MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-Second Session
April 30, 2003
The Committee on Commerce and Laborwas called to order at 2:16 p.m., on Wednesday, April 30, 2003. Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4406 of the Grant Sawyer State Office Building, Las Vegas, 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.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Mr. David Brown
Ms. Chris Giunchigliani
Mr. Josh Griffin
Mr. Lynn Hettrick
Mr. Ron Knecht
Mr. John Oceguera
Mr. David Parks
COMMITTEE MEMBERS ABSENT:
Ms. Barbara Buckley, Vice Chairwoman
Mrs. Dawn Gibbons
Ms. Sheila Leslie
Mr. Richard Perkins
GUEST LEGISLATORS PRESENT:
Senator Warren Hardy, Clark County, Senatorial District No. 12
STAFF MEMBERS PRESENT:
Vance Hughey, Principal Research Analyst
Diane Thornton, Senior Research Analyst
Sharee Gebhardt, Committee Secretary
OTHERS PRESENT:
Margaret McMillan, Director, Governmental Affairs, Sprint
Tom Skancke, Legislative Advocate, AT&T Wireless Services
Helen Foley, Legislative Advocate, T-Mobile
Fred Hillerby, Legislative Advocate, Verizon Wireless
Sgt. Bob Roshak, Las Vegas Metropolitan Police, Nevada Sheriffs and Chiefs
Steve Holloway, Executive Vice-President, Associated General Contractors, Las Vegas Chapter
Jack Jeffrey, Legislative Advocate, Southern Nevada Builders & Construction Trades Council
Jeanette Belz, Legislative Advocate, Associated General Contractors, Nevada Chapter
Lori Ashton, Legislative Advocate, Southwest Regional Council of Carpenters
Roc Stacey, Nevada Department of Transportation
Terry McHenry, Legislative Advocate, Nevada Association of Land Surveyors
Larry Matheis, Legislative Advocate, Nevada State Medical Association
Jack Kim, Legislative Advocate, Nevada Association of Health Plans
Robert McBeath, M.D., F.A.C.S., Certified American Board of Urology
Tony Alamo, M.D., Owner, Alamo Medical Clinic; Chief of Staff, Sunrise Hospital, Las Vegas
Marie Soldo, Legislative Advocate, Sierra Health Services, Inc.
Chairman Goldwater:
We’ll bring Commerce and Labor to order. We’ll start as a subcommittee. There’s not a quorum present, but we’ll note for the record when one is present. We have many members testifying in the Senate. Speaking of the Senate, Senator Harding, in an effort to expedite your service, we’ll take your bill first.
Senate Bill 437: Makes various changes relating to contractors and projects involving residential pools and spas. (BDR 52-1288)
Senator Warren Hardy, Senatorial District No. 12 (Clark County):
[Introduced himself.] It’s technically not my bill; it’s a bill I adopted because of a problem I created last session. I think it’s maybe the first time that this has ever happened: I worked on a bill as a lobbyist, and now I’m here to “clean it up” as a senator.
This legislation is really cleanup legislation from a bill that this Committee addressed last session with regard to residential pools and spas. In conversations with the Contractors’ Board and others that were involved in this last session the crisis, particularly in southern Nevada with regard to fraudulent activities by pool contractors, has gotten much better as a result of the legislation that was passed. In fact, the Contractors’ Board told me that it’s almost not a problem anymore [although] they still have some issues.
However, there were two things that we inadvertently did last session that we need to clean up in this bill. One of the issues we addressed last session was the problem of a pool builder also being the owner of a financing company. What they would do is sign a contract for the construction of the pool, take a large down payment as the financial institution, and then leave town. What we attempted to do last session was prohibit a pool contractor from having a controlling interest in a financial institution. What we did in that sweeping reform was also to prohibit a pool contractor from owning stock in a publicly traded financial company. That was not the intent.
Section 2 clarifies that the pool contractor can own directly or indirectly, through a mutual fund or any other financial arrangement or investment plan, stocks and securities, provided that they are offered openly to the public and the contractor does not possess a controlling interest in the company. It clarifies the law with regard to what a pool contractor can own in terms of a financial institution.
The other inadvertent side effect of the bill last session was that it created a loophole. What we addressed last session were contractors who were building pools illegally, [i.e.] contractors who were getting around the requirements of the law because of key employee verbiage and language. We inadvertently left a loophole that some individuals have jumped into, the owner/builder statute. We have people now calling themselves consultants who are using the owner/builder statutes to essentially build pools. This section of the bill clarifies it. If you are going to be the owner/builder, you have to be the resident or the owner of the property where the work’s taking place. You can’t be a consultant to get around the requirement of having a contractor’s license.
It really is cleanup language from the legislation we passed last session.
Chairman Goldwater:
It seems clear, Senator Hardy. Your work on behalf of pool and spa owners throughout the state is appreciated, both from an elected position and a non-elected position.
Assemblyman Brown:
I want to state that as an attorney who represents contractors, I’ve had instances [whereby] a particular general contractor who built pools went under and a client of mine did pool plumbing. We filed 17 mechanics’ liens, and in the process of that we came across one entity that was happily stepping in to complete these pools. He did not have a contractor’s license and it was a rather shady operation, so I’m happy to see the hole get plugged.
Senator Hardy:
I appreciate that. We’re finding that these unscrupulous pool builders will find any way they can to continue their activities. We left a loophole that needs to be closed, and this bill closes it.
Chairman Goldwater:
[There further no further questions or testimony.] We’ll close the hearing then on S.B. 437. S.B. 163 is sponsored by Senator O’Connell and Senator Townsend. They are not here. We will wait until they get here. In the meantime, we’ll open S.B. 10.
Senate Bill 10: Prohibits certain regulation of use of telephonic device by person who is operating motor vehicle. (BDR 58-57)
Margaret McMillan, Director, Governmental Affairs, Sprint:
[Introduced herself and explained she represented the local, long-distance and wireless divisions.] Many of you are probably aware that more than 200 state legislative bills considering restricted use of wireless phones while driving have been proposed over the last several years. Yet only one state, New York, has actually enacted a broad restriction. In addition, over 50 local governments have considered ordinances restricting wireless use.
Chairman Goldwater:
Let me just disclose for the record that my wife is a business sales manager for Sprint PCS, a subsidiary of Sprint. I don’t know if I will vote on this or not.
Margaret McMillan:
Last year Clark County considered an ordinance that restricted the use of cell phones while driving. If it had been approved, use of a wireless telephone while driving would have been illegal in Clark County but not in Las Vegas, Henderson, or the City of North Las Vegas. Even those of us who live in southern Nevada have a difficult time knowing when we cross county lines and go into the city, so it would have been a real disadvantage. It not only creates confusion for drivers who cross a jurisdictional boundary, but ordinances and laws, such as the one passed in New York, fail to address the real public issue: inattentive driving.
The New York-type proposal ignores the fact that other driver distractions cause far more accidents and inappropriately singles out the wireless phone user. Testimony at the Clark County hearing indicated that an existing ordinance is in place, which allows law enforcement to stop motorists who are driving in a reckless manner whether they are using a cell phone, eating a taco, beating their kids, or putting on make-up. It’s my understanding that the other local governments have similar reckless driving restrictions. This bill in no way erodes that authority.
The wireless phone is a well-known tool for safety. Motorists’ use of wireless phones has become invaluable assets to law enforcement, reporting drunk and aggressive drivers, accidents, health and safety problems, criminal activity, and other highway emergencies. The ability to instantly contact someone has been an aid in public safety. Those business people who are caught in traffic have a way to notify their business appointments so that they don’t have to make up time. Parents who need to pick their children up and who have been delayed because of road hazards, or whatever, have a way of notifying the kids or having someone else take care of that.
Safety and security are the primary reasons cited for a person buying a cellular phone. With these widely known benefits, drivers should not be unduly discouraged from the use of wireless technology. Five states have enacted similar legislation to S.B. 10 that you are considering today. The legislation preempts municipalities and/or counties from restricting or otherwise regulating wireless phone use while driving. Ordinarily we do not propose preempting local government; however, this is a special circumstance and with motorists traveling from one jurisdiction to another, it’s very important that this bill be passed. It’s difficult to have a patchwork approach to driving safety laws. They are confusing to motorists, and they are virtually impossible to enforce.
[Margaret McMillan continued.] Some states that have already passed this preemption legislation include Florida, Mississippi, Oklahoma, Oregon, and New York. It’s our hope that Nevada will join these other states in passing S.B. 10. The wireless industry is very concerned and has been involved in the issue of driver safety. We’re committed to educating our customers for the safe use of wireless phones and safety on the road, and the responsible use of wireless technology has been a goal we all share.
Assemblyman Beers:
Could you run that list of states by me again, please?
Margaret McMillan:
Florida, Mississippi, Oklahoma, Oregon, and New York. The New York preemption was for local government, but the state passed a law saying you couldn’t use your cell phone while you were driving. Only New York passed a law that says you cannot use your cell phone while you’re driving. The others just preempt local authorities from doing that. So New York is the only state that has actually passed a bill that does that.
Assemblywoman Giunchigliani:
I have a problem with preempting local governments. It’s interesting that we sit here in Commerce and we have individuals who come before us and say, “We want free enterprise and open competition,” and then the next bill comes up, and [they say,] “Help us restrict and regulate and prohibit groups from doing X, Y, and Z.” That happens each session. We’ll see it many times before we adjourn. Other than it could restrict your sales, why would you want to preempt the local governments from making this type of decision?
Margaret McMillan:
The difficulty is that you don’t have any way of knowing when you cross a county line. If Clark County had enacted that legislation –
Assemblywoman Giunchigliani:
I would buy that if we did smog checks in all 17 counties in the state of Nevada, but some people don’t believe that the smog doesn’t cross lines.
Margaret McMillan:
I think Tom had some specific information on the transportation authority problem with that and posting where you’re in violation and where you are not. I’ll ask him to address that.
Tom Skancke, Legislative Advocate, AT&T Wireless Services:
[Introduced himself.] I’ll give you an example. As you travel up West Sahara, the north side of Sahara is pretty much the City of Las Vegas, and the south side of Sahara is the county. So if I’m traveling westbound on Sahara and I’m on my cell phone, which is legal westbound on Sahara. I make a legal U-Turn at Rainbow as I’m heading east on Sahara, I’m now in the county. I’d have to hang up my phone. If I’m traveling on the 215 east to Henderson, I am in Clark County; then I’m in the City of Henderson; then I’m back in Clark County because of the outparcels, zoning, and sawtooth boundaries of the cities and the county. There are points throughout the valley where I’m in a city or I’m in the county. As I crossed a street, I’d be in the county and I would have to hang up my phone, essentially. As I got back into one of the municipalities, I could redial my phone call. It’s virtually impossible for Metro or the local law enforcement to determine whether that person was in the city or the county at the beginning of the phone call. Do I have to terminate my phone call? We believe that this is a legislative issue and not really a local government issue from this perspective. The drivers don’t know where they are. If you asked your constituents today, “Do you know if you live in the City of Las Vegas or the County of Clark?” they probably couldn’t tell you. Most people don’t know if they are in the city or the county.
Assemblywoman Giunchigliani:
I appreciate that. I think you just argued that we shouldn’t have people driving with telephones because it probably is not safe. However, I’ll listen to the rest of the testimony, but that exists with curfew, that exists with most of the rules and regulations, because we do allow the local governments to legislate many different things. Although I understand that, because half of my district is both in the county and the city, people complain, “Why can’t I vote for the Mayor? I live across the street on Sahara,” that type of thing. So you are right, they don’t always acknowledge where the county line might be or the boundaries might be. I tend to think that the local governments – maybe the Southern Nevada Regional Planning Coalition could take this up. Then they would deal with all of the counties and local cities.
Helen Foley, Legislative Advocate, T-Mobile:
[Introduced herself.] We agree with everything that has been stated, but I would like to clarify something. We’ve worked very closely with Stan Olsen and Metro on this issue as it went before the county and also as it’s been discussed throughout this process. Right now there are ordinances that say that you have to pay full time and attention to your driving, and if you aren’t, then Metro can cite you. I might be putting on my mascara [or] eating a hamburger [or] all the other things that people do while driving. The fear that Metro has, and what Stan has represented in the past, is that if we start a laundry list and we don’t include other distractions – as an example, I don’t believe that when I’m on my wireless phone and it happens to be a hands-free unit that I have a problem. But there is a serious problem when I take my Palm Pilot out to look up the phone number. That’s when my eyes are distracted, as I’m looking the phone number up as I’m driving down the street. But that would not be a violation unless you specifically put it in the law. It’s only the use of that wireless phone that’s the problem. You can see where, if you start including things on a list, it ends up excluding other things, and they do believe that when they say that it’s a violation for not paying full time and attention to your driving that they can cite you for anything. If I drop my lipstick on the passenger’s side and I’m leaning over to get it, that is not paying full time and attention to my driving, and they can cite me for that. Once you get into the laundry list, where do you end? We certainly support this legislation. What all of the companies do is encourage their drivers to be responsible and to use hands-free devices. Many of them provide the hands-free devices free of charge. It’s just good policy to keep both hands on the wheel.
Assemblywoman Giunchigliani:
Do you know if Stan happened to have a number how many citations have actually been issued by Metro for people not paying attention, such as in the circumstances you noted? Did he ever offer that in the Senate?
Helen Foley:
I don’t know. We’ve got someone from –
Assemblywoman Giunchigliani:
Okay, I’ll wait for them to come up. I’ll hold my question.
Fred Hillerby, Legislative Advocate, Verizon Wireless:
[Introduced himself.] I’m going to say on the record “me too.” We support this bill.
Sgt. Bob Roshak, Las Vegas Metropolitan Police, Nevada Sheriffs and Chiefs:
[Introduced himself.] If Stan obtained those numbers [referenced by Ms. Giunchigliani], I was not provided them. I can tell you as a former motor officer investigating traffic accidents, probably 40 per cent of the citations I wrote were either for failure to use due care or failure to pay full attention to driving based on people looking down, adjusting their radio, putting in a CD, drinking coffee, lighting a cigarette at night and the lighter flares up, and those types of issues. We don’t have a concern with the cell phone. We feel that we do have adequate laws on the books, both county and state, to address situations caused by people not paying attention.
Assemblywoman Giunchigliani:
I think that helps me understand, but those [situations] are generally only cited then when an accident occurs. You don’t just pull over for inattention?
Bob Roshak:
Probably the majority of the citations are for an accident. But while traveling down the road, [for example] someone is fumbling for something in their car or looking up a phone number on their Palm Pilot and they begin to veer from lane to lane or crossing back and forth, that will cause a traffic stop to find out what’s going on, and they can be cited for failing to maintain a travel lane.
Assemblywoman Giunchigliani:
Okay, but it has to be coupled with something else, not just somebody driving down with a phone in their ear or something like that.
Bob Roshak:
If they have the phone in their hand and they’re abiding by the laws or keeping up with the flow –
Assemblywoman Giunchigliani:
But not swerving. But if they begin swerving or that type of thing you could have cause.
Bob Roshak:
That’s correct.
Chairman Goldwater:
Outside of a particular local government official, is there a huge clamoring for this law or ordinance to be passed prohibiting this [cell phone usage]? Do the local governments want to start addressing this issue?
Margaret McMillan:
Clark County did have the ordinance to begin with and it failed. We have not heard that the others have planned to do that. It’s just that it’s a trend throughout the country, not only at the state level but also in local governments. It’s just an ongoing trend.
Tom Skancke:
If I may respond, as well, to Ms. Giunchigliani’s question, I have personally seen Metro pull people over in Las Vegas as recently as January for not paying full time and attention. This individual happened to be putting on her make-up in the morning in rush hour commute and was holding up traffic and she was pulled over and she was cited. So those laws are on the books. What I would like to do is drop back to the purpose of the bill, [which] was that there are laws on the books and that for local jurisdictions and local governments to go out and arbitrarily pass these types of ordinances when there are laws already on the books – what we really want to do is just codify the fact that they already have the authority to do that. We would appreciate your support.
Chairman Goldwater:
[There were no further questions or testimony. The Chairman closed the hearing on S.B. 10.] Dr. McBeath, are you here as a proponent of S.B. 163? [Received confirmation.] Do you think you need the senators to introduce this for you or did you ask them to introduce it? [Received confirmation.] We’ll wait for them then. We have another bill. I’ll bring up S.B. 71.
Senate Bill 71 (1st Reprint): Authorizes original contractors to require subcontractors and other contractors to provide surety bonds to guarantee the payment of certain indebtedness. (BDR 53-402)
Steve Holloway, Executive Vice President, Associated General Contractors, Las Vegas Chapter:
[Introduced himself.] I have a question, Mr. Chairman. I handed out a summary of the revisions (Exhibit C). Would you like me to run through them for the Committee?
Chairman Goldwater:
You could probably just tell us overall what the bill does.
Steve Holloway:
All right. Senate Bill 71 is intended to provide surety for moneys owed by contractors or subcontractors for wages and benefits due its employees and for contributions or premiums to be paid on the account of employees of contractors or subcontractors as currently required by Chapters 616A to 617 inclusively of the Nevada Revised Statutes (NRS). S.B. 71 is also intended to clarify NRS 608.150 by making it clear that the person or entity owed the money may seek recovery from either the original or prime contractor, the surety bond required by the original or prime contractor, or the contractor or the subcontractor who owes the money. Section 1 of the bill was drafted by our attorneys for the Joint Labor Management Trust for the building trades. It’s to insure that it’s easier to go after a surety bond than it has been in the past.
Section 2 simply allows the original or prime contractor to require his subcontractors to obtain a surety bond covering their perspective indebtedness for labor. AGC (Associated General Contractors of America) representatives, including myself, serve on numerous labor management, health and welfare trusts. Upon the advice of the attorneys for these trusts, we have often ignored the subcontractor who owes some money to these trusts and gone after the prime contractor who employed the subcontractor. This is somewhat analogous to you having to pay for the benefits of the staff of a janitor or housecleaner if he failed to pay those benefits while he was employed by you. NRS 608.150 makes a prime contractor on any construction project liable for any labor indebtedness of any of his subcontractors. This bill does not propose to change this.
[Steve Holloway continued.] S.B. 71 is a compromise. It simply provides additional security in the form of a surety bond to protect a worker or a person or entity owed money as a result of the labor of that construction worker. Senate Bill 71 also makes it clear that the person or entity owed money for the labor or the labor indebtedness of a subcontractor may seek recovery from either the original or prime contractor, the surety bond required by the original contractor, or the contractor or subcontractor who owes them money. In other words, it just provides additional security for labor indebtedness on a construction project. We believe that S.B. 71, which was unanimously passed by the Senate, has the support of all affected parties and we respectfully ask that you, too, support it.
Assemblyman Beers:
Mr. Holloway, couldn’t requiring subcontractors to obtain surety to perform their labor obligations be part of the contract now? It’s not illegal, is it? This appears to be authorizing rather than mandatory. I’m wondering if this is something we could already do, why are we putting it into law?
Steve Holloway:
You are right to this extent. Currently we have negotiated in several labor and management agreements where the prime contractor may require of those union subcontractors a surety agreement or bond to cover the obligations to the trust. We have had problems both in these obligations not being paid and also in the collections of these obligations. This simply extends that concept so that a prime contractor can, if he chooses, require that of all the subcontractors. It also provides a procedure. There was some concern on the part of subcontractors and some concern on the part of general contractors as to who was going to pay for the surety bonds. This legislation says who will pay for it. If the general contractor requires it when he goes out for bids, and makes that a provision in the bid documents, then the subcontractor would have to pay for the surety bond. If he fails to do so, but subsequently requires a surety bond because he finds or believes the subcontractor is not paying his trust obligations or other labor indebted obligations, then he would have to pay for it. It does more than just the basic requirement for a surety bond.
Jack Jeffrey, Legislative Advocate, Southern Nevada Builders & Construction Trades Council:
[Introduced himself.] S.B. 71 as it was amended in the Senate was acceptable to all of the parties concerned. My understanding is that there is going to be an amendment submitted by Northern Nevada AGC, and the only reason I came up [to the witness stand] was to ask that we hold S.B. 71 until we have a chance to check that amendment out with the trust attorneys. As you know, Mr. Chairman, I’m not an expert in this area, and I’m not comfortable in saying that we are all right with the amendment without checking it out with the people who have to deal with it.
Jeanette Belz, Legislative Advocate, Associated General Contractors, Nevada Chapter:
[Introduced herself.] The amendments that we are proposing which are being distributed to you (Exhibit D) are on the amendment that was added in the Senate. So, after our attorney got a chance to look at it – this is one of those things probably attorneys should just be sitting down and talking about it – these are several amendments that our attorney suggested that we add. In Section 1, subsection (1), we felt that it was important that it be clarified that the notice of the claim be in writing. Although this one is not in here, specifically in terms of language, in Section 1, subsection (1)(b), there is a reference to an audit or any other similar accounting report. We really are not sure what a similar accounting report would be, and we would hope that that could be tightened up and that the audit would be verified in someway. In Section 1, subsection (2), our attorney felt that it would be important that the payment of the surety should be limited to when it’s found that the failure to pay was found by the court to be unreasonable or without justification. In Section 1, subsection (2)(d) [our attorney thought] that the attorney’s fees be incurred from the date in which the written demand or claim was made subsequent to subsection (1). Those are the amendments [we recommend]. We’re fine with having Jack [Jeffrey] look them over. We shared them with him this morning and his attorney will take a look at them.
Chairman Goldwater:
Okay. I’ll just let you know that we only have 30-some days left in the Legislature. As you ask for bills to be amended, you risk them being lost because of time and the inability for everyone’s review. I would rather err on the side of not passing something than passing something that’s going to be bad. Are there questions for Ms. Belz on the amendment? I don’t see any.
Lori Ashton, Legislative Advocate, Southwest Regional Council of Carpenters:
[Introduced herself.] Our trust fund attorneys reviewed this. I think ours is just more of a technical amendment and that would be on page 1, Section 1, subsection (1)(a), line 14, where it talks about “incurred indebtedness for labor and,” the word “and” be changed to “or” [to read] “or for the requirements imposed by Chapter 616A.” They also recommended that change in subsection (b) and (c) in the same sentences. The only other –
Chairman Goldwater:
Did you bring this up in the state Senate, Ms. Ashton?
Lori Ashton:
No.
Chairman Goldwater:
Why not?
Lori Ashton:
The attorneys waited for the final reprint of the amendment, and because of the amendment that was made and the changes in the language, then they reviewed it. So that was their suggestion. I’m just bringing it forward on their behalf. Then for clarification to Mr. Beers, it was in all of the paragraphs under subsection (1) –
Chairman Goldwater:
The word is “and” in the original bill.
Lori Ashton:
And they have “or.” They waited to see what all of the revisions, and I know there were a lot of things brought forward on this – They watched it to see where it was. I’m just bringing it forward for the record. The only other thing that they came up with was in Section 8, line 21. They were recommending where it says “remedy or penalty against,” they would like the inclusion “an original contractor, a subcontractor, or contractor who was acting under, by or for an original contractor and who failed to pay the indebtedness . . . .” I don’t know if that makes a lot of sense. I’m just bringing it forward for the record. I think they want to make sure that the penalties can be applied to the original contractor as well as the subs or other contractors. That was our only remarks. And if by contract, the original contractors –
Chairman Goldwater:
Do you have all of those [changes] in writing, Ms. Ashton?
Lori Ashton:
I have them on a piece of paper that I can give you.
Chairman Goldwater:
If you could provide your suggestions to the Committee in writing, I think it will be much easier for us to understand what you are asking.
Lori Ashton:
That would be fine.
Roc Stacey, Nevada Department of Transportation:
[Introduced himself.] We’ve worked with the AGC about some problems with the original bill, and as amended, we have no difficulty with it.
Terry McHenry, Legislative Advocate, Nevada Association of Land Surveyors:
[Introduced himself.] My testimony is, for the record, a clarification. When the bill first came out, unfortunately, we missed the testimony in the other house because of a scrambled agenda. This language doesn’t seem to implicate professional services by land surveyors’ or engineers’ licenses under NRS 625; however, it doesn’t specifically exclude them either. We believe that this bill would not cover our services, but at the same time we are a little unclear, so I just want to be on record that as long as this bill does not incorporate our services, we’re perfectly fine with it. If it does [incorporate], we have some concerns. I spoke with Mr. Holloway who testified earlier. It is not their intent to cover our services, and probably most specifically the services I would be addressing here would be construction staking and control services on projects provided by land surveyors.
Chairman Goldwater:
Okay, we will review with our counsel when he returns whether or not he thinks that that is an issue.
Terry McHenry:
I would appreciate that.
Chairman Goldwater:
There were no further questions or testimony on S.B. 71. The Chairman closed the hearing on S.B. 71 and opened the hearing on S.B. 163.]
Senate Bill 163 (1st Reprint): Revises provisions governing certain contracts with providers of health care. (BDR 57-683)
Larry Matheis, Legislative Advocate, Nevada State Medical Association:
[Introduced himself.] Senator Townsend and Senator O’Connell are downstairs and are processing some assembly bills. Because the issues were worked out, they’re available if you need them, but they asked me to just go ahead and walk through the bill, if that’s okay.
Chairman Goldwater:
Okay, please do.
Larry Matheis:
Senate Bill 163 is, I hope, the last time I appear before you on these issues. This is the third, and, we think now, the final clean up of several issues that this Committee and this Legislature have dealt with over the last three sessions. If you remember, Senate Bill 145 of the 1999 Legislative Session and Senate Bill 99 of the 2001 Legislative Session dealt with the issue of timely payment of medical claims and the issue of prohibiting the charging of a fee to be on a provider panel for services. We decided there is very little left that needed to be addressed, but these are issues that came up after implementation of Senate Bill 99 of the 2001 Legislative Session. The first deals with panel fees. It was the intention of the Legislature that S.B. 99 of the 2001 Legislative Session prohibits networks that provide provider panels to HMOs and other groups. It was the intention to prohibit the charging of panel fees. Legal counsel thought that had been done in the language that was inserted into S.B. 99 of the 2001 Legislative Session. Following session, that was challenged and it has not been totally rectified. So there are panel fees being charged by networks that provide their services to licensed entities saying that the language in the current law doesn’t cover them because they are not licensed. The first section here specifically addresses that any organization that establishes a panel of providers for the purposes of providing medical services through them is covered by the prohibition of the panel fees. That’s what Section 1 does.
It also provides for two kinds of remedies to make sure that these entities, because they’re not licensed, fulfill the requirements. One is that it would be actionable if they charged a panel fee to any provider. The other is that if it provided that service, that network to a licensed entity, it also requires the State Commissioner of Insurance then to prohibit that insured entity from being able to use them while they’re breaking the law. It goes in two ways so that this door will be closed presumably, and we won’t have to come back again ever on the panel fee issue.
Section 2 and the sections thereafter deal with one remaining issue on timely payment. That’s an issue that would be surprising except I suspect by now many of you know, or probably have heard, that physicians are not always great businessmen and businesswomen. On occasion, many of them are involved in contracts, which do not provide, even upon request, an exact schedule of what they will be paid for the service they provide. It’s hard for the timely payment law to be effective if you’re not quite certain what you would actually be expected to pay for the claim. A number of the clients simply will not provide a schedule of payment. What this does is simply require for all of the various insured entities that, either in the contract or upon request, if it’s a code that’s not covered in the contract, for the codes that the physician or the other provider are likely to bill for, that they be provided at the time of the contract, or subsequently, an actual payment schedule of what they will be paid. That’s what most of the rest of this does.
[Larry Matheis continued.] The last part, Section 10, goes back to the panel fee issue with one more hole. We did not ask for the law to affect worker’s compensation plans because no worker’s compensation managed care organization charged a panel fee. Since they were not prohibited, one of them last January started charging a fee saying, “Well, if the Legislature hadn’t wanted us to do it, they would have banned it.” Section 10 informs them that they can no longer do it.
Jack Kim, Legislative Advocate, Nevada Association of Health Plans:
[Introduced himself.] I just want to clarify a couple of points. We did work with Mr. Matheis in the Senate to resolve the issues that he has brought up. We had thought we had resolved this issue with S.B. 99 of the 2001 Legislative Session, especially with the panel fee issue. Evidently it’s not the health plans that have been causing the problems that he has mentioned. It seems to be more some TPAs, which we thought were included, but evidently they were excluded in S.B. 99 of the 2001 Legislative Session. We have worked with him on the provisions of getting copies of the medical fees schedules. We were kind of surprised when he indicated that in some cases they have difficulty getting that, so we have drafted language to address his concerns.
Robert McBeath, M.D., F.A.C.S., Certified American Board of Urology:
Dr. Alamo would like to speak to Section 1 of this bill. I would like to speak to Section 2, which is the panel fees, so I’ll yield to Dr. Alamo right now.
Tony Alamo, M.D., Owner, Alamo Medical Clinic; Chief of Staff, Sunrise Hospital, Las Vegas:
[Testified from Las Vegas via videoconference. Introduced himself.] Something really unique to my experience, as well as southern Nevada, is the fact that I was the past co-founder and co-owner of Health Strategies, which is a consulting company that helped broker PPOs. I actually put provider networks together to sell to the market place down here so I do know the business of PPOs rather well and why I am very disappointed in their continued use of provider paneling fees to help augment their profits. The typical PPO here in Las Vegas will receive an access fee from the employer which can range anywhere from $0.90 to $1.30 per employee per month. It’s a very good business and a very lucrative business with a very small amount of burden costs with FTEs [full-time equivalents] necessary to run that business.
I appreciate everything that Mr. Matheis has said and definitely, with S.B. 99 of the 2001 Legislative Session, the intent was a good intent. But the two loopholes that Mr. Matheis brought up, this bill definitely addresses: the loopholes about the licensing and worker’s compensation. What the entities here in Las Vegas have done now is use the verbiage “credentialing fee.” They’re credentialing the doctors and that’s why they are necessitating the monetary remuneration on a yearly basis. Basically, they are just again hiding under a provider fee. It’s a very lucrative thing for them to do; it is definitely adding to their profits. As you know, the situation here in Las Vegas is the typical physician or physician group still has to pay in excess of $1,000 a year in these “credentialing fees.” Definitely, the intent is good. It should work, but we do need to change the verbiage and add that [there can be] absolutely no fees whatsoever, or any verbiage that they could tack on in a loophole fashion such as credentialing. I don’t know what else they may use, but they should absolutely not receive from any provider any type of remuneration to participate in that contracted situation.
Larry Matheis:
This issue has come up actually since the first bill. The Legislative Counsel Bureau in our initial draft of the first bill tried to go through all the things that they could call these [fees], because some call them administrative fees, some call them credentialing fees, some call them educational fees, some call them extortion. Whatever it was, the Insurance Commissioner ruled that as long as you were required to pay or you would not be listed on the panel, whatever they labeled it, that was prohibited by the law, and that’s how they have interpreted it for all the covered entities. I would assume that they would continue that now with these additional entities. That also has been part of the legislative record on both sides with S.B. 99 of the 2001 Legislative Session. I absolutely agree with Dr. Alamo that the creativity in language was part of the problem and that was why your legal counsel advised not for us to begin to try to list it, because then we would be back again to add to the list. You may want to ask your legal counsel for further advice on that. Obviously we want it to be ironclad. But that also has been the position that the Insurance Commissioner has taken.
Assemblyman Hettrick:
Given the problem that’s gone on and the repeated attempts to circumvent the intent, why don’t we put something in the law that says the Insurance Commissioner shall write regulations to prohibit any attempt to charge fees to be on a panel? If we were to do that, then she would have the opportunity, while we’re out of session, to go ahead and fix any creative thing that they would come up with.
Larry Matheis:
The Commissioner actually did adopt regulations defining a lot of this following S.B. 99 of the 2001 Legislative Session. I think that the authority is already there. You can certainly direct that in here and it would be fine, too, but she has done that.
Chairman Goldwater:
We can mandate that she adopts something too.
Dr. Tony Alamo:
If I can just echo again what Mr. Matheis has said. I think it would definitely help if the verbiage is put in there that absolutely no fees be obtained from any provider in strict language. I think that would give us a little more bite if we need to take this to the Attorney General.
Chairman Goldwater:
Okay, that’s noted. We’ll bring that to work session.
Marie Soldo, Legislative Advocate, Sierra Health Services, Inc.:
[Introduced herself.] At the previous hearing about this bill, there were legitimate reasons to credential and there were costs associated with credentialing physicians. Those health plans that are certified by certain certification organizations have to certify physicians. My understanding of this bill is that it is trying to get at third-party administrators. If that’s what we’re trying to do, PPOs are basically not regulated in this state. There is no PPO law that I know about yet. So I would like to point out that it may be, at some point, that a health plan needs to recover its costs to credential physicians because of the certification it’s seeking, and I would hope that we wouldn’t – we discussed this in the Senate side and I don’t think that it was brought up in this detail.
Assemblyman Hettrick:
I guess my question then is to the doctors. Would you agree that the problem is the third-party administrators? Or is the problem the HMOs and PPOs? Is that the issue?
Dr. Tony Alamo:
I think there are two things playing out here. Remembering that the PPO, of course, is a business and deserves to make money; it’s a capitalistic society. They’re getting revenue from the employers for an access fee. The burden cost to run a PPO is rather small. I know; I ran one. So they’re getting revenue on that side. They argue they want to share the burden of credentialing with the doctors. That should actually be a burden cost and taken from your profits. But, even if that were the case, the typical surgery centers, for example, would have to credential their doctors. The burden cost of credentialing is about $25 a doctor. A lot of these PPOs are charging well over that. Sierra Health & Life [Insurance Company] charges approximately $300. We have MCC (Managed Care Consultants) also charging $200. Definitely there’s a little gouging going on. I cannot agree with the previous testimony. Recredentialing is generally costing about $25.
Dr. Robert McBeath:
[Testified from Las Vegas via videoconference.] This provision [S.B. 163, Section 2] that has been drafted and added by Senators O’Connell and Townsend is an incredibly important piece of legislation for stability of physicians in this state. I have provided to the Committee two examples of fee schedules (Exhibit E). One is from a local company and one is from a large, billion dollar, health insurance conglomerate. I provide these examples to show you what we are up against in real life. The Station Casino’s example basically lays out a situation where a physician can easily see what the fee schedule is for his contract. The example for the second insurance company contract (and I have a star next to it) basically does not provide the fee schedule. It actually states that they can change the fee schedule as determined, time-to-time, by the plan. The problem with this is that the small physician offices – and I’ll agree with Mr. Matheis that many physicians lack the sufficient business acumen, and there’s also another reason. They’re small businessmen. They’re one, two, three-man physician practices, and they do not have the sophisticated staff, computer systems, or manpower to track unilateral changes in the fee schedules once they’ve agreed to them.
The original bill of Senator O’Connell and Senator Townsend has been amended and we would ask that the Assembly entertain a potential change in the bill. Specifically the original bill stated that the fee schedule could not be unilaterally changed and had to be changed only with agreement between both parties. That sounds like standard contract language, and it is. The problem we have now is the way the bill is currently written. Yes, we receive a written fee schedule, but what it doesn’t address is the ability for large insurance companies to unilaterally change or reduce that fee schedule without ever notifying the physician and without the physician having an ability to then restate whether or not he agrees with that. We have no ability to track it; we can’t afford to track it. They do it unilaterally without notifying us. The net result is they change the fee schedules and it goes unnoticed by unsophisticated business staff. We’re simply requesting that the Committee and the Assembly entertain a modification of this to add that a requirement between both parties agree to any change in the contract once it’s actually been agreed to.
Larry Matheis:
I think the language that Dr. McBeath is talking about is in A.B. 320 that you processed. It was actually the Judiciary Committee. I believe that is where the language actually is.
Chairman Goldwater:
It is.
Dr. Robert McBeath:
I believe Mr. Matheis is right. We were concerned that there was a difference between these two and we felt fairly strongly that that was a critical difference and actually would make all the difference in the world for the physicians whether or not this was going to be helpful.
Chairman Goldwater:
[There were no other questions or comments.] We’ll close the hearing. I don’t plan any action today. We have too many members in the Senate [testifying]. Is there anything else to come before the Committee? You will notice that your agendas will get a little bit longer now. There are a lot of bills and only five meeting days, so we can either have long agendas or plan on a Saturday or two. Right now, I’m staying with the long agendas.
The meeting is adjourned [at 3:18 p.m.].
RESPECTFULLY SUBMITTED:
Sharee Gebhardt
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: