrists are trained at different levels of surgery, and it is something that can be performed in the office, but we do not recommend it.  I feel this should be performed in a hospital or a surgical center institution, where everyone is granted those privileges. 

 

Senator O'Connell:

What you are telling me is you cannot do this procedure in your office without the staff or accreditation of a surgical committee in a hospital?

 

Dr. Rawson:

Yes.

 

Senator Rhoads:

How many other states allow this to take place?

 

Dr. Rawson:

Currently out of 50 states, including the District of Columbia and Puerto Rico, that allow amputations of the toe, 7 states, including Nevada, podiatrists are unable to perform this kind of procedure, while other states allow further amputation, including partial foot or full foot.  This bill has two provisions, one to allow us to amputate in a proper setting.  The second one deals with hospital privileges, the definition of a physician.  In our Nevada Revised Statutes     (NRS) 635.087, it describes a licensed podiatric physician, it defines a podiatrist and as a podiatric physician.  That was done, I believe, in 1993.  The problem we are seeing in some of the county hospitals in this state is when we apply for medical staff privileges, it is not allowed due to an older statute, NRS 450.005 and .006, which states we are “allied health profession.”  However, there is certainly a position for “allied health profession” in the hospitals, which are typically psychologists, physical therapists, and those kinds of professions, which are certainly needed.  Nonetheless, we are physicians; we should be able to perform our specialty in these hospitals, as we do at private hospitals.  The second part of the provision clears that language up, so that we will be able to get those medical staff privileges as in any other hospital. 

 

Dr. Rawson:

I have provided a packet to review at your convenience (“Nevada Podiatric Medical Association” [Exhibit C. Original is on file in the Research Library.]), explaining several important topics, such as podiatric medicine, amputation, education, residency, and food facts.  Amputations are unfortunately needed for certain patients, with over 70,000 non-traumatic amputations in this country every year.  More than half of those are diabetic patients who get some sort of infection of the foot and it progresses.  There has been a lot of research done, and podiatrists, oftentimes, are the first level of defense against this type of condition.  We see patients, and usually diabetics, on a regular basis.  If we detect any sort of problem we try to take care of it, because our real goal is to prevent amputations.  However, whether it is a diabetic, or a vascular problem with the foot where an amputation of the toe is needed, we are not able to do the surgical procedure. 

 

In such cases we must then send that patient to another specialist, such as an orthopedic surgeon, general surgeon, or vascular surgeon, all of which takes time, costing more money due to additional consultations, and possibly more tests.  The problem is these diabetics get worse quickly, and if it takes too much time, instead of losing a toe, they can lose further body parts.   A patient who loses a toe does a lot better than if he loses a leg.  This bill is to prevent problems like the one I just explained.  Our goal is to prevent amputation of any kind, although, sometimes it is absolutely necessary. 

 

I have included Medicare data from 1999 in my presentation packet (Exhibit C), the approximate number of amputations of the toe occurring today.  Currently, podiatrists in this country perform the second most toe amputations on both feet.  I will illustrate for you (referred to pages 6 and 7 of Exhibit C, foot graphic, under amputation), it is one of these two joints, it is called an “interphalangeal joint.” If it is the joint at the knuckle of the hand or the foot, it is called “metatarsal-phalangio joint.”  General surgeons perform most of those amputations; they are performing 25 percent, we are performing 22 percent, and orthopedic surgeons are third with 21 percent.  Other physicians make up the rest.  So this is a common practice in this country and in 43 other states. 

 

We are not asking for special privileges, but for privileges that we are trained for.  Further, I also list the curriculum of two of our podiatric medical schools.  We have seven schools of podiatric medicine in this country, which are all private.  First of all, in order to get into medical school, you have to earn an undergraduate degree, 4-year education.  We do 4 years in medical school, 2 years of basic sciences, and 2 years of clinical medicine; then we do 1, 2, 3, or 4 years of residency training.  In medical school everyone is taught how to do amputations, and in post-graduate, we learn how to do them clinically.  I also have included in my packet subjects like residency programs.  There are four or five different types of residency programs; some train to be just primary podiatry, where there is no surgery involved.  Therefore, they would not be performing amputations simply because of lack of training. 

 

Senator O'Connell:

Do you know how long these statutes have been in existence? 

 

Dr. Rawson:

In 1993, NRS 635.087 defined a podiatrist as a “podiatric physician.”  The older statute, I believe in 1979, is when we were “allied health,” although I may be wrong on that. 

 

Senator O'Connell:

I was wondering if, in your medical training, the discipline had progressed where you would have gotten the degree of doctor as opposed to what it was at the time the statute was initiated. 

 

Dr. Rawson:

Yes, I believe so.  Our training has improved over the years.  Forty or fifty years ago, we were called chiropodists, which included mostly corn, callus and toenail care.  Our profession has evolved to a 4-year medical school, where we do residency programs and are trained extensively in foot and ankle surgery.  Our scope of practice has increased, and so has our education in the state of Nevada.  We can perform complicated procedures if trained for it. 

 

Senator O'Connell:

Are there still varying degrees as far as the training goes?

 

Dr. Rawson:

We are all trained with a certain of level of training for the foot.  Every podiatrist should be able to handle any nonsurgical problem with the foot.  There are times when we will use a referral system if we have a vascular problem, which is very common for us, to refer to specialists regularly.  We consider ourselves as part of the medical community, and many of our patients come from physician’s referrals, too. 

 

Cathy A. Bax, D.P.M. Treasure/Vice President, Nevada Podiatric Medical Association:

I am a member of the State Board of Podiatry who approves of the changes requested through this bill.  To clarify several of your concerns, I would like to say our licensure requirements, in the state of Nevada, are higher than a lot of other states, and we do require a higher score on the national board, and at least 1 year of residency programs.  Also, the progression of our training with licensure, over the last 10 years, has changed.  Today, we do require a residency program.  If the applicant does not have one, the applicant is not even considered to practice podiatry in this state.  At a board meeting last Saturday we talked about these issues.  The board prepared to implement some type of further certification or continuing education program for podiatrists who choose to do amputations.  You can feel very confident the hospitals we work in make sure there is a “check and balance” in these types of situations.

 

Robert Barengo, Lobbyist, Nevada State Board of Medical Examiners, and Nevada State Contractors’ Board:

On behalf of the Board of Medical Examiners, I would like to voice support for S.B. 405.

 

Robin C. Titus, M.D., Board of Medical Examiners:

I am a family practitioner in Smith Valley and in Yerington.  We want to make it clear the state Board of Medical Examiners neither opposes nor supports this bill, but we do recognize it would expand the scope of practice of the podiatrist, and there will be an overlap in the practices of the orthopedic and podiatric positions.  Regarding skills of podiatrists, when someone applies for medical staff privileges, even in rural Nevada, whether it is a podiatrist, a dentist, a surgeon, or a family practitioner like myself, there is a specific list of skills we must present.  We go through a “line check item” to make sure, indeed, people or physicians, who are applying for those privileges, are qualified.  We ask for documentation on the numbers they perform; there are checks and balances through the system on various levels.        

 

Chairman Townsend:

On page 2, subsection 3 of section 1 of S.B. 405, where it says, “the board shall adopt regulations that prescribe the requirements for the certification of a podiatric physician to amputate toes,” that is if their board will draft these regulations.  When the certification is presented, the hospital will then go through those certifications and requirements, but still have the ability to make a determination.  Is that our understanding?

 

Dr. Titus:

If somebody applies, even with documentation from an alternate board, whether it would be podiatry or counseling or dentistry, physicians, M.D.s, first the medical staff, then the board has to review the documentation and determine the qualification before the privileges are granted. 

 

Lawrence P. Matheis, Lobbyist, Nevada State Medical Association:

We oppose the bill.  Surgery is one the basic tenets of what it is to practice medicine.  In the state of Nevada, you would have to be licensed as an M.D. (Medical Doctor) in chapter 630 of NRS, or as a D.O. (Doctor of Osteopathy) under chapter 633 of NRS to be a physician to do surgery.  This is a significant addition to the scope of practice of a non-physician.  Fundamentally, we see a pattern emerge.  A group receives a privileged license to do some X, Y, and Z, specified by statute, knowing it is what they are restricted to do.  They then get the additional training to do T, then come back and say, “It is wrong.”  I am not licensed to practice law in the state of Nevada, but what if I went to the “piggly wiggly” school of law, held on three weekends in Las Vegas, and learned on uncomplicated divorce cases how to process them, come to the legislature and say, “I know I am not licensed to practice law, but I am trained to be able to do uncomplicated divorce cases, and I would like an exemption from the regular rules, to be able to practice this kind of divorce law.”  It is a principle of public policy you need to seriously consider before approving the bill. 

 

We would recommend you not process the bill, but if you do, then you need to explicitly state in the statute that anyone allowed to do this would have to meet the same standard of practice as a licensed physician; if they failed to do so, they would qualify for medical malpractice. 

 

The second issue has to do with medical staff privileges.  There is nothing that precludes podiatrists from being granted medical staff privileges as “allied-health professionals.”  Clearly, the intent is to require their admission to county hospital medical staff, to be able to do surgery as staff members, but we think, under current conditions, the medical staff privileging and credentialing process can incorporate it, and not necessarily place it into statute, because it seems to be a directive to allow staff privileges in every case.  Not every medical doctor, nor every osteopathy doctor, is granted staff privileges to do everything in a hospital.  It is the authority of the medical executive committee, chief of staff, and others, to determine whether it is appropriate or not, given the person’s training and experience within a hospital setting. 

 

Senator O'Connell:

Can you give us some background regarding the 4 years of training, and the states that do allow this practice?  Have they gone through some of the issues you just related, as far as the credentialing that is needed in order to perform surgery?

 

Mr. Matheis:

My understanding is that each state has done it in very different way.  In some cases they set up a blue-ribbon committee of the licensing boards and professions to develop protocols and standards; in other cases they specify the educational requirements, or there is a joint licensing board.  As you know, each state has presided over the health professional licensing and oversight process by very different means.  Although there are general patterns, every state uses its own variations. 

 

Senator O'Connell:

What I am interested in is if the colleges of podiatry from other states have licensed graduates from those colleges to perform amputations, and if there is any additional training required, other than the 4 years of college and the 1-year residency. 

 

Mr. Matheis:

I will get the information and submit it on the record.

 

John Ellerton, M.D., Las Vegas:

I am a physician and have been in practice for 21 years in Las Vegas.  Today I appear as vice chief of the medical staff at the University Medical Center (UMC), and on behalf of the 1400-plus members of that medical staff, vigorously objecting to S.B. 405, in particular to sections 2 and 3.  Yesterday the medical executive committee of our medical staff voted unanimously to oppose this bill.  The UMC feels quite strongly this would remove our ability to control privileges, and would open a door we are not willing to see open.  I would like to point out a very fundamental difference, the special credentials of physicians, which are not specified by the Board of Medical Examiners.  Mainly, when a general license is provided it includes privileges to do other than general procedures, such as, surgery, brain surgery, cancer, or oncology, which is determined by the medical staffs of the hospitals in their process and setup, partly by the joint commission and partly by “common sense.”  Instead, we are going to have a group of people come to us with a “ticket” from their board, saying they are qualified.  We do not face that; all we get is someone with a general license. 

 

The statute is being changed to state we cannot discriminate against podiatric physicians, but the license they have says they already have the right to amputate a toe.  I think if you read carefully the two sections that are being amended, they contradict each other.  They certainly contradict the definition of podiatric physicians as being “allied health,” because NRS 450.430 prevents discrimination against “allied health” personnel for being on the medical and dental staff.  We strongly feel we are in a vice in terms of credentialing these people, because under this provision, we cannot discriminate, or say whatever action we take is discriminatory.  We had this reviewed by legal staff counsel representing the medical staff, and they agreed not only was it contradictory, but it would put us in a difficult position.  Credentialing is not the responsibility or right of any other organization. 

 

We object to this Legislature, specifically, giving us direction on how to credential people.  If the credentialing process is taken away from our organization, it would threaten the ability of UMC to get JCAH’s accreditation.  On behalf of the medical staff, I urge you not to amend S.B. 405 and not to add podiatric physicians.  It would create all sorts of confusion and contradiction, but above all, we strongly feel it removes our ability to do effective credentialing.

 

Douglas Stacey, D.P.M., Las Vegas:

I would like to speak in favor of the bill.  In 1993, I served as the president of the Nevada Podiatric Medical Association.  In the same year, the Legislature made a change, defining podiatrist as a physician and surgeon.  I believe the second part of the bill was overlooked when the language was rewritten, and a podiatrist should be able to practice in any hospital as a regular member of the medical staff.  As a podiatrist and vice chairman of the credentials committee, where I served at two of our local hospitals, we, as the credential committee, are cautious in making sure any doctor who applies for privileges, has the ability and the training to perform those surgical privileges. 

 

In order to become a member of the medical staff, the surgery department would have to approve certain privileges.  Then those privileges and any type of additional procedure is reviewed by the credential committee, regardless of the applicant’s specialty.  At the recommendation of the credential’s committee, the medical executive committee will meet, followed by the hospital board of directors who ultimately will grant the privileges.  I can assure you this is a careful mechanism and no one can be granted a specific privilege.  They must show proof of training and the ability to fully perform in their capacity.  Currently JCAH approves podiatrists on hospital staffs.  Therefore, it would not be an issue of hospital certification.  I would urge you to support this bill.

 

Chairman Townsend:

We will close hearing on S.B. 405, and open the hearing on S.B. 387. 

 

SENATE BILL 387:  Revises provisions governing deceptive trade practices             committed by providers of telecommunications service.  (BDR52-1103)

 

Senator Jon C. Porter, Sr., Clark County Senatorial District No. 1:

Lines 15 and 16 of the bill summarize the purpose of the bill, which has to do with telecommunications service to customers without first informing the customer of the amount to be charged for that service.  I like to call this “telecom purgatory,” something that has fallen between the cracks in our telecommunications industry, and has impacted our consumers.  When customers decide to sign up for a new telephone service, they contact their local phone company, asking for this new service, at which point, they are offered to sign up for a long-distance carrier.  If the customer does not choose a long-distance carrier, and just wants to stay with that local phone company, the charges for long-distance calls could be anywhere from 40 cents and up per minute, but the customer may not discover it until the bill arrives 2 or 3 weeks to a month later.  In the meantime, if you try to call your phone company back to ask what happened, they remind you that you had some choices, but you did not make a selection of any long-distance carrier, and they say, “so you are stuck with us, but at this time, we will re-rate you, or we could reassign you to another long-distance carrier.”  Second choice would be, when you first call to hook up, the local phone company, unfortunately, is not able to disclose any of the long-distance company’s rates, so you have no idea, at that point, what your phone charge will be per minute. 

 

Many times an operator will suggest that you, yourself, call the new long-distance carrier to find out exactly what your rates are.  However, it is only a policy and it is not required.  When dealing with companies like AT&T or MCI WorldCom, as consumers, we cannot just assume what the rate will be.   There are several numbers to call for these long-distance carriers, but the problem is getting someone to talk to you on the phone other than a recorded message.  When you signed up, you are charged a random rate, but certainly not the best rate, nor should it be at that point and time. 

 

What this proposal offers on lines 15 and 16 is, a phone company cannot provide a telecommunications service to a customer without first informing the customer of the amount to be charged for the service.  The rest of the bill was drafted by the LCB (Legislative Counsel Bureau), but if there is need to make amendments, I am open to ideas and suggestions. 

 

Senator Porter:

In regards to the “purgatory” part of the bill that I mentioned before, the problem begins when you attempt to contact your phone company or long-distance provider to try to correct the problem or to replace a phone card.  When you call the 800 number, you may get an operator or may have to push a series of numbers. 

 

Like with my own experience, it took me an hour and half to make contact with my long-distance carrier, at which point many people would be so frustrated they would finally just give up.  When you realize, months later, you have been charged 80, 50 or 30 cents per minute, and even when the company offers to re-rate your long-distance service, then another problem is getting credit or any type of help back to the time when you signed up.  After a period of time, you may end up in a collection agency, who will say this is not my problem, you need to talk to your phone company, it is their problem; but the situation can just go on and on. 

 

The purpose of the bill is to make sure as a customer you know exactly what you are signing up for.  I cannot think of any consumer services or products we sign up for that do not make us aware of our options.  Apparently, the phone companies used to employ a method called “hot-sync.”  When people signed up for phone service, the company would sign them up to a long-distance carrier that would come on automatically, and sometimes that was more expensive service. 

 

Senator Porter:

I am not an expert in the phone business; however, I would think with all this technology in the phone business today, they could find a way to transfer a phone call over to AT&T or MCI WorldCom, and you can be offered more options with different rate plans.  There are different rate plans according to the usage.  But just imagine a senior citizen, or a single parent taking care of children and family, who cannot sit at the phone for an hour at a time to find out exactly what the rates are. 

 

In summary, it is about the consumer, about how consumers can find out exactly what these charges are without having to first sign up for service not knowing the cost.  Once the charges are disclosed, the customers should be able to choose which long distance carrier they prefer to do business with.  It is unacceptable when you cannot speak to a person about your phone service problems, and it should not be the policy of a local phone company to tell the customers to call their long-distance carrier themselves. 

 

Scott M. Craigie, Lobbyist, Sprint:

I do not disagree at all with Senator Porter’s concern.  It is a legitimate issue and very well stated.  I would like to give you a little history of the origin of my bill.  I was chairman of the Public Service Commission of Nevada, when my bill was reviewed by U.S. District Judge Harold Green; all of the long-distance companies, at the time, primarily MCI wanted to have the ability to sell, on an “equal footing,” long-distance services to all of the business and residential customers.

 

All the long-distance services had to be separated from the local companies, where long distance would subsidize local phone service.  Over 4 years, we had to take $66 million out of the system that was otherwise subsidizing local phone companies.  Family-owned companies like Lincoln County Telephone Company had difficulty staying in business.  Other small companies were forced to sell on to larger regional companies.  In the changeover, some of the casino hotels realized the access charges to get into the local system were so high, they put microwave dishes on the top of some of the casino hotels to microwave the long-distance signals across the border to save a significant amount of money.  In 2 months they took 28 percent of the business from the entire Las Vegas area.  Rural communities were really affected and were losing revenue.  We were one of the first states, along with Virginia and Idaho, to create a rural improvement program.  In fact, we had to find money to compete with technology and population, and Elko was one of the major areas to work with Nevada Bell. 

 

Every single state has dealt with all of the issues and sacrifices for one basic principle called “equal access.”  Consequently, equal access was what the long-distance companies insisted the court should grant them, so that no phone company could direct everyone into its own long-distance entity, such as AT&T.  The federal government, the United States Congress, and the Federal Communications Commission insisted that no one should guide consumers from one long-distance choice to another. 

 

Unfortunately 18 years later, as Senator Porter has described, we have a system is still in operation that is somewhat antiquated.   Local phone operators are prohibited by law from attempting to persuade their clients from selecting a certain long-distance company.  At the time we set those rules, they had to be rigid, because it was the only way MCI and other companies that came in to Nevada could have an equal shot, if these very rules existed. 

 

Senator O'Connell:

When you look at the bill, particularly the first four lines of the bill, it says, “make a statement or representation regarding the provision of a telecommunication service, including without limitation, a statement regarding the rates, terms or conditions of a telecommunication service.”  If the rules have not been enforced up until now, how is this going to help?  How can we make sure they are enforced?  And why is it not being done now?

 

Mr. Craigie:

At the federal level the decision has been made that the person who receives that call, from any local phone company, cannot disclose the competitive rates of others, because they will “shade” it.    

 

Senator O'Connell:

Could they make that disclaimer?  As Senator Porter has indicated, it took him an hour and a half to get through, to find out what the rates were.

Mr. Craigie:       

It is my understanding Senator Porter’s problem was making contact when he called his long-distance carrier.  My concerns are lines 15 and 16 of section 1, the issue focusing specifically on the operator who originally receives the call from the new customer, who just established a new residence or business and is requesting new service with any phone company.  Then they want to get assigned to a long-distance carrier, and the operator can only use a set language approved by regulators, and is not authorized to give a list of choices on long-distance companies.

 

Senator O'Connell:

The question is, do they then say, “I am sorry, I can not give you that information”? 

 

Mr. Craigie:

In terms of explaining the rates, yes.

 

Senator Porter:

My hour and a half wait call was to replace a phone card; thus it was with the same company.  I understand we make choices as consumers as to what company we are going to use, and, certainly, my comments today are intended to be consumer friendly as to the regulated community. 

 

In another case, it took us a number of calls to obtain the re-rate.  Once we got the re-rate that was all right.  At that point we were into a number of weeks and months before the correction was made.  The problem is getting a person that can help you with the problem.  There are operators available when you call “1-800-newbusiness” to take your new business call, but getting to the customer service when you have a problem or getting it corrected, takes a long time.  During this period of time the bills continue to be generated, and if payments were not made, then collection agencies start to call and demand payment, but deny any knowledge as to what happened with the phone company.  This is that “purgatory” period I mentioned before. 

 

Customers are signed up for a rate they have not chosen.  I understand the consumer has to be very cautious regarding what is said, when talking to a phone company like Sprint or Nevada Bell for new phone service.  I think consumers have the right to know how much they are going to pay, once they choose a long-distance carrier such as MCI WorldCom or AT&T.  Whether it cost 20 cents a minute or up to $2 a minute, in some cases, we, the consumers, should be able to make that choice. 

 

Mr. Craigie:

I agree with Senator Porter’s opinion.  I believe, having established those “equal access” rules, we are in a position where the various long-distance companies are separated enough, and we should be able to offer some of that information.  Everybody who calls Sprint or Nevada Bell is told, when they choose a carrier, they should contact that entity.  Frankly the “hot-sync” is a system available nationwide, and all of the local phone companies have the ability to “cut” over it, but that is an issue the long-distance companies have to decide.  We cannot go beyond informing them, because we would be crossing over the rules, which as a matter of fact, I think should be reviewed. 

 

Chairman Townsend:

We need to make sure the public has access to a basic phone service, in addition to all other options.  I believe the purpose is very simple.  When a customer calls his local phone company exchange to hook up a new service, and if he is asked which long-distance phone carrier he would like, then the customer makes a decision.  However, under the federal rules, the local company is not allowed to disclose information about rates.  This may be where the problem is:  if I were to pick “X,” and as soon as the service is hooked up they instantly mark down company X so I can start making long-distance phone calls, then I, the customer, am told to call the carrier to find out about the plan. 

 

That sounds very good, but it is not how it really happens.  The customer could be at the neighbor’s house, or on a cellular phone, or at his business, trying to get through to say “tell me my options, because I have chosen X.”  In the meantime, family members could be making calls without knowing the rate they will be charged.  The customer does not know what he is hooked-up to, when he first says, “I want carrier X.” 

 

Mr. Craigie:

At the beginning, and for many years, they were hooked up to the low-cost option.  For most of the time I served at the commission, and well after that, all of the carriers were such competitive entities that they signed everyone up for the low-cost, long-distance service.  In the long-distance market, there are high-cost and low-cost customers.  It is becoming so competitive some of the carriers have decided not to get into a pattern, like when they bring in a new customer, because of the cost involved.  For example, my mother makes about three calls a month, and she is really upset that AT&T would not give her $100 to come back to their service.  The reason she switched over is because some of her acquaintances switched over to another company.  Since she does not make a lot of phone calls, she is considered a high-cost customer, and no one is going to go out of their way to get her business.

 

Many people have cellular phones that are toll-free nationwide.  These people make three to five calls out of their house on their residential phone, and, depending on the competitive attitude in the area, they are assigned automatically to a rate.  Some are assigned to a very low rate, and others to a higher rate.  Due to the changing nature of the competitive market, currently companies are considering two options: first to cut costs as much as possible; second, to avoid getting caught in a series of customers who are going to cost them a significant amount of money.  I believe it would be appropriate to change the information offered to consumers. 

 

I totally agree with the direction Senator Porter has taken.  I am not here to speak against the situation, I am here to help. 

 

Senator O'Connell:

So this language is not helpful for anyone.  It should identify the telephone industry’s hands are tied as to what they can do.  It would look like we have the wrong language in the law, because it would fly in the face of federal rules. 

 

Chairman Townsend:

I believe the reference in NRS 598.969 is to someone who is trying to sell a service and they are calling your home or your business saying, “Hi, I am with company X and we are going to give you a free credit card and free miles,” meanwhile, the federal law has influence over those calls.  We have a special situation in southern Nevada, because we have a local phone company who is also a long-distance carrier.  Are they treated differently?  Do they have to abide by the same rules?

 

Mr. Craigie:

They actually have to play by the same rules, but they have stricter requirements, placed by the PUCN (Public Utilities Commission of Nevada).   When they have the ability to do joint marketing, there has to be a clear separation from that first person, who lives by all those rules and they are sent to a totally different division, where all the rest is processed.  That independence has to pass the federal government requirements, and we have to make sure it is handled properly at the state level. 

 

Senator Porter:

This committee is far more aware of the rules and regulations under the federal guidelines.  We are talking about an industry that is on the “cutting edge” of technology in this country and all over the world.  It seems only reasonable to me the technology of the industry, having the latest phone equipment and patching networks, could transfer a call to the particular company that has been chosen as the long-distance carrier.  Also, I believe we need to take a look at some of the PUCN regulations, and how the rules are being enforced. 

 

My understanding when Senate Bill 440 of the Seventieth Session was passed by this body regarding the industry, working together and penalty guidelines were to be enforced by the PUCN.  I really question whether the PUCN is following through.  I am confident these issues are more about consumers than about the phone companies.  In this day and age of free enterprise and an economy that has been thriving, with many challenges, we have the responsibility to see to it the business community finds a way to protect the consumer in a short period of time. 

 

SENATE BILL 440 OF THE SEVENTIETH SESSION:  Revises provisions relating              to regulation of providers of telecommunication services. (BDR 58-1239)

 

Chairman Townsend:

Based on the customer’s call for new service, is there a federal provision against the local phone company advising the customer by saying, “This will be your rate until you call and change it”? 

 

Mr. Craigie:

It is my understanding that would be in violation of federal law.

 

Chairman Townsend:

In today’s world, there are mechanized voices that have no tone, which can give you a flat name with no editorial.  When long-distance carriers are calling you at night, they are very accessible, but when you need to correct something, it is very difficult to make contact.  I understand the frustration.  I would think perhaps the committee, as we work through these amendments, would contact federal representatives to convey these problems and find out what we can do about this situation.  I am not sure chapter 598 of NRS is the right place for it.  In fact chapter 598 of NRS may already include language that could have entwined this kind of behavior. 

 

Chairman Townsend:

We will close S.B. 387 and open S. B. 544.

 

SENATE BILL 544:  Makes various changes to provisions governing practice of pharmacy. (BDR 40-400)

 

Keith W. Macdonald, Executive Secretary, State Board of Pharmacy:

I would like to offer a summary for S.B. 544, which allows the board to keep abreast of technical and regulatory developments in the practice of pharmacy, so we can remain up to date in a progressive board among the states.  The intent of section 1 is to allow the board to regulate controlled substance prescriptions, and to abide by the federal regulations.  On page 1, lines 1 to 16, and page 2, lines 1 to 32, remove a section, so the board can set the regulations.  The reason is that over the last 8 years the federal government has amended the laws, which generally changed the methods used, and reduced the ability of physicians to be able to prescribe control substances such as narcotics and other drugs that need extra control.  They have reduced those requirements, and our state is always behind until we come back to the Legislature to introduce another bill 2 years later. 

 

Chairman Townsend:

We are very proud of what the board of pharmacy does, what our practitioners do, and how they manage their patients’ needs.  But when you see somebody arrested with a trunk full of prescription drugs, how does that happen?  Do they go to Mexico to buy these drugs?  Or do they steal them?  Is there a street term for this diversionary wholesale business?  

 

Mr. Macdonald:

It can occur in so many places.  One, they are “stuffed” out of a storage area and into a diversionary wholesale business.  There is a secondary source, the re-importation of the drugs, of black market drugs.  The Mexican drug source is alive and well.  There are trucks bringing prescription drugs to cultural markets on a regular basis, over which we have virtually no control; they even have practitioners in those markets. 

Chairman Townsend:

So it is a plot of illegal options.

 

Mr. Macdonald:

Yes.  We try to do the best we can to control them.  The second point we would like to talk about, within the intent of this bill, is in sections 3 and 4, page 3, lines 3 to 7, dealing with Internet pharmacies.  This bill addresses the issue of people obtaining drugs in an unusual way, without seeing a doctor, through Internet pharmacies.  I would like to note S.B. 397 is a bill with the same intent, but it also includes criminal and civil penalties beyond what the board of pharmacy could impose.  Both bills could operate harmoniously. 

 

SENATE BILL 397:  Prohibits certain acts related to drugs and Internet             pharmacies.  (BDR 40-102)

  

Section 5 of S.B. 544 addresses an oversight, and now optometrists will be included as one of those practitioners who may prescribe and administer therapeutic pharmaceutical agents.  Section 6 removes and updates some of the language regarding licenses and certificates.  We had language requiring a pharmacy to notify the board of any changes of ownership, because we have pharmacies that have changed their ownership without notification.  We consider it vital to inform the board within 10 to 15 days.  Therefore, the word “immediately” will be stricken from the amendment.  The intent of sections 7 through 10 is the requirement of out-of-state or other country’s pharmacies to be licensed in Nevada if the pharmacy sells drugs to Nevadans, that would be on re-importation and Internet pharmacy concerns (pages 4 and 5).  Section 11 on page 5, will remove the requirement for a prescribing practitioner to place DEA (Drug Enforcement Administration) numbers on prescriptions.  We have people seeing 200 doctors a year in this state just to obtain controlled substances, and even though the controlled substance task force addresses those matters, we still have a number of people who spend time going to various practitioners and doctors to obtain narcotics and drugs. 

 

We have approximately 160 deaths a year in Nevada from prescriptions drugs, and whether they are suicides or overdoses, it is a real concern.  Practitioners have been concerned regarding inclusion of their DEA numbers and the inability to prescribe appropriately.  This section also allows for electronic signatures and other secure electronic means to suffice in lieu of the prescribing practitioner’s handwritten signature (page 6, lines 1 through 7) and this should improve the visual contents of a prescription when it arrives at a pharmacy.  Then lines 13 and 14 on page 6 include a section which does not allow electronic prescribing for controlled substance prescriptions. 

 

Since the fall we have attended some conference demonstrations where the federal government is now making encrypted secure electronic transmission of controlled substance prescriptions available.  Therefore, we would like to remove that section from the bill, on lines 13 and 14, because it would not be applicable to future federal government laws. 

 

Section 12 allows the board to increase the disciplinary flexibility, allowing suspension for longer than 1 year, and increasing fines up to $10,000, which would be equivalent to the authority of other boards.  Although this amount may seem large for a board, it does not include any criminal actions.  Let me inform you of a disciplinary action we had in Las Vegas.  We had a diversionary wholesaler, who claims he never sold a drug, yet he passed $34 million worth of drugs to his organization, and we were only able to fine him $1,000 for that violation.  The bill is asking for stiffer fines so we can treat those kinds of matters more seriously, matters that affect consumers in Nevada.  

 

Mary F. Lau, Lobbyist, Executive Director, Retail Association of Nevada:

I will confirm and second Chairman Townsend’s comments on what an excellent job the State Board of Pharmacy is doing.  One of my concerns was also the word “immediately” on page 3, from a corporate point of view.  It is very difficult to immediately transfer something, but I would not suggest to go any further than 15 days.  I recognize there is a drug diversion market, but I was concerned about the jump to a $10,000 fine; however, I am aware, at times, it is extremely difficult for the board; nonetheless, enforcement would be more appropriate than a fine.  Although some of our members have concerns about that option, we will not oppose it.  However, we would like to reserve the right to come back before this committee if at any time the board appears to be using that fine arbitrarily or as a financial matter.  At this time we will support the recommendations and watch the history of fines and how they are handled.

 

Larry D. Lessly, J.D., Executive Director, Board of Medical Examiners:

We also support this legislation.  We think it is progressive, realistic, and will help address some of the problems we have had in the area of Internet prescribing and practice of medicine. 

 

Senator Carlton:

When referring to Internet providers’ licensing, there is no fee schedule or licensing schedule.  Could you tell me how that will be addressed?

 

Mr. Macdonald:

$200 a year.  There are other sections of statutes referring to licensing limitations and listing of retail pharmacy goods.  We have not divided them or given them a different title, so Internet sellers would be called retail pharmacies, as with every other pharmacy in the state. 

 

Chairman Townsend:

Your responsibilities have increased based on the tremendous growth and the self-contained pharmacies that seem to be on every corner, as well as the growth in the grocery industry with pharmacies located inside their businesses. 

 

Mr. Macdonald:

I agree.  In the last 5 years, the pharmacy growth has more than doubled in Nevada, and the number of pharmacists has increased by 56 percent. 

 

Fred L. Hillerby, Lobbyist, Nevada State Board of Pharmacy:

It would be fine with us to strike the word “immediately” from the bill, and we will define those time frames by regulation, like we do with all others.  Also, the new language on page 6, lines 13 and 14, I request be deleted as well. 

 

Chairman Townsend:

We will close the hearing on S.B. 544, and open the hearing on S.B. 416.

 

SENATE BILL 416:  Exempts certain persons from provisions governing licensure of private investigators. (BDR 54-933)

 

Senator Schneider:

I am bringing this proposal forward again.  The language we have here is very similar to the one passed in Arizona last year, and I believe it is good for Nevada.  I do not think you need a cop to do mystery shopping, but I feel it is necessary to check advertising programs, public relations, and the bill is not designed to be used for terminating employees. 

 

But, as a storeowner, you cannot have a relative come in and do mystery shopping in your own business under the current law. 

Daniel C. Musgrove, Lobbyist, Southern Nevada Regional Planning Coalition:

The City of Las Vegas tried to set up a mystery-shopping program.  We have observed a mystery-shopping presentation by the University of Georgia School of Government, which has set up a program where public entities could determine their public service capabilities and problems within the public sector.  We thought it was an innovative program, something we decided to try in Las Vegas.  I was made responsible for the research, and attempted to put the program together.  We were going to shop ourselves, to see how we serve the public, to find out where we could use improvement, and make the governmental experience a better one.  I have a handout (Exhibit D) from the Las Vegas SUN, dated July 16, 2000, an editorial by a reporter.  As a consequence of the article, private investigators were disturbed and I received several phone calls and e-mails. 

 

Apparently this issue was debated at the last legislative session, but I was unaware of it.  The investigators did not want us to have people do mystery shopping in the city of Las Vegas who were not licensed private investigators.  It was never our intention to discipline employees, to do any background check, or do anything adversarial to our employees, but merely to serve our customers in the best possible way.  On the other hand, we have been precluded from doing so due to current state law.  We support Senator Schneider’s changes to the bill; however, from the way the bill is written, it refers to businesses, and customers, but private investigators may still be precluded.  I am not sure how the board would interpret the definition, if we would be considered a business, or if our constituents would be considered customers. 

 

I would ask that a friendly amendment be added in regard to employers, or come up with a clearer definition for “customer,” so we can participate in mystery shopping.  I think it would be beneficial for all parties for us to do our jobs better.  This was a very innovative way to find out for ourselves, whether or not and how many times you were transferred, whether the person you called knew the right answer, whether signs are correct when you walk into the business, and whether you could determine what line to stand in.  However, we would not be able to do that under current law.  I would ask for your support on this bill and your help in making sure the city of Las Vegas can fully participate in mystery shopping. 

 

 

 

Senator Schneider:

I believer Mr. Musgrove explained very well what mystery shopping means to most businesses in this state.  I have a neighbor who does advertising in public relations and some mystery shopping, and then he does a follow-up.

 

Senator Carlton:

The program you were going to institute in Las Vegas, was it a questionnaire type of program?  Or was it going to be a face-to-face contact type of program?

 

Mr. Musgrove:

The University of Georgia, along with a company out of Georgia called, “Shop & Check,” had done the preparation and research to come up with the questionnaires, focusing in different departments, whether it would be public works, business licensing, the mayor’s office, or the city manager’s office.  We assisted them with preparing questions we were interested in to find out whether a secretary in an office knew where to direct a call.  We were attempting to do two kinds of mystery shopping, phone shopping and an actual walk-in shop, where a shopper would walk into a business and figure out where he needed to go.  Then we would make phone calls just to see how long we were put on hold, how many times we would be diverted from person A to person D before we got an answer.  The questionnaire was something we designed and approved, then returned to the University of Georgia and Shop & Check, to contract with people in Las Vegas who actually were going to do the mystery shopping. 

 

Senator Carlton:

Then I would have some concerns if you were talking about face-to-face shopping.  When I read this originally, I was under the impression this was all going to be common questionnaires and would not address face-to-face type shopping, rather have someone go in, fill out the form, and just submit it.  In the history of Las Vegas, have you done just the standard common inspection in lobbies at different offices?  Or have you used a different approach at city hall? 

 

Mr. Musgrove:

Yes, we have.  But, this was directed at a particular focus in a specific department, and that is why we devised that questionnaire, to give that mystery shopper some kind of “expertise” to be able to know what questions to ask.  When face to face, they would actually go in and act as a customer.  The importance, then, would be to record their experiences on the questionnaire, whether it was a positive one, or whether the person was friendly with them, or identified themselves by name, etcetera.

 

Senator Carlton:

Would the current law preclude you from using an internal employee from one department or division in the city?  Or from going into another department or division, and perform this function, rather than contracting out to an agency that may not be familiar with how the city runs?

 

Mr. Musgrove:

I do not believe it would preclude us from shopping ourselves, but what we would prefer to do is be part of this broader survey and study, so we can compare ourselves to other governments.  That is what the Georgia study was all about, and that is why we decided to use their program and their shoppers. 

 

Ms. Lau:

I should also disclose that I have a part ownership in a private investigations firm.  However, I am here on behalf of my members who are in full support of this bill, specifically its original intent.  Except the issues brought up by         Mr. Musgrove, such as, service, procedures, cleanliness, clerk responsibility, did they fulfill everything, etcetera, which are usually accompanied by a questionnaire, and you need to know specifically what you are searching for.  We have used our own personnel, and unless you are going to continue to hire personnel and train them for this purpose only, they cannot continue in the stores.  For example, in Scolaris’ markets with 17 stores, it would not take too long for 17 stores to recognize who “you’ve got coming.” 

 

As Senator Carlton mentioned, currently large companies, or any company, can use what is called proprietary security guards, their own personnel, but they get burned pretty quickly.  This bill is another alternative.  There is absolutely no way any of our members would use any type of mystery shopper for honesty shopping or any inclination toward theft.  Wrongful termination suits are a serious threat.  Grocery stores seem to have a strong handle on matters like their shelf and checkout pricing.  Everything has a tag.  However, our retail market and general merchandise stores have a bigger problem.  They want to be able to go in and make sure everything has been adjusted accordingly.  This is part of what they want to use it for. 

 

 

The questionnaire is not to be used as a sole-basis discipline.  Generally, you would talk to an employee who has been reported, from a questionnaire or comment card, as being rude, that in itself would not constitute discipline, but I would assume it would be made part of the employee’s personnel file. 

 

Senator Carlton:

I know in my particular industry, due to house policies, anything that is in your personnel file stays in as part of your record, and can be used against you.  A comment card or questionnaire from a true consumer, I believe, should outweigh an opinion, especially from a shopper from outside of our area who may not be familiar with our policies. 

 

Ms. Lau:

I absolutely agree.  We use comment cards currently in the retail industry, in particular to choose employee of the month.  They are also used for bringing comments to somebody’s attention, like “somebody from New York thought they were extremely rude.”  It is used in gaming, and as an incentive to compliment employees. 

 

David L. Howard, Lobbyist, Nevada State Chamber Association:

This bill was discussed at some length in the 1999 session.  I was particularly taken with the amount of controversy it brought up last time.  We see it as a tool for business to provide better service to the people that we serve.  Section 13 seems to address some of those concerns, and I think those concerns have been addressed.  We would strongly recommend this bill go forward. 

 

Jeff Hall, Mystery Shopping Providers Association (MSPA):

The MSPA is an international organization of over 150 market research companies throughout the United States and abroad, whose purpose in business is to assist business operators and others to improve the experience for their customers.  We strongly support S.B. 416, specifically section 13, which would allow business operators in Nevada to hire the services of mystery shopping program providers.  The mission of mystery shopping is to view a normal shopping experience from the perspective of a typical customer, who generally lives and works in the area.  The shopping programs are highly visible initiatives within our client companies; employees are notified well in advance that mystery shopping will be taking place; they are often trained on service standards of their company, as well as the elements that would be observed on the mystery shopping questionnaire.  As has been brought up earlier today, after completing a mystery shopping visit, the shopper generally fills out a survey or questionnaire with such questions as, “Did the employee greet you with a smile?  Were they friendly and helpful?  Was the facility clean and orderly?” 

 

I have provided for your reference samples of mystery shopping evaluations (Exhibit E) used by national retailers, financial services institutions, and the United States Postal Service, evaluating the quality of service these organizations provide their customers on a daily basis.  The MSPA further believes there is clearly a distinction between our type of work and that of licensed private investigators.  The amendments being proposed through this bill clearly support that distinction, which we fully intend to honor.  The MSPA members never perform integrity shopping, where the intent is to observe and evaluate the honesty and integrity of employees, or to “catch” employees in the act of theft or other illegal activity.  Instead, those types of shopping are always referred to licensed private investigators.  Our members are generally and solely hired by the human resources, training, or quality service departments, and not for the integrity or loss control departments of companies. 

 

Clients who approach the MSPA members wishing to conduct mystery shopping or honesty checks are referred to licensed private investigators, whether they are members of the MSPA or not.  To our knowledge, up until now, there has been not a single documented consumer or business complaint, in any state, submitted to the state attorney general’s office or state licensing board, regarding mystery shopping work, in the last 40 years. 

 

Mr. Hall:

There are a number of leading national customer-service-focused organizations who currently utilize a mystery shopper to gain either competitive advantage or a more realistic understanding of the service their customers are experiencing.  These organizations include:  the United State Postal Service, Shell and Mobil gas stations, Wells Fargo Bank, financial institutions, as well as Bank of America, Pizza Hut, Taco Bell, Kentucky Fried Chicken, department stores such as Nordstrom’s, grocery and market chain operators such as Safeway and Albertson’s.  There are also a number of hospitality companies involved in mystery shopping, including the Hyatt, and Marriott hotels, and casinos in our state. 

 

 

 

Senator Schneider: 

A mystery shopper would be more of a person who has a degree in marketing or public relations?

 

Mr. Hall:

Many shoppers do have an extensive background and experience, but many represent your typical and average consumer, individuals who live and work in communities for which we have been asked by establishments to provide objective and unbiased feedback regarding employee courtesy, a facility’s cleanliness, availability, and pricing and service information. 

 

Senator Carlton:

I have notes from last session, that were brought to my attention, indicating some of these mystery shoppers were not actually on the payroll.  They were receiving comps for food, beverage, hotel lodging, or merchandise.  Does that still exist?  And how do you keep track of these employees?

 

Mr. Hall:

The nature of the work arrangement between mystery shopping companies and the mystery shopper does vary.  In some companies there are employees who are considered independent contractors by others, but they are not necessarily employees of the company.

 

Daniel D. Crate, General Manager, Burns International Security Services:

I am a licensed investigator and patrolman, and I have come before you as a member of the licensing board.  Part of the board’s concern is the statute that has been established and how it may be pursued, as written, by other industries, and taken advantage of.  We are particularly sensitive to the idea of quality control, the Legislature previously has defined an investigator with some 21 different terms.  However, with the most recent attorney general’s review, at least 11 of those terms defining a mystery shopper are also contained under the definition of an investigator.  We agree with the amendments and any language changes under the exceptions in section 4, to further define and clarify, rather than interfere with business owners on how they conduct their business; specifically stating, “a nonrestricted employer is exempted.”   

 

Our goal is to operate in the best interest of the public, and to regulate those individuals, such as, clerks, cashiers, sales person, housekeeping, product preparation, receptionist, and all other entry-level positions in the service industry.  Our concern is by not having any accountability or licensure, any regulatory guidelines by which a mystery shopper is to operate under, those individuals who may be harmed or may have an action taken against them do not have a direct contact or accountability back to those who have provided that information, whether, it would be derogatory, casual, or as an observation. 

 

Mr. Crate:

The Mystery Shopping Providers Association had appeared before our board with their concerns.  They did not necessarily employ professionals, and the nature of mystery shopper organizations, in order to be fairly representative of the public, tended to have people receiving nontraditional compensation, who go in periodically in exchange for food, gifts, or discounts, in lieu of making casual observations.  While that would be of merit, we offered various opportunities and suggestions on how that might be dealt with.  We think it would be in the public’s and business’s best interest to provide some credibility, some proficiency, or some recognition by the state, for those competent individuals to evaluate and give feedback on the performance of employees working and interacting with the general public.

   

There is nothing in this provision regarding training.  It does not hold the contractor or the mystery shopping provider to a degree of training whatsoever, which takes us back to the concern we have of people being solicited over the Internet on a 25 percent discount.  We have worked with industry representatives, worked and addressed gaming industry’s concerns.  We have conveyed to them, we are certainly not in the business to function as regulators, we are just trying to perform the tasks we were previously assigned under the law.   

 

Gina Crown, Lobbyist, Acting President, Nevada Investigative and Protective Services Association:

I would like to voice our opposition to this bill.

 

Andrea L. Boggs, Lobbyist, Professional Society of Investigators:

I am a member of the Professional Society of Investigators in Nevada.  I have been licensed as an investigator for about 15 years, and before returning to Las Vegas, I was licensed in the District of Columbia.  I operate a branch office of an investigative consulting firm with headquarters based in Alexandria, Virginia.  This morning I am speaking as a licensed investigator and a member of our society.  The amendments to chapter 648 of NRS that would exempt the mystery shopper from the statute are troubling.  Clearly, the issue of fairness has been overlooked.  The proposed changes, in our opinion, will open very dangerous doors that would allow, or perhaps more correctly stated, continue to allow out-of-state unlicensed mystery shopping firms to compete unfairly with Nevada-based firms. 

 

Licensed private investigators in Nevada must abide by Nevada law and pay the required fees for the right to operate in this state.  The proposed amendment dilutes the statute.  It reduces the standards and opens those dangerous doors to give an unfair advantage to the non-Nevada businesses.  The exemptions require no training, no testing, no experience, and no accountability, and apparently, no fees or taxes.  This is not fair. 

 

I would like to remind you that all of us who are licensed in Nevada, by our statutes, are required to show 10,000 hours of experience, basically 5 years of experience.  We take a written test, an oral examination, and are fingerprinted, and then an FBI (Federal Bureau of Investigation) background investigation is conducted.  We are held at very high standards.  This amendment, as proposed, frustrates the intent of the law.  The law specifically states a private investigator means any person who, for any consideration, engages in business to obtain information with reference to the identity, habits, conduct, business, honesty, integrity, credibility, efficiency, transactions, acts, or the character of any person.  This is exactly what a mystery shopper or survey taker is going to do.  If this exemption is passed, there is no protection whatsoever for the employee who is being observed, and no accountability required for non-licensed individuals working for out-of-state firms.  Regardless of how the amendment reads, it is common knowledge the results of these surveys and questionnaires, frequently have led to the dismissal of certain employees.  The employee’s right to appeal is meaningless, if a non-licensed, non-Nevada, mystery-shopping firm causes the dismissal. 

 

Ms. Boggs:

We have regulations in place to protect the employee, and regulations to protect the public from unlicensed investigation.  But, it is wrong to tamper with this statute.  This amendment is unfair to Nevada business and unfair to Nevada investigators.  We urge you to vote against the proposed amendments that are offered for S.B. 416. 

 

 

Peter Maheu, Lobbyist, Professional Society of Investigators:

I am a managing partner of Global Intelligence Network.  We have a division that does, in fact, conduct mystery shopping.  We are a licensed private investigating firm in the state of Nevada.  Our concerns with S.B. 416 are the removal of accountability from the mystery-shopping individuals as they conduct mystery shops and report on employees’ activities and behavior.  It removes mystery shopping companies from all types of regulations that are presently enforced in this state to protect citizens against improper activity by unlicensed firms.  Perhaps the most important right I feel is being removed is the right to confront the accuser by employees in this state.  There are documented cases of mystery shopping organizations coming into the state of Nevada to conduct mystery shopping, where disciplinary action takes place, and when that employee goes to a labor board hearing or counseling, the accuser or person who filled out the survey is no longer in the state of Nevada  and would not appear, thus  depriving our citizens and employees the right to confront their accusers. 

 

In addition, the Mystery Shopper Providers’ Association sent an e-mail on November 7, 2000, signed by Bradley Worthley, which read, “If the state catches you using independent contractors as shoppers, if one of your shoppers applies for unemployment and lists your company name, you can end up paying back taxes since the time you began your business.  The federal government will step in right after that, demanding their payroll taxes be paid, plus interest.  Here are the taxes you may owe:  the State Unemployment Insurance and Workers Comp; the Federal Unemployment Insurance; Social Security, and Medicare.  So think about what would happen if you have been in business for 10 years, and then this state and other states demand you pay taxes for all out-of-state shoppers going back 10 years, with interest.  This bill allows this type of practice to continue to operate unregulated, and it condones the activity of nonpayment of fair and reasonable taxes to the state of Nevada and the unemployment system.  We feel strong opposition to this bill.   

 

R.T. Smith, President and Chief Executive Officer, Investigative Specialists Incorporated, Las Vegas:

The agency has been licensed through the state since 1985.  I am in full support of Mr. Crate, Mr. Maheu, and Ms. Boggs’ testimony, but I am opposed to S.B. 416. 

 

 

Dorothy Williams-Jamal, Owner, Williams-Jamal Investigations, Las Vegas:

My firm conducts mystery shopping assignments.  I would like to say I disapprove of this amendment because it is a form of investigation.

 

Ms. Crown:

In Nevada, all investigators have to register their employees with the board.  They have to have a work card, background check, and are accounted for at the PI (Private Investigators’ Licensing Board) board.  On the other hand, most of the mystery shopping companies do not have bonded employees.  They require no registration of any employees, and that is our biggest concern.  I would like to reemphasize there is a proprietary exclusion for mystery shopping operations within companies and casinos.  People can shop themselves and would not be of concern to the board or to our industry.  As an association, we do not have any concern about mystery shopping services that are comparing prices in stores.  We draw the line when reporting on conduct and the identity of a person with the potential of a disciplinary action.  Many of our investigators testify regularly on wrongful termination hearings, and we do know there is disciplinary action based on these reports.  So when you are talking about reporting on a person, that is where we are concerned.  We would like to see the industry continue to be regulated. 

 

Senator Schneider:

I would just like to inform the committee the Arizona Senate has approved a bill similar to S.B. 416, and it is about to be signed by the Governor of Arizona.  Arizona and Nevada are the only two states left that have mystery shopping under the private investigator’s board.  

 

Chairman Townsend:

We will close the hearing on S.B. 416, and open the hearing on S.B. 420 and  S.B. 513.  It would be our intention to review both bills at the same time, and address all of the concerns at the same time.

 

SENATE BILL 420:  Requires occupational licensing boards to submit monthly summaries of disciplinary actions and biennial reports of activities to director of legislative counsel bureau. (BDR 54-451)

 

 

 

 

SENATE BILL 513:  Makes various changes to provisions relating to investigations and proceedings for disciplinary action by regulatory bodies who regulate certain professions, occupations and businesses.     (BDR 54-81)

 

Senate Bill 513 came as a result of a board’s ability to negotiate a settlement for discipline and it not being made part of the public record.  There is no intent to point fingers at any of those boards.  This committee has taken 20 years of testimony on the importance of “sunshine” and regulatory proceedings.  As a result, S.B. 513 has been brought forward as a means, not only to codify, but also to state that disciplinary actions in the state of Nevada are, in fact, to be made public; they are not some kind of opportunity for someone to receive special treatment to protect their license.  If a disciplinary action has been taken, then it should be made public.  Senate Bill 420 sponsored by Senator Carlton precedes Senate Bill 513.     

 

Senator Carlton:

The idea for this proposal (S.B. 420) came to me after serving on the Governor’s Fundamental Review Committee, and looking at how we do business in this state.  Boards are, without a doubt, a big part of how we serve the constituents in this state.  I have had the opportunity to review boards that may need more resources, as well as boards that may no longer be needed.  I requested some reports from Scott Young (Committee Policy Analyst), who informed me we do not have those reports, we only do those on an intermittent basis.  I do know the boards submit budgets and other financial information to the Governor’s office through the Executive Branch.  I believe since this committee deals with a lot of issues, we need to have more information on the boards before we come back into session, so we can review what the boards are doing, how they are performing, how many times they are meeting, and how many vacancies they may have, in order to be able to work with them.  Then we need to contact them before we start the next session, address their issues, find out what their needs may be, and what they would like to improve. 

 

I understand the chairman’s comments on the disciplinary action.  Recently I have discussed this with a couple of people from different boards.  If the chairman wishes to keep it (reporting) as monthly or quarterly reporting, I am supportive, since disciplinary procedures tend to run 60 to 90 days at time by the time the investigation is completed.  Also, this is not meant to cause any fiscal imposition on any of the boards.  What we are asking for is for this committee to receive the same report being submitted to the Governor’s office; in a suitable form. 

 

I would inspire the boards to do as much electronically as they possibly can to avoid paper trail in working with the Legislative Commission and the Legislative Counsel Bureau.  That is the full intent of this bill.  We are not telling the board they have to take disciplinary action to be viable boards, we just need to be informed as to what type of discipline, how it is handled, and the end results. 

 

Senator Shaffer:

On behalf of my wife, who chairs the funeral board, if you are not taking any kind of disciplinary action, would the board need to report that, and would it be on a monthly basis? 

 

Senator Carlton:

This matter would be open for discussion, and whatever is decided on, we would like to receive something in writing saying, “Yes or no.  No action was taken.”  I am open to suggestions. 

 

Senator Shaffer: 

I believe the problem is there is no full-time staff to work on these reports.  They generate their own revenue, and sometimes it is very hard to survive.  Unless there is a standard form they can just fill out, where you just answer yes or no, it would be difficult to provide reports. 

 

Senator Carlton:

It is currently under review.

 

Senator O'Connell:

Do we have a schedule as to how often the boards meet?  Do they meet on a monthly basis?

 

Senator Carlton:

No, they do not.  That is another of the original considerations we talked about.  I had to do more research and found it could be a problem, and the review committee will be addressing those issues as well. 

 

 

 

Chairman Townsend:

This committee is not interested in creating more work for the boards.  The goal is simple:  Whenever a disciplinary action takes place, whether it is monthly or quarterly, LCB (Legislative Counsel Bureau) would need to have that report, even if it is in the same format that already exists, such as your minutes from a disciplinary hearing, saying, “April 4, at 4:00 p.m., committee took up the following docket, and it was decided on a vote that licensee ‘X’ would be suspended for 60 days for these reasons, and a $500 fine was imposed.”  If it is in your minutes, that is all we would need.  The LCB will compile it in a format for our purposes.  I also would like to convey this request to all the boards we generally do not see or hear from, but not to misunderstand, we are not out to “get” anybody.  We just need to make sure we are made part of the overall disciplinary activity for this committee to understand and start preparing for the next session. 

 

The information I normally receive is very helpful.  We just need the boards to forward the information to the LCB, in whatever form you already do, whether it is a compact disc, or a tape, or a printed document.  The LCB will put the information on document for us.  Those reports are public documents; therefore the public has a right to them.  However, approximately half of you have statutes allowing you to have private reprimands.  I do not think it is appropriate. 

 

James T. Russell, Lobbyist, Nevada State Board of Accountancy:

Basically the board has not been able to review S.B. 513, but I find nothing offensive.  My suggestion would be to change “public hearing” to “public meeting” on page 2, line 28.  I believe it would be best to have the settlement agreement and the sunset provision together.  However, you do not have to have everybody come from Las Vegas, or from the north to the south, in reference to a hearing. 

 

Senator Amodei:

Our record should reflect that I am a law partner in the firm where Mr. Russell is also a partner. 

 

Bruce Robb, Board Counsel, State Board of Professional Engineers and Land Surveyors:

The board supports S.B. 513, and we agree with its purpose.  I believe it clearly states the correct position this committee has taken for many years.  In regards to S.B. 420, I agree with comments made, and I think a quarterly report would be more suitable.  For this committee’s information, our board meets every 2 months. 

 

Chairman Townsend:

I would like to reiterate this committee is not trying to create more work for the board.  We believe you are doing a very good job, and somehow we hope you can get that information to the Legislature at a time we can all agree to. 

 

Mr. Lessly:

We support this legislation (S.B. 513).  However, we do see problems in section 19, subsections 4 and 5 (page 10), which relate specifically to the State Board of Examiners.  The word “impose” in subsection 4 needs to be changed to “initiate.”  It is not a decision of a committee, who conducts the investigation to impose the disciplinary action, it only has the authority to initiate the disciplinary action.  It would take a finding of guilt by the adjudicating members of the board in order to impose any type of disciplinary action. 

 

The problem with subsection 5 is it makes all of the prosecutor’s work product and his attorney/client privilege communication a public document.  We believe that is totally inappropriate.  We ask that subsection 5 of the bill is stricken in its entirety.  If a general counsel is prosecuting, or our deputy attorney general assigned to the board is prosecuting a licensee, we think it is inappropriate his notes, his conversations with witnesses, his trial preparation, or any information should become a public document.  There is nothing wrong with the complaint itself, the testimony given at the hearing, all of the evidence introduced at the hearing, the findings of fact, the conclusions of law and the order of the board, all of those are public documents.  But to destroy the attorney/client privilege between the prosecutor and the investigative committee he is working with, or to bring those charges and make his work product public, would be inappropriate.  We ask that you delete the paragraph (subsection 5) in its entirety. 

 

Regarding, “The board shall not administer a private reprimand,” we do not have any problem with it.  However, where it says, “form and content of any disciplinary action taken by the board are public records,” I do not understand what the form and content of a disciplinary action are.  Under the administrative procedures act, chapter 233B of NRS, boards are required to make findings of fact, conclusions of law, and then enter an order in any type of disciplinary case.  I believe that is what is being discussed here today, but I would suggest changing it to where the public is provided with the findings of fact, the conclusions, and the order they are entered by the adjudicating body. 

 

I would request you change “form and content of any disciplinary action taken by the board” to “findings of fact, the conclusions of law, and the order of the board,” which are all required by chapter 233B of NRS. 

 

Chairman Townsend:

That may simply be a legislative drafting issue.  I believe what you have expressed covers the intent of the legislation. 

 

Mr. Macdonald:

The State Board of Pharmacy is in support of both of these bills.  We do, however, have a concern relating to the issue of the budget.  I presume what you are requesting is some type of document showing expenditures for the proceeding   2 years, and I just want to make sure you understand we no longer prepare proposed budget reports.  We do have a firm that audits the State Board of Pharmacy every 2 years, and we could provide you with a copy of our activities. 

 

Chairman Townsend:

If your current budget could be provided, and if there is some executive summary you use to provide to the LCB, to the administration, or to your own board, that is the basic information we are asking for.  We are trying, basically, to get a sense of how much people are being charged or undercharged. 

 

Doug Walther, Chief, Office of Business Finance and Planning, Department of Business and Industry:

My concerns would pertain to the divisions of real estate and financial institutions that would be affected by S.B. 513.  If I can point out in section 5, in the case of the Real estate Commission, it would not present a problem, because all those consent agreements are discussed at an open public meeting.  Then again, the problem would be with matters which have been delegated by the commission, or the administrator of the division, which are more technical minor types of violations, and in the case of financial institutions, all the disciplinary authority lies with the commissioner.  As we read the proposal, the commissioner would have to conduct a public hearing by himself to approve a stipulation.  Also, in the cases of the real estate and the appraisers commissions, which have recently adopted regulations to create an advisory committee, some sort of a diversion program for offenders done in large part to speed up the process and eliminate the backlog, and just have the commission focus on rigorous cases.  Those proceedings are basically meetings with a former commissioner who volunteers to serve in a private confidential meeting between the investigator and the subject. 

 

Chairman Townsend:

That is exactly what we are trying to avoid. 

 

Mr. Walther:

The agreements out of these meetings are public record and we would not have a problem with it, but the purpose of the program is to delegate the commission’s and the administrator’s authority to discipline.  We are concerned if the program does not work as intended, then the commissioner will have more cases than it can handle. 

 

Chairman Townsend: 

I would say workload should come substantially further down the list than the public policy of keeping regulatory disciplinary actions public.

 

Mr. Walther:

That is a policy decision for the Legislature.  I am trying to explain what we were intending to do. 

 

Chairman Townsend:

I appreciate the consideration, but the goal of this bill is to be consistent for everybody.  The issue regarding financial institutions is even more of a concern, because the credibility financial institutions have in the mind of the public is paramount to the continued success of our monitory system.  I hope any actions by the commissioner are immediately transmitted to the public, or through the Internet.

 

Mr. Walther:

They are.  My comments are not directed to the notion the final outcome is not public, it is just the requirement in section 5 of the bill, in order to enter into the agreement, you have to precede it with a public hearing, because the real estate

 

 

diversion process is where the commission has delegated to the administrator the ability to accept those consent agreements that have been worked out for technical violations.

 

Chairman Townsend:

We will take note of that in our work session for S.B. 513 and S.B. 420. 

 

Paula Berkley, Lobbyist, Chiropractic Physicians’ Board of Nevada:

We support both of the bills.  However, we would like to suggest some changes for S.B. 420, where all parties would agree. 

 

Vern Krahn, President, Board of Landscape Architecture:

We would like to voice our support on both bills, and are pleased with the consistency S.B. 513 will bring.  We are also very pleased with the clarification on the recuperation of cost that has been incurred by the board as a part of the investigative process.  In particular, we are supportive of section 7, which exactly applies to chapter 623A of NRS.  We really do not have any problems.  Our board has taken the philosophy that an open public meeting and disciplinary actions are very positive, not only for the profession, but also for the public trust in what we do as a board.  On S.B. 420, the comments of Chairman Townsend and Senator Carlton relieve some of my concerns regarding how this bill was being perceived by our board.  We are very comfortable after these clarifications with what you are trying to do.  We would also encourage the use of quarterly reports versus a monthly report, as far as us reporting back to the LCB. 

 

Chairman Townsend:

The debate here over the last 20 years has brought us to this point, and as representatives we were receiving many complaints, but, did not have enough information to respond.  With the growth of the state, you have more licensees and more problems.  We had to call to find out the information, and in some cases it would take time to get all the details. 

 

Rosalind Tuana, Executive Director, Board of Examiners for Social Workers:

My board supports S.B. 513.  We feel this is consistent with our normal practice.  On S.B. 420, we would like to make a recommendation to change it from “calendar year” to “fiscal year,” and to change the date from January 31 of the odd years to November 1. 

 

 

Senator Carlton:

We really are not looking to receiving 100 pages of any report.  Executive summaries would be acceptable, preferably on a compact disc. 

 

Kathy Apple, R.N., M.S., Executive Director, Administration, Nursing Practice, Discipline and Monitoring, State Board of Nursing:

We are in support of both bills and for the quarterly and fiscal reporting issues.  We do publish our disciplinary actions and minutes in our Website newsletter. We currently send an annual report to all of you, so we ask that you let us know if you need additional information. 

 

Sharon Atkinson, Executive Director, Board of Examiners for Alcohol and Drug Abuse Counselors, Professional and Occupational Licensing Boards:

I am testifying in support of both bills.  Nevertheless, we would like the dates changed in concurrence with prior recommendations. 

 

Mr. Barengo:

I am here today on behalf of Margi A. Grein (Executive Officer, State Contractors’ Board), who is in support of the bills.  I also want to make sure it is the sense of the committee that the records used in the course of an investigation would be confidential documents, and the only records to the public are the complaint and records attached to the complaint when it is filed.

 

Chairman Townsend:

Mr. Lessly’s observations are well taken, as we work on both bills to make the necessary changes, to be consistent for all the boards.  We do not want to preclude you from providing the appropriate information, if you have to go to the next level, like the district court. 

 

Mr. Barengo:

Well, the language on page 4, section 9, line 31, pertains to the contractors’ board, but if we investigated several complaints, and chose to go forward on one, then all of them would become public record.  That is not necessarily beneficial to anyone.

 

 

 

 

Chairman Townsend:

It is only on the ones you acted upon, because you are going to get several complaints, and when you sort through them and dismiss them for lack of merit, then they are dismissed, and that would be confidential. 

 

James L. Wadhams, Lobbyist, Nevada State Board of Architecture:

On behalf of the board of architects, who support these bills, we appreciate your comments, Chairman Townsend, regarding meritless complaints to not become public.  I think that is contrary to the intent of this legislation.     

  

Mary Manna, Executive Secretary/Office Manager, State Board of Cosmetology:

The board of cosmetology supports the committee’s efforts on both S.B. 513 and S.B. 420. 

 

Chairman Townsend:

We will place all of these bills in work session and have the appropriate amendments in hand in the event we decide to take action.  We will close the hearing on S.B. 513  and S.B. 420.

 

There being no further business, Chairman Townsend adjourned the meeting at 10:10 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

Silvia Motta,

Committee Secretary

 

APPROVED BY:

 

 

 

                       

Senator Randolph J. Townsend, Chairman

 

 

DATE: