MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-Second Session
March 17, 2003
The Committee on Commerce and Laborwas called to order at 2:25 p.m., on Monday, March 17, 2003. Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Ms. Barbara Buckley, Vice Chairman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Mr. David Brown
Mrs. Dawn Gibbons
Ms. Chris Giunchigliani
Mr. Josh Griffin
Mr. Lynn Hettrick
Mr. Ron Knecht
Ms. Sheila Leslie
Mr. John Oceguera
Mr. David Parks
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Assemblyman Jerry D. Claborn, District No. 19, Clark County
Assemblywoman Peggy Pierce, District No. 3, Clark County
Assemblywoman Vonne Chowning, District No. 28, North Las Vegas and Clark County
Assemblyman Rod Sherer, District No. 36
Assemblyman Wendell Williams, District No. 6, Las Vegas
STAFF MEMBERS PRESENT:
Vance Hughey, Committee Policy Analyst
Wil Keane, Committee Counsel
Corey Fox, Committee Secretary
OTHERS PRESENT:
Mickey Adams, Vice President, Operating Engineers, Local 12
Jack Jeffrey, Southern Nevada Building and Construction Trades Council, Operating Engineers Local 12
Benjamin Blinn, Citizen
Terry Johnson, Labor Commissioner for the State of Nevada
Jim Keenan, Nevada Purchasing Study Commission
Dan Musgrove, Clark County
Terry McHenry, Nevada Association of Land Surveyors
Ruedy Edgington, P.E., Nevada Department of Transportation
Randy Robison, Capitol Strategies, Associated Builders and Contractors
John Reda, Citizen, Las Vegas
Nancyann Leeder, Nevada Attorney for Injured Workers
Jack Jeffrey, Southern Nevada Building Trades Council and Nevada Travelers Association
Bob Ostrovsky, Employers Insurance Company of Nevada
Danny Thompson, Nevada AFL-CIO
Jeannine Huckleberry, Era Elite Properties, Clark County
Ralph Felices, Chief Investigator, Department of Motor Vehicles, Compliance Enforcement Division, Reno
John Sande, Law Firm of Jones Vargas, Nevada Franchise Automobile Dealership Association
Chairman Goldwater:
We will bring the hearing on Commerce and Labor to order. Indicate everyone present and we will be a subcommittee until Mr. Oceguera is here, and I will announce a quorum present when he is here. We have four bills on the agenda today. Assemblyman Williams is sponsoring A.B. 119, but I do not see him, so we will hold off on that one. We will go to A.B. 176. Is Mr. Claborn here? Welcome, Mr. Claborn.
Assembly Bill 176: Makes various changes to provisions governing prevailing wages. (BDR 28-972)
Please note that a quorum is present; Mr. Brown has arrived. We are back to full Committee.
Assemblyman Claborn, District No. 19, Clark County:
[Introduced himself] I bring before you today A.B. 176. This bill is relating to public works, requiring the Labor Commissioner to survey certain additional employers to establish a prevailing rate of wages, providing that certain workmen are deemed employed on the public works, and to establish prevailing wages in each county in which the public work is being performed for each craft or type of work. In the bold language, you will see that this is the heart of the bill. Today, I have with me Mr. Jack Jeffrey and Mr. Mickey Adams. If it pleases the Chair, I would like to turn the microphone over to Mr. Mickey Adams, who is Vice President of Local 12, Operating Engineers. He represents Southern Nevada as well as Southern California. Thank you, Mr. Chairman.
Mickey Adams, Vice-President, Operating Engineers, Local 12:
[Introduced himself] The purpose of me being here today is for the amendment of NRS 338.030 [Nevada Revised Statutes], wage surveys for workmen, as defined under NRS 338.030. The current statute requires the Labor Commissioner to conduct annual wage surveys of contractors that have performed work in a particular county. The Labor Commission has interpreted the term “contractor” to mean only those employed who have a current contractor's license. This bill would rectify the inequity of excluding other employers who employ workmen in a public work project and wage surveys, such as field survey firms and inspection firms and soil testing firms. In order to establish a credible and accurate wage rate for owing any counties, all employers who perform covered work on public works projects should be included in such wage surveys.
NRS 338.040 currently defines “workman” as a person employed at the site of public work and is necessary in the execution of the contract for public works. A.B. 176 would codify the classification of equipment greaser repairman, field surveyor, construction inspector, and soils and material testers workmen, as defined in NRS 338.040, subject to the payment of prevailing wage. All four of these classifications are recognized by the Nevada State Apprenticeship Council, and the Operating Engineers is the recognized program under that council. Inclusion of these four classifications to NRS 338.040 would avoid any further misunderstanding, as well as any misinterpretation, as to whether or not these four classifications are work entitled to the prevailing wages repairman and maintenance, heavy-duty equipment used for the construction activities of the state site of construction. The Labor Commissioner’s office has published rates for the equipment greaser and heavy-duty repairman before October 1, 1985, and the reason I am saying 1985, is because that is the first year I have firsthand knowledge of it. The reason these classifications are included in this bill is because a leasing company provided equipment on the McCarran airport project, a public works project, in which the Labor Commissioner excluded the maintenance and mechanics as the equipment greaser because he was not a licensed contractor, but an equipment rental company. The Labor Commissioner's office first published a soils field technician rate on October 1, 1998, as part of the Operating Engineers classifications. On October 1, 2000, the Labor Commissioner’s office first published the building and/or structural inspection. Each of these contractors have to carry certification, required by the Department of Development Services.
I would like to give you a brief history on our apprenticeship programs. Our construction apprenticeship program, which is a 6,000-hour approved program by the State of Nevada Apprenticeship Council, covers the classifications of equipment greaser and mechanics. We also have an apprenticeship program that covers mechanics and welders, which is an 8,000-hour program, which is certified by the Nevada State Apprenticeship Council. On February 1, 1991, the Southern Nevada Operating Engineers Apprenticeship Committee applied and was awarded and approved apprenticeship standards for the general construction inspectors program, which is a 6,000-hour program covering all phases of electrical, earth work, concrete placement, crane certification riggings, stemming materials, vent documentation, steel welding, mining, mechanical, and building constructions inspectors. That is an 8,000-hour program. Not all of our contractors are licensed contractors under the criteria of the current Labor Commissioner's Office. For example, survey employers. Every survey employer in Nevada has a professional land license survey and has to have a person who is a professional land surveyist, which is not part of the prevailing wage, but all employees performing work on a project, whether on public or private or a workman employed by these employers, such as a Rodman chainman and instrument men. The employers of these contractors contributed to the Operating Engineers Trust Funds a total of 91,490 hours on behalf of the employees of those contractors last year. I am talking about the time period that the Labor Commissioner certified those hours for the prevailing wage. The total hours used by the Labor Commissioner’s office was 2,059 in determining the prevailing wage rate, because those companies are licensed land surveyors and not contractors, as determined by the current Labor Commissioner. That is one of the reasons we are in support of this bill. Thank you very much.
Chairman Goldwater:
Questions from the Committee? Question Ms. Giunchigliani please.
Assemblywoman Giunchigliani:
Thank you. It is good to see you, Mickey. Would this have benefited or stopped or prevented the problems that we had, if somebody had been testing the soil properly for compaction, as well as whatever else they tested for down at the City of Las Vegas when the building was off tilt by a foot, or was not it the Mandalay Bay that they did not do the soils test? Would this help at least with that part of making sure that someone is reviewing that before they actually go to construction? [Mr. Adams replied in the affirmative.]
That would be a good thing. And, would you have objection if we began using terminology, instead of just “workmen,” because I know that you have workwomen, that maybe we might deal with workers, and that may be more for bill drafting, but I just throw that out there. [Mr. Adams replied that he would not object and Ms. Giunchigliani thanked him.]
Jack Jeffrey, Southern Nevada Building and Construction Trades Council, Operating Engineers Local 12:
I really cannot add anything that Mickey has not covered, except to tell you that the Building Trades Council is in support of this legislation. There have been problems in this area in recent years and they are problems that need to be worked out and I think that we will get there with this legislation.
Chairman Goldwater:
Signed in on A.B. 176, Ben Blinn.
Benjamin Blinn, Citizen:
I am for this bill. I think it is a good bill. [Introduced himself] I have an interesting history. I taught machine shop and welding at Stewart Indian School. I also taught out in the rural areas, Silver Peak and Esmeralda County. I taught welding to the miners, in addition to teaching grade school out there. In Elko County, where I graduated from high school, I was first employed with an “idiot stick” down in a hole. That is digging with a shovel. In Elko County, I was paid $3.10 an hour to be in the hole, digging. There was no protection of the job I was doing. I was working on the elementary school building up there, and the high school, that still stands. My father was a vocational teacher at Elko High School and they needed a certified welder to weld the overhead beams that are still up. So, when Mr. Anderson, from Anderson Construction out of Salt Lake City, they hired no union help at that time and so the wages that I was being paid, and I am ready to go to college, that summer was important to put my money away. My dad, they asked him who was a welder that could weld that, and he says, “well, you got one working for you.” With his recommendation, I went to Reno and I took that certified welding test. That is important because if you want to hold 35 tons of steel by an inch square of weld, you have to know that you did it right, especially if you know that your grandchildren are going to be in that school building. The importance of that was I qualified and I did all the welding on those school buildings. To this day, I am kind of proud of that as my first on the job OJT train deal. I still got the same $3.10 an hour because they were trying to find somebody that wanted to work on the “right to work for nothing plan.” I needed that to go to college and they had me over a barrel. I did not get what I was worth as a certified welder in Reno, or any other county, because I am out in the cow county. There needs to be some guidance as to the wages that are paid throughout the state. I think this bill supports that and, in my own case, having lived and worked in the cow county and taught welding to the miners and also to the graduates of Stewart Indian School, a lot of them went on to be iron workers and are in the welding union. They have a very strong union, but if there is any way that “cheapo outfit” construction places that do not care whether the school building stands up or not, and they cheat. They do not want to pay what you are worth. I am worth union wages to this day on welding, and I would like to support Mr. Claborn’s bill, and anything that would rectify the money and inspections and hiring proper help that know how to do the job, I would support.
Chairman Goldwater:
Let us bring up the opposition, the Labor Commissioner. If any of the others opposing want to come up and give him support, we will take them all at once.
Terry Johnson, Labor Commissioner, State of Nevada:
It is obviously an awkward position for me to be in to not be able to support legislation that I think was intended, in the mind of the sponsors, to remedy some challenges that are out there. I am not able to support this bill. If you look through this, some of my concerns are resource-related, primarily, starting with the title of the bill: “an act requiring the Labor Commissioner to survey certain additional employers.” My position and concern is that the Labor Commissioner does not even have enough money to survey contractors, let alone additional employers. This would be the first year where we are going to face some really serious challenges in trying to conduct the survey under the law that is currently written. You will see in subsection 2, it talks about “other employers of workmen, in addition to contractors.” When the prevailing wage or regulatory scheme was enacted, it was generally focused on contractors who bid on public works projects and the wages they pay their workers, which they employ on those public works projects. This expansion of prevailing wage by adding these classifications, in my view, will result in additional money to have to survey these additional employers. I believe it will result in additional claims and complaints and additional litigation. I think there are some instances where, in the process of trying to expand the prevailing wage law and expand the regulatory reach of the Labor Commissioner, it is broad in some places, particularly with regards to the language about “inspecting work performed at the site of the work.” What kind of work, by whom, so forth and so on? My general concern is that we are operating in an environment, in a fiscal climate, where we have extremely limited resources as it is. I am not able to support legislation that would expand the regulatory reach of the Labor Commissioner in this fashion. Given the challenges that were cited, I have some concerns, as well, as to whether this bill really remedies the problems and concerns that are perceived by the sponsor. I shared my concerns with the sponsor before the hearing today, as well. I am not in a position to support this bill and I do not think it would be in our best interest.
Chairman Goldwater:
I have a question for you, Terry, and I appreciate your objections and the challenges all of our administrators face with limited resources in this state, but this is a policy-making Committee. I am blessed, as are a number of other people that sit on this Committee, to sit on the Ways and Means Committee as well. We get to hear from a number of different administrators on their challenges, with the policies that we put in place. If we put a policy in place and you do not think that we are getting the resources to you, you need to come to us, in that Committee. I am not entirely sure that it is appropriate to be talking to this Committee about the resource. Do you have any objections to the policy outlined here? If you had the money, would it be all right if we did this?
Terry Johnson:
Mr. Chairman, I think that we are setting a precedent here, in terms of expanding the classifications through this mechanism. So, with that, I did have some concern and objections as well. [Chairman Goldwater stated that he thought those objections would be more appropriate here in this Committee.] We are talking about, in a number of these instances, classifications that have not been traditionally recognized as being subject to prevailing wages. Obviously, we look at these issues as they emerge and unfortunately there is pending litigation in just about all of this. We look at these issues as they emerge, we try to make the best determination that we can, and see what ensues thereafter. From a policy perspective, the bulk of the classifications have not been traditionally recognized for purposes of prevailing wages.
Chairman Goldwater:
Are these classifications considered in other states?
Terry Johnson:
I believe you might find the heavy equipment repair. I am not aware off the top of the inspection, and I believe this is related to building inspection, I think I heard the gentleman testify to, of the other 30 states that have prevailing wage laws. I could not give you a figure as to how many have these exact classifications.
Chairman Goldwater:
So, your objections are resource-based and tradition-based. Other questions from the Committee? Mr. Beers, please.
Assemblyman Beers:
Thanks, Mr. Chair. Should there be a fiscal note on this?
Terry Johnson:
I wanted to hear, Mr. Chairman, about what the intent of the legislation was, particularly with the inspection work and the heavy equipment maintenance, the soil tester, before deciding whether to prepare a fiscal note. I wanted to first learn more about the bill and hear the testimony before making that decision.
Assemblyman Beers:
How would you find these people, because we have a registry of contractors? These guys are not necessarily on a list anywhere.
Terry Johnson:
Mr. Chairman, I guess they would be on a list of engineering firms or equipment rental firms, equipment leasing firms, or professional engineers, the building inspections; I would probably have to work with some people to see where we could get that data from, if this bill is enacted.
Assemblyman Brown:
I take it this would obligate all the same record-keeping, in terms of certified payrolls, for all of these additional companies. Let me state, Mr. Chairman, I represent some contractors. I even represent some equipment leasing companies. So, just for a “for instance,” that would be required of them at the same time.
Terry Johnson:
I think it would gradually roll over and expand the scheme, so that everything that applies to a contractor would now apply to what you see referenced as “other employers of workmen, in addition to contractors.” We would have to look at the certified payroll reporting requirements. I do not think a number of these types of companies are listed as subcontractors, when the contractors are required to report their list of subcontractors. So, we would have to take the regulatory schemes as it exists now and in all probability have to just expand it throughout to include and encompass the types of works being addressed here.
Chairman Goldwater:
Other questions from the Committee?
Jim Keenan, Nevada Purchasing Study Commission:
We normally appear before the two Government Affairs Committees, so with your permission, perhaps an introduction of who we are? We are mandated by NRS 332.215 to meet at least quarterly. We meet monthly, and our stated mission is to study practices in governmental purchasing and laws related thereto and make recommendations with respect to those laws to the next regular session of the Legislature. That is the purpose for which we are here today. We have approximately 75 members statewide, all public employees, employed by over 50 municipalities. Approximately 25 percent of them have professional certification in purchasing and purchasing-related fields. We are proud of that particular statistic. In any case, we represent mostly local government purchasing and public works offices around the state. I would like to echo the Labor Commissioner's comments. I realize I cannot echo the issue of resources, but his other comments, in terms of what is traditionally construction and what is not, and the ability to survey these and locate these individuals, and some questions as to what kind of companies you would survey; again, we echo his comments in that regard. In addition, in local governments, the first thing we do before a public works contract is ever awarded, we execute a professional services agreement, a non-competitive agreement, allowed by the NRS, with an architectural firm. The reason it is non-competitive is because we are contracting for the individual's uniqueness, creativity, particular skills, particular expertise, and it is one of the few instances in purchasing when you cannot compare “apples to apples.” It is, in effect, “apples to oranges.” We choose an architect for what he or she represents and what we think they can do for us. We customarily do not discuss fees or charges or wages or rates until the contract is awarded and, in fact, as I understand federal law, if you solicit quotes from architects and engineering firms, you cannot discuss their fees, which implies wages, until you are ready to award agreement. Thus, anything that dictates prevailing wages ahead of time, number one, contradicts the intent of professional services agreements. Secondly, with the exception of mechanics, surveys and soil testing. [Chairman Goldwater interjected and stated that he did not understand how it interrupts privacy.] What I meant was, when we award a professional services agreement, with a contractor of an architectural firm, it is a non-competitive agreement. We have chosen that individual because of his skills, his ability, and his creativity. He is entitled to charge whatever he wants, just as if you went to the doctor that you chose because he was the best and did not question the fee. If we begin to impose prevailing wages on these individuals, then we have taken away some of their uniqueness in terms of their ability to do their creative work their way and charge whatever they wish to charge. [Chairman Goldwater stated that he thought he understood.] Perhaps this might help also. Under federal law, when you solicit quotes from architects and engineering firms, you are prohibited from discussing fees and wages until you have awarded a contract. The idea is that money is not supposed to be an issue when you award a professional services agreement. That is the intent behind them, which is why they are non-competitive and exempt from competitive bidding in NRS 332. So, by including prevailing wages in such arrangements, we just feel that you are taking away some of the individuality of these firms and these professional services agreements. In addition, as the Labor Commissioner well knows, local governments would subsequently have to investigate any prevailing wage violations. We would need to get a lot of information from him, knowing what was a violation, the basis for it, and so on and so forth.
Chairman Goldwater:
You are talking about the uniqueness of heavy equipment repair maintenance firms?
Jim Keenan:
I am sorry, Mr. Chairman, I thought I excluded mechanics. I was referring to soil testing, surveyors, and independent inspectors. What I call mechanics would not be part of an architectural firm or a design firm.
Chairman Goldwater:
Are soil-testing firms unique from firm to firm?
Jim Keenan:
When we contract with an architect to design a project for us, it includes soil-testing, surveying, laying out the properties, etc. We contract with the architectural firm. We do not go any further to ask where he/she gets those technical resources. Architects have their own subcontractors, mechanical engineers, electrical engineers, surveyors, etc. [Chairman Goldwater noted that information was helpful to him and he thanked Mr. Keenan.] In addition, what too often happens, we will contract with an architect or an engineer at a local government to design a public works project, and that design is never completed or the building is never built. The subsequent public works contract is never awarded; therefore, how could we say that someone worked on a public works project, when it was never awarded? That is another concern we have in the wording of the bill. So, for some of those reasons, and I do have a summary I can hand to the Committee afterwards (Exhibit C). For those reasons, we support the Labor Commissioner in his opposition to this bill as it is written.
Chairman Goldwater:
Questions from the Committee? I do not see any. I appreciate your testimony and we are glad to have you in Commerce. [Mr. Keenan thanked the Chairman.]
Dan Musgrove, Clark County:
Thank you, Mr. Chairman. I really do not have much more to add. One of the things that my purchasing folks pointed out in this bill, was that this proposed legislation begins to take those classifications beyond what we feel are employed by the contractor and are, therefore, eligible for that prevailing wage. In other words, the heavy equipment leasing companies that are doing the work on the heavy equipment are employees of the leasing company and not the contractor. They are not actually performing work on that jobsite related to the contract that is being bid to perform the public works. We think that this sets a precedent to take it beyond what the intent of prevailing wage was initially intended. That is our concern and I am open for any questions.
Chairman Goldwater:
Questions to Mr. Musgrove? I do not see any. Additional testimony, sir?
Terry McHenry, Nevada Association of Land Surveyors:
[Introduced himself] This bill before you today, A.B. 176, is something that our organization is adamantly opposed to. I believe there is a handout the Committee has that I prepared (Exhibit D). We are opposed to this bill for basically three reasons. One, we believe that materials testers and surveying personnel function under the direction of professional engineers and professional land surveyors, respectively. To place these skilled technicians in with the construction trades and crafts, for purposes of prevailing wages, would be contrary to the intent and purposes of Chapter 625 of NRS. Also, we believe this language would preclude a city or a county, from negotiating contracts for surveying services on a lump sum basis, which is a common way to do it. The federal law that was referred to earlier in testimony is the Brooks Act, which is public law [PL] 92-582. The purpose of the Brooks Act is to enable and defend qualifications based on qualification selection, as opposed to bidding. It includes in the bill, and you will see this on the second page of the bill in your handout, individuals in the employ of architects, engineers, and land surveyors. Under the definitions, architectural engineering services also incorporate surveying and mapping soils, engineering and testing. It incorporates those under the employ of engineers and surveyors. So, we see this bill as another ongoing effort to extend the jurisdiction of the trades into the profession, which again is contrary to NRS 625. We believe these individuals are truly agents of the professions and not tradesmen. I cannot speak specifically in this bill to Section 2, subparagraph A, or I cannot speak directly, at least to [subparagraph] D, although I believe, as far as inspection is concerned, my comments would apply in some instances. So with that, if there are any questions, I would be happy to answer them.
Chairman Goldwater:
Questions for Mr. McHenry? I do not see any. We appreciate your testimony.
Ruedy Edgington, Nevada Department of Transportation:
[Introduced himself] We are not here to oppose this bill, but hopefully to shed some light on some of the consequences of it. First of all, there would be an increase in cost for the department contracts. Contractors normally do not have to pay their mechanics, and a lot of those workmen offsite, the prevailing wage, so there would be an increase to our contract cost. Second, there would be an increase to our administration cost, as we hire engineering consulting firms to do this type of work on our sites, both surveying, materials testing, and that type of thing. There would also be a resource problem for us, as the Department of Transportation is obligated to work with the contractors on our projects to confirm that their workers are being paid prevailing wage. If this were expanded to workers offsite, it would be a nearly impossible task for us to monitor all of those things. As wage complaints came in, we would need more resources to go and follow those and it would be very difficult for us to track when an employee was actually working for a public works project and making prevailing wage, when he was, per se, working on something else. That piece of equipment may be used for two different projects, one public works and one not. That would make it very hard for us. Another concern for us is that we have a fairly large staff of testers and surveyors that work for us. If the private industry was to start paying other workers prevailing wage, I would be very fearful that we would lose our employees to them fairly quickly. Finally, the language in this bill, right now, does not talk about what happens to current jobs, if this were to be enacted. I would ask that some language be included that would exempt current jobs, so that it would take place after the effective date, when a project was bid, and not come into effect immediately at that time, for ongoing jobs. [Chairman Goldwater thanked Mr. Edgington and asked if there were any questions. There were none.]
Randy Robison, Associated Builders and Contractors:
[Introduced himself] I just wanted to go on record, also in opposition for many of the same reasons that have been mentioned before. I will not belabor those points. Thank you.
Chairman Goldwater:
Duly noted. No questions? Thanks.
Is there anybody else who wants to testify against this bill? Is there anyone who wants to testify in favor of this bill? [There were none.] We will close the hearing on Mr. Claborn's bill. I will bring this back to work session and we will have Mr. Hughey's document enumerate some of the points that were brought out, in hopes of improving the bill. Mr. Claborn, I will direct you to Mr. Hughey, to make sure that document contains all of the things that you are concerned with.
Next on the agenda is A.B. 206. Welcome to Commerce and Labor, Ms. Pierce.
Assembly Bill 206: Revises provisions relating to repayment of compensation received in lump sum for permanent partial disability. (BDR 53-1103)
Assemblywoman Peggy Pierce, District No. 3, Clark County:
Good afternoon, Mr. Chairman and members of the Committee. Thank you for this opportunity to present my bill. My bill deals with the workman’s comp system. A worker who is found partially disabled and paid a lump sum settlement, and then later found to be fully disabled, has to pay the lump sum back. The first thing my bill would do is make it possible for an injured worker, who has to pay back a lump sum, to pay that lump sum back in one payment, if they choose. I have additional language that has been passed out to the Committee (Exhibit E) that pertains to the second goal of my bill. This language would strengthen the language pertaining to the repayment of the lump sum. The repayment should only be for the exact amount of the lump sum. Also, this language would mandate a recalculation of all repayment plans for lump sums that are currently being made, so that injured workers are only paying back the exact amount of the lump sum. I would like to introduce Mr. John Reda, one of my constituents in Las Vegas, who brought this situation to my attention first. Then I will introduce Ms. Nancyann Leeder, the Nevada attorney for injured workers, who will take you through the bill and the additional language. Mr. Reda is in Las Vegas.
John Reda, citizen:
On 12/21/92, I was injured from America West Airlines, as I fell out of an aircraft, 28 feet, and broke my back and was unconscious. I was getting a run- around with the doctors, so I closed my case in 2/94. They offered me $31,584 or they would offer me $2,567, yearly. That time, being injured and had all kinds of bills that I had to pay to keep up, I took the lump sum settlement and closed the case. In 5/94, I reopened the case, due to severe and traumatized back pain. I went to two other doctors, an orthopedic surgeon and a neurosurgeon. Both of them told me my case should have never been closed. I did damage to the T9, 10, 11, and 12 [vertebrae]. It took me a year, from 5/94 to 5/95, to be exact, to have the case reopened. SIIS [State Industrial Insurance System], with their doctors, agreed that my case should have never been closed. So, I had surgery in 8/95 and the doctors told me it was going to be a three-hour surgery. Come to find out, there was more damage than they had anticipated, or any other doctor had anticipated, they worked on the T9, 10, 11, and 12, and I was in there for six and a half hours, lost 12 pints of blood, and went into cardiac arrest. I had two more heart attacks while in intensive care. I finally left the hospital 25 days later. In 7/98, SIIS gave me permanent and total disability, where I cannot work at all. By the way, this is supposed to be a two-part surgery. I am supposed to go back and have the other surgery for a plate back there, but my heart will not take it. I only have less than 30 percent of my heart left, so that is out of the question.
In Vietnam, I got chronic asthma, laryngitis, and bronchitis. So, I received total 100 percent disability with the Veterans Administration (VA). They gave me a settlement in the year 2000. So, I called SIIS, and I asked them if I could pay back the $31,000. They told me no. I asked why and they responded that if you had put it in the bank, you would have got $64,000. So, I said, I cannot afford $64,000 to pay you back. According to Wells Fargo Bank, if I would have put the $31,000 in 1994, to this day, till the year 2119, when the lump sum is paid back, I would make $50,000. As far as I am concerned, that is “loan sharking.” Because why pay back $64,194? According to my calculation, that is paying over 200 percent. I am supposed to be getting $950 a month, but they are paying me only $736.75 due to the recovery payback. To this date, I have paid back $20,542. When I reach age 70, I will be paying the $64,000. I do not think it is fair that I should have to pay back that much money, considering that it is “highway robbery.” I wish you would all reconsider on the amount of interest that you are charging the permanent and disabled injured workers. I know we are down. Why keep us down? I know they were expecting me to go back to work, and give me $2,500 a year, but who can actually live on that? You almost have no choice but to take the lump sum settlement. Not knowing that I had to pay back $64,000, they told me that I would be paying until age 70. I figured there was nothing in there stating that I would have to pay back $64,000. I think I would have borrowed the money to pay other people and just took the $2,500.
Chairman Goldwater:
Thank you, Mr. Reda. Any questions? Mr. Knecht, please.
Assemblyman Knecht:
Thank you, Mr. Chairman. As I read the bill that is before us, Assemblywoman Pierce, and hear from your witness, I have a concern that is not completely ameliorated yet, that possibly the formula that is provided, even with the amendment, would, in an economic sense, end up shorting the disabled worker. I am concerned that, for example, the worker would end up paying back some compensation that would cover the period between the time that he or she was found to be partially disabled and the time that total disablement was determined. I am wondering if you are open to discussion of details like that that would help make sure that the worker gets full compensations, if he or she is determined to have, in fact, suffered total disability. I do not know that we can do the details here today, but I, as someone who works with compound interest, which is involved in these calculations, and is at the essence of these lump sum calculations, am concerned that as the language stands, it might short the worker. [Assemblywoman Pierce indicated she was willing to work on this.] Thank you, Mr. Chairman, and thank you, Ms. Pierce.
Nancyann Leeder, Nevada Attorney for Injured Workers, State of Nevada:
Thank you, Committee, for allowing me to address you on this subject. We have talked about this subject in 1997 and 1999, attempting to correct the problem that Mr. Reda just discussed. A part of his problem is dealing with how much money gets recouped by the insurer when there is a permanent partial disability (PPD) prior, paid in lump sum, when the worker becomes permanently totally disabled (PTD), or even temporarily totally disabled (TTD). The other part of his problem was that he wanted to pay it in lump sum. So, we first have the issue of, can you repay in lump sum, if you choose? And secondly, how much need you repay in lump sum when you are allowed to? In contract law, you would be allowed to repay in the concept of recision. Apparently the person to whom Mr. Reda talked and offered this recision idea, told him no. But then when it got in to the second problem, which is how much would he need to repay, and he was told how much he would need to repay, which essentially is the capitalized amount that he took in lump sum, plus interest, or compound interest, as Mr. Knecht said, he could not do it and therefore did not pursue it. There are other people in similar situations. You would think, how does the worker have enough money to offer to rescind the taking of the lump sum. In Mr. Reda’s case, he had his settlement from the VA disability. So, he had the approximately $32,000 that he had been paid in lump sum.
I have another case, where the woman offered to repay in lump sum the amount of permanent partial disability she had been paid, because in her case, the PPD was $5,018, but she had just been awarded, by the appeals officer, temporary total disability, in the amount of $6,500. Because the insurer had not paid her for two years, and between the time that the appeals officer made a decision and the time that she would have actually been paid, the insurer offered her a PPD amount and therefore did not pay her the TTD amount, but she would, had she taken the TTD amount, have had sufficient monies to repay, therefore rescinding the PPD amount. On occasion, there are situations that arise where an injured worker would have a lump sum available to him to repay a prior paid permanent partial disability lump sum amount. The more important question may be how much need be repaid. In 1999, we changed the language for the second time, the first time being in 1997, so that the intent of the Legislature, in passing that legislation, was that the prior paid lump sum permanent partial disability amount was the amount that was to be repaid. There are people… not just Mr. Reda… we also have some other cases, where they continue to have deductions made. We cannot tell…we do not have any cases, where the deduction started to be made after the 1999 version of the statute. What went into effect in 1999 was a little bit after that. There is a time delay in our getting cases. We did not represent Mr. Reda. I do not know if there are new cases in the pipeline. If there are, then, of course, this proposed legislation would affect those cases. This proposed legislation would also affect people who have reductions being taken from, not only permanent total disability pensions, but also those who have had money taken from their temporary total disability, and then permanent total disability.
According to the amendments that were just passed out, this proposed legislation would also require recalculation so that this overpayment does not continuing being made. So, if we look at the bill that was proposed, that is printed as A.B. 206, together with the proposed amendments, which were passed out today, the first change would come on the second page of A.B. 206, and is contained as point number one on the amendments, which were passed out today. So, in statute 616C.440, under subsection 1(b) [Nevada Revised Statutes], there would be an additional entire sentence, which is contained on the amendments. It says that, as is the case with Mr. Reda, between May 1995, when he was paid temporary total disability, until July 1, 1998, when his permanent total disability arose, the $10,000 plus, that was deducted from his temporary total disability payments, would be credited to his repayment of the permanent partial disability lump sum prior paid. That is the purpose of the first sentence on the amendments that were passed to you today. The proposed amendment in the bill itself, which is paragraph 2, is nearly editorial. Paragraph 4 would have a change as proposed in A.B. 206, and an additional change as proposed in the amendments that were passed out today. The purpose of today’s amendment is to ensure that the repayment or the rescinding is at the request of the injured employee, not at the request of the insurer. The next substantive change would be under Section 4, “a” and “b,” which is the rescheduling provisions. There would no longer be an “a“ and “b.” In other words, there would no longer be a distinction between a minimum lump sum and anyone else. Minimum lump sum is not defined anywhere, so it would not exist anymore. The repayment would take place pursuant to paragraph 3, number 3, on the amendments that you just had passed out to you. On page 3 of A.B. 206, there is additional language proposed, part of which would be replaced by the fourth number paragraph on the amendments, which were passed out to you. Which again would mean that the injured worker only repays once, not repays out of temporary total disability, and then the repayment starts over again with permanent total disability. We have had cases like that. In paragraph number 5 on the amendments, which were passed out today, there would be a requirement of a recalculation, which is not included in proposed language, under the bill as it is originally printed. Any questions?
Chairman Goldwater:
Let me go to Beers, and then we will go to Buckley, please.
Assemblyman Beers:
Thank you, Mr. Chair. The primary point of this is to take the time-value-of- money concept out of these transactions? Am I to understand that in Mr. Reda’s case, he received a lump sum seven or eight years ago, and now he is repaying that piece of it because he is, as it turns out, permanently disabled? The insurer has asked for the lump sum, plus some interest, and this legislation proposes that there would be no interest?
Nancyann Leeder:
That is correct. The lump sum that he took was a capitalized amount. He was entitled under his PPD, which I questioned him on, and then we did calculation, and he found some old letters that he had received. Had he taken the stream of payments, he would have received, as his permanent partial disability, more than $64,000. Instead of that, he took a capitalized amount, the current day value of that money, which was not quite $32,000. Therefore, it was already discounted. So, yes, you are correct.
Assemblyman Beers:
So, now, eight years later, in order to make this transition to permanent disability status, the state is saying we will give you the permanent disability funding source or lump sum, but we have to undo the previous permanent partial, and the discount rate is different today then what it was eight years ago. Is that where the inequity is arising?
Nancyann Leeder:
I do not know what the discount rate is. I do know he has repaid $20,500, he said just now in testimony. I calculated today, $20,586.76.
Assemblyman Beers:
He has repaid that amount? Is the remainder that is not repaid from the original lump sum now resulting in a reduction on his ongoing permanent benefit? [Ms. Leeder replied in the affirmative.] How would this bill change that?
Nancyann Leeder:
It would not until it reached the amount that he had taken as the discounted amount.
Assemblyman Beers:
Is the issue that the insurer is saying that "you must pay us back? You received this much…" These are awfully difficult concepts of economics and banking, so let's try visual aids. He received this much. [Mr. Beers used hand gestures to show an amount of money by placing his hands approximately 5 inches apart.] The insurer now wants this much. [Mr. Beers moved his hands to approximately 10 inches apart.] He was able to pay back this much. [Mr. Beers moved his hands to approximately 3 inches apart.] But, there is still some left, and so they are taking that as a reduction in his ongoing benefit. This issue is, when do we stop the ongoing benefit? [Ms. Leeder agreed.] This legislation would say, when he hits a repayment of the amount that he originally was lump summed, in real dollars – that is, if it was $30,000 then – then today the 30,000th dollar paid, he is done, and his benefit goes back up? Is that where we are going?
Nancyann Leeder:
Yes. But also, this is, I think, the third attempt at making this happen. So, the Legislature has already tried twice to make this happen, because it is understood that that was the original intent of the Legislature, that injured workers should only pay back the exact amount of the lump sum.
Assemblyman Beers:
With no accounting for having had the use of that money for the ensuing years, as you would in a bank loan, or a life insurance annuity. Is the policy – perhaps one of the veterans can help me out here – is the presumption that the injured worker spent the money when he received it, rather than was able to invest it to create an income stream?
Nancyann Leeder:
I believe that is the case, but also would be taking into account the fact that the money is already discounted, because he would have had $64,000 plus.
Assemblyman Beers:
If he had opted for payments, instead of the lump sum?
Nancyann Leeder:
That is correct. So the entity already has the benefit of that discounting and the accounting charges.
Chairman Goldwater:
Let me see. The issue is that the discount already occurred. Here is somebody who can succinctly put it. When they took it, it was discounted at today’s present value. If you ask me, you repay the lump sum over the past three years; you should probably get a benefit.
Mr. Jeffrey, can you shed some light through your experiences of former chair here?
Jack Jeffrey, Southern Nevada Building Trades Council and Nevada Travelers Association:
I will try, Mr. Chairman, if I can use the example that Mr. Beers used. We need to go back one step. When a person is partially disabled, a certain amount of money is reserved, for what they anticipate the life of the claim will be, by the insurer. You come in for a lump sum award, they give you this much. [Mr. Jeffrey illustrated this by placing his hands approximately 5 inches apart from each other.] Now they want you to pay back this much. [Mr. Jeffrey moved his hands to approximately 10 inches apart from each other.]
Bob Ostrovsky, Employers Insurance Company of Nevada:
[Introduced himself] It is my understanding, and somebody tell me if I am wrong, in 1999, in S.B. 37, we changed the formula and gave up the right to get the increased value. We put into law language that says that the partial disability must be made in a reasonable manner and must not be more than the total amount, which was paid for the previous award for permanent partial disability. That is the way claims that were incurred in 1999 were treated. What I believe we are talking about, are claims that predated 1999, like this gentleman’s [Mr. Reda], in fact did. His settlement and all of these payments were made in 1997 and 1998. What we are trying to do is look at the policy of what we should do with claimants that were affected under the previous law, which is the way the company applied the rules at that time. In addition to which, the company has probably sold that claim [Mr. Reda’s claim] in the process of going private to another insurer. The question of going back and recalculating, we would like some time to look at what that means. We do not know how many claims might be impacted. I believe – and if I am wrong, tell me so – if a claimant is injured after this change, when the law of 1999 went into effect, we cannot get more back than we paid as a lump sum. [Fire alarm went off at the Las Vegas building.] The policy question is, do you want to go back and recalculate those claims, which predated that 1999 change in the law? Nancyann Leeder has indicated that she does not know if there are any claims after that, because none have reached her desk, for potential adjudication, but my client, at least, believes, in following the law, as it was adopted in 1999, we will not have these cases going forward. We have not seen any of those cases. We have no problems with the change that the bill sponsor has asked for here. We are a little concerned about the language in the amendment, which asks us to go back and recalculate all of these. I do not know how far back to go and how many we have to recalculate. That would probably take some time and an actuarial analysis. Thank you.
Chairman Goldwater:
I think we understand what we are trying to get to here. Yes, Mr. Jeffrey. Any concluding comments, Mr. Beers? Thank you very much for your testimony on this bill. Is there anyone else who wishes to testify on A.B. 206?
Danny Thompson, Nevada AFL-CIO:
[Introduced himself] Just to go on record in support of this bill.
Chairman Goldwater:
Anybody else that wishes to testify, either in favor or opposed to A.B. 206? We will close the hearing. I will direct the sponsor of the bill, Ms. Pierce, to work with Diane Thornton to get something ready for work session, and with Mr. Ostrovsky as well. Thank you, Bob. A.B. 221, is the sponsor here? Ms. Chowning, welcome to Commerce.
Assembly Bill 221: Revises requirements concerning consignment of vehicles. (BDR 43-215)
Assemblywoman Vonne Chowning, District No. 28, North Las Vegas and Clark County:
I proudly bring to you today Assembly Bill 221, which is a consumer protection bill, protecting consumers who are consignors when someone takes their motor vehicle to a dealer, who is called a consignee, and consigns their vehicle to them for sale. In 1999, the Legislature passed legislation trying to protect people in these situations. It went a long way; it did not go far enough. This bill requires several things. There is a lady in Las Vegas who is a victim of this, Ms. Huckleberry. Assembly Bill 221 does a few things: it requires the consignee, who is the dealer of the vehicle, to assist the consignor in completing a financing statement to create a purchase money security interest of the consignor in the vehicle. That is called Uniform Commercial Code 1, a UCC1 form. It requires the dealer to assist the customer in filling out this form. Then it requires the dealer to file this financing statement with the Secretary of State of our state of Nevada. Thirdly, it requires the dealer to include, as part of the consignment contract, a disclosure form. That is the amendment you have on your desk. Instead of a sign, I decided it would be much more effective to have this disclosure form be a requirement, as part of the contract. It does provide a penalty of a misdemeanor if the dealer does not comply. I have a gentleman from the Department of Motor Vehicles who can tell you about these problems. Imagine, if you will, you are having a hard time anyway, because you need to sell your vehicle, or a vehicle of one of your relatives. You decide that an automobile dealer has a much better chance of selling your vehicle, because, after all, that is the business they are in. So, you take your vehicle to the dealer to sell, thinking that everything is going to be fine. Little do you know that the dealer has some problems with their lender. The lender then sends somebody, probably at 3:00, 4:00, 5:00 in the morning, and takes all of the inventory. Your vehicle just happens to be there on the floor, on the lot, as part of their inventory. So your vehicle gets taken away. However, there is a provision in our statute that says, if someone files this UCC1 form, your vehicle would be protected, because it would establish priority. It would state to the world that the owner of the vehicle is you; that vehicle would not be able to be taken with the rest of the inventory. That is what this bill is trying to do: to help the consumer, so that they can be protected.
I do want to tell you, however, in the real world, sometimes accidents happen. In this case, inadvertently, the lender, the financing company, may come and take your vehicle anyway, with the rest of them because they just did not get the notice, or they just did not care. Maybe they just took all of them because they were in such a hurry because they did not want to lose the inventory. Prior, the person would not have had any document to show a court, a judge, an attorney, but now they will. They will have the UCC1 form, which says, "this vehicle was not supposed to be taken, because this vehicle is my vehicle." This will help them in court. It will give them as much consumer protection as we can. Has this happened to many people in our state? The person from the Department of Motor Vehicles will tell you, “no, it hasn’t.” Do we pass statute, though, to protect a few people? Yes, we do. That is what we are supposed to do. Preventive medicine, in this case, laws, is much better than having to react after the fact. It means thousands of dollars to people, and their dollars and their rights should be protected. That is what I am trying to do here. I thank you, Committee, for your attention. I have Mr. Felices from the Department of Motor Vehicles that would like to amplify on this subject. I also believe that possibly there are some people in Las Vegas that would like to tell you the stories that have happened to them. Therefore, they would be in support of Assembly Bill 221. Thank you, and I will gladly answer any questions. [There were none, and Mr. Goldwater asked Ms. Huckleberry to testify.]
Jeannine Huckleberry, citizen:
I had a car that I put on a lot for consignment in the year 2000. It was a 1995 Cadillac that only had 33,000 miles on it. I also had a travel trailer that I put on consignment. They sold the travel trailer and gave me the money, so I thought that everything was going to be fine. I went out of town, and while I was out of town, the business went under. I was called by the girl that ran the lot to come in and get the car, but I was not in town. I arrived there two days later; the car had been impounded by the finance company, and I faxed them the title, which I still have. I faxed them the consignment agreement and they said “so sorry, it is our car.” I called my attorney and he could not believe it either until one of his law clerks looked up and found the statute that said they can keep your car, even though you have clear title to it. So, I had to resign the fact that they stole my car.
Chairman Goldwater:
Ms. Huckleberry, I am sorry for your loss. That is a terrible story.
Jeannine Huckleberry:
I thought so too, but if this law will stop them from attacking another poor widow woman, I would be ecstatic.
Chairman Goldwater:
Any questions for Ms. Huckleberry? There are none. Assemblyman Sherer, welcome to Commerce.
Assemblyman Rod Sherer, District No. 36:
I would just like to thank Ms. Vonne Chowning for putting this in. Ms. Huckleberry is my constituent, and I just really appreciate that Vonne is putting this bill in to take care of this, so this issue does not happen in the future.
Chairman Goldwater:
Thank you, Mr. Sherer. You are well represented, Ms. Huckleberry. Sir?
Ralph Felices, Chief Investigator, Department of Motor Vehicles, Compliance Enforcement Division, Reno:
[Introduced himself] We are here today in support of this bill. We would also like to thank Assemblywoman Chowning for offering this piece of legislation. It goes a long way to add to the existing consignment law in strengthening and providing some additional consumer protection. The original law, and this, comes from experiences of private citizens losing their vehicles from various types of fraud from a business in trouble, in which the vehicles were eventually seized as part of a bankruptcy, or by a flooring unity, in which the owners of the vehicles were held to lose the vehicle and would still be responsible for the debts they owed to a previous financial institution. Some of those people actually purchased other cars from this particular business and ended up owing two debts: One for the one they lost and one for the one they purchased. This goes a long way to add some additional protection, as Assemblywoman Chowning stated. Nothing is infallible. There could be some seizures that still would occur, but this would give consumers some additional protection where they could stand up and show that they are filed and recorded as the owner of the vehicle, which would assist them greatly in any court of law. I would imagine, in front of a judge, showing that they did have an interest in ownership of the vehicle, aside from the assets of inventory of the dealership. I would be happy to answer any questions.
Chairman Goldwater:
Questions from the Committee? I do not see any. Ms. Vonne Chowning, concluding remarks?
Assemblywoman Chowning:
Thank you, Mr. Chairman. If you will notice on page 2, a huge part of this bill lies in lines 20 and 21. Those say that “the dealer must not receive delivery of the vehicle” until this form has been filed. That is a huge part of the protection for the consumer, because the dealer, then, cannot put the vehicle as part of their inventory for sale. I have also had the secretary pass out to you, from the Secretary of State, the charge for filing (Exhibit F), which is $20 for the filing of the UCC1 form. I have also given you copies of that form, for your information. That concludes my testimony. It is a pleasure for me to bring this to you and I know that everyone wants to protect our Nevadans in as least costly form as possible. For a cost of $20, the dealers, also, I am sure, want to be able to be a part of this, because, they also, do not want to be in a bad light when they can protect the people who are bringing them business, as well. So, I thank you very much and I urge you to support our Assembly Bill 221. Thank you.
Chairman Goldwater:
Thank you, Ms. Chowning. I believe you have satisfied all of our concerns. Here to raise more concerns, I think, is Mr. John Sande.
John Sande, Law Firm of Jones Vargas, representing Nevada Franchise Automobile Dealership Association:
I believe that the witness, Ms. Huckleberry…I think maybe a partner in our firm represented her. I think it was Mel Close, according to the article in the paper. In any event, representing the Franchise Auto Dealers, we would be supportive of this legislation. We do not do as many consignments as other types of dealers, but understand the problem. I do not think it is possible to amend the UCC [UCC1 form] to avoid this. So, this makes the most sense, to address it this way. I would be glad to answer any questions.
Chairman Goldwater:
Is there any other testimony on this bill? Any against? I do not see any. I will close the hearing. We will open up the hearing on A.B. 119. Chairman Williams, welcome to the Commerce and Labor Committee.
Assembly Bill 119: Revises provisions governing determination of expiration date for certain prescription drugs or medicines. (BDR 54-238)
Assemblyman Wendell Williams, District No. 6, Las Vegas:
Thank you very much, Mr. Chairman, glad to be here. The bill that you have before you, A.B. 119, you can pretty much disregard the language in the bill. We are passing out an amendment (Exhibit G). The bill actually does the opposite of what we want to do with the bill. It is quite simple. It is just one statement, which is the amendment that is being passed out. In layman's terms, it prohibits a pharmacist from prescribing on the label of medicine an expiration date that is different than the manufacturer has put on the label of the bottle of medicine. What we found is that medicine has been prescribed to people and the manufacturer of that particular medication has put an expiration date on it. Some pharmacists have put dates on the medicine that is less time then what is on the manufactured date. Which means that people are buying medicine oftentimes a lot sooner then they would have to. This bill actually came from individuals who could not afford to keep paying the price of medicine. We found out that, in some cases, some pharmacists were putting dates of expiration that were far less then the manufacturer had prescribed. This amendment would actually say that quite simply, that it would be prohibited to change a date that has an expiration date that is less. Thank you very much, Mr. Chairman.
Chairman Goldwater:
Questions from the Committee? I do not see any questions, Chairman Williams. Is there anybody here to testify in favor of Assembly Bill 119? Is there anybody here to testify in opposition to Assembly Bill 119? Anybody in Las Vegas? Is there anything else to come before the Committee today? I will close the hearing on A.B. 119. I will announce to the Committee that the subcommittee on two bills will be meeting right now, upon adjournment. [With no further business, Chairman Goldwater adjourned the meeting at 3:56 pm.]
RESPECTFULLY SUBMITTED:
Corey Fox
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: