MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-Second Session
May 12, 2003
The Committee on Commerce and Laborwas called to order at 2:17 p.m., on Monday, May 12, 2003. Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 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
Ms. Barbara Buckley, Vice Chairwoman
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:
Senator Mike Schneider, Senatorial District No. 11, Clark County
STAFF MEMBERS PRESENT:
Vance Hughey, Committee Policy Analyst
Wil Keane, Committee Counsel
Diane Thornton, Senior Research Analyst
Corey Fox, Committee Secretary
OTHERS PRESENT:
Roger Bremner, Administrator, Nevada Division of Industrial Relations
John Wiles, Attorney, Nevada Division of Industrial Relations
Renny Ashleman, UMC [University Medical Center]
Sharon Atkinson, Executive Director, Board Examiners for Alcohol and Drug Abuse Counselors
Richard Harjo, Chairman, Nevada Indian Commission
Tom Balam, CEO, Step 2 Drug Alcohol Treatment Program, Reno, Nevada
Rose McKinney-James, Clark County School District
Bob Ostrovsky, Employers Insurance Company of Nevada
Ann Nelson, Employer Insurance Company of Nevada
Roger Bremner, Administrator, Division of Industrial Relations
Ray Badger, Attorney, Carson City
Jack Jeffrey, Southern Nevada Building and Trades Council
Nancyann Leeder, Nevada Attorney for Injured Workers
Paul Aakervik, Lubbock Agency, Compensation Trust
Gail Anderson, Administrator, Nevada Real Estate Division
Pam Riebe, Compliance Chief, Nevada Real Estate Division
Chairman Goldwater:
We’ll bring the Committee on Commerce and Labor to order. Note for the record that all of the members are here. Mr. Oceguera is excused for duties in Las Vegas; a quorum is present. We have several bills on the agenda today and we’ll open up with Senate Bill 168.
Senate Bill 168 (1st Reprint): Revises provisions governing industrial insurance. (BDR 53-466)
Roger Bremner, Administrator, Nevada Division of Industrial Relations:
[Introduced himself] In Las Vegas we have John Wiles, Division Attorney, and directly to my left is Renny Ashleman, representing the University Medical Center. I believe Mr. Wiles in Las Vegas is going to explain this highly technical bill, Mr. Chairman.
John Wiles, Attorney, Nevada Division of Industrial Relations:
[Introduced himself] As Mr. Wiles said, I will try to explain this highly technical bill in a very untechnical fashion. The purpose behind Senate Bill 168 is to correct some deficiencies that we discovered during the course of our regulatory activities. Starting off on page 2, Section 1, you’ll note we’ve added a new definition of a medical facility. That is relevant later on on page 4, under Section 4, when we get into the filing of the appropriate claim for compensation. You’ll note that we’ve also added, at the top of page 4, subsection 9 of Section 3, a caveat that explains that confidentiality provisions of [NRS] 616B.012 do not apply to the information regarding uninsured employers or proof of coverage. That system enables us to keep track of uninsured employers, to assist employers and insurers in exchanging information, and to verify that every employer in the state of Nevada does, in fact, have coverage.
Going on to Section 5 and 4, going backwards, those are the provisions that we worked out with Mr. Ashleman concerning the filing and completing of the claim for compensation. We discovered during our regulatory activities that often times there were relationships between treating physicians and chiropractors in medical facilities where the medical facility had assumed the responsibility for filing the claim for compensation. Unfortunately, the way the statute was worded, we could not necessarily impose a penalty on the medical facility. We had to impose an administrative fine on the treating physician or chiropractors. That seemed to be fundamentally unfair and with Mr. Ashleman’s help, we believe we have some language which addresses that issue in a fair manner.
Going on to Section 6, beginning on page 5, the provisions that are really changed are on page 7. We have decreased the time for filing an appeal for an uninsured assignment to 30 days, from 60 days, and provided a direct appeal to the appeals officer, rather than an appeal that goes through a hearing officer and then to an appeals office. The rationale behind that is oftentimes we’ve found that the decision on the assignment, which is really a decision on employer/employee relationship is somehow trailing the claims-related activity. So, we might be paying money out of the uninsured employers account and still there not be a final administrative decision regarding whether or not that person was, in fact, an employee and whether or not that employer is responsible for those costs. This will put that decision on the front end, thus we think it will correct a deficiency and it will make it easier for us to collect monies due from uninsured employers. We have also, as you’ll note, on page 7, subsection 10, extended the time for the claimant to appeal claims related decision on uninsured claims to 70 days, where it was 60 days. That is consistent with the appeal time for insured claims and we think that they should be the same. Again, we think it’s just a matter of fairness.
[Mr. Wiles, continued] The changes you’ll see in Section 7, page 8, are changes to reflect other changes within the bill itself and are not really substantive in and of themselves. Page 10, Section 9, again, we have changed an appeal time here. We’ve extended the appeal time when we impose an administrative fine or benefit penalty from 10 days to 30 days. We felt that the ten-day period was an awful short window. We think that people should have the opportunity to contest administrative determination. We believe that the 30-day time period is an appropriate time period and is fair to all parties involved. This section here, though, Section 9, and this will probably be worked out in a conference committee, is not entirely consistent with A.B. 168, which this Committee has already passed, and is up for review before Senate Commerce and Labor. I believe that hearing is scheduled for tomorrow. Under Section 10, you’ll begin to see the parallel provisions in Chapter 617 that reflect the changes that I previously discussed in Chapter 616A through 616D. The remainder of the bill is parallel provisions. They are not new; they merely reflect the changes that I’ve discussed earlier and I’d be happy to answer any questions about the bill at this time.
Chairman Goldwater:
Are there questions from the Committee for Mr. Wiles? I don’t see any, thank you, John. Anything further, Renny?
Renny Ashleman, University Medical Center:
[Introduced himself] No sir, Mr. Chairman, I’m just here in case of questions and to support the bill.
Chairman Goldwater:
Let me ask one quick question. When you’re defining “medical facility,” is there anybody who is currently doing the duty that will be precluded under this definition that you know of?
Renny Ashleman:
Not to my knowledge, Mr. Chairman.
Chairman Goldwater:
Any other questions from this panel? I don’t see any. Is there anybody else here who would like to testify on Senate Bill 168? We’ll close the hearing on S.B. 168, and we’ll open the hearing on S.B. 248.
Senate Bill 248 (1st Reprint): Revises provisions relating to alcohol and drug abuse counselors. (BDR 54-327)
Sharon Atkinson, Executive Director, Board of Examiners for Alcohol and Drug Abuse Counselors:
[Introduced herself and spoke from prepared testimony (Exhibit C)] I appear before the Committee on behalf of Dorothy B. North, president of the Board, who is unable to be in attendance today. S.B. 248 is a bill that essentially makes some changes to NRS 641C that the Board deemed necessary to more effectively carry out its mission to serve the public. If I may go over the changes with you, please, the changes are as follows:
Thank you for your time. I am ready to answer any questions you may have.
Chairman Goldwater:
Thank you. Are there questions from the Committee? Can you tell me some of the “good cause” that would allow the Board to waive requirements for renewal certificates?
Sharon Atkinson:
Yes, Mr. Chairman. If somebody were very ill. Most licensed individuals are certified for a period of two years and are required to obtain 40 hours of continuing education units during that time to renew their license or certificate. I have had several instances where people have had strokes, are being treated for cancer, and they are not capable of obtaining their continuing education units. So, this is one of the provisions. Right now, we have several individuals who are overseas fighting in Iraq, I have been working with them on holding off on their renewals, using my own authority, so they will not be out of compliance and will not have to lose their licenses.
Chairman Goldwater:
It only troubles me to the degree that why have it in place at all? Do they not need to have continuing education?
Sharon Atkinson:
Yes, they do, to keep up with the changing information in the field, to continue improving their skills.
Richard Harjo, Chairman, Nevada Indian Commission:
[Introduced himself] Good afternoon. I have with me this afternoon Dr. Babek Nayeri, M.D., who is with the Indian Health Service from Phoenix, Arizona. We are here in support of S.B. 248 and we would also like to propose an amendment, which is just a single-word amendment in Section 4. I don’t know if you have copies of these yet (Exhibit D), but the amendment is down in the last line, where it says “licenses and certificates as gambling, alcohol, and drug abuse counselors.” We are inserting the word “gambling,” consistent with another bill that is being heard, S.B. 351.
Chairman Goldwater:
Do you receive state funds for drug abuse, drug substance, and gambling abuse, or is it all federal?
Richard Harjo:
I would say no, they don’t receive [state funds], unless you have some programs that I don’t know about. If there is, it’s just a very small amount of money, if any at all.
Sharon Atkinson:
Mr. Chairman, the Board does not grant funds. That is done by the Bureau of Alcohol and Drug Abuse, and I know there are some tribes that do receive funding, but I could not give you a dollar figure or the number of tribes.
Chairman Goldwater:
I don’t recall on our state budget that being a very big item or an item at all, but we do struggle on that Committee with to whom to delegate funds to, mainly because we don’t know what’s effective and what’s not effective. I think I could speak as one member, the best you can do to quantify and tell us what works and what doesn’t, I think we could sure save a lot of money.
Tom Balam, CEO, Step 2 Drug Alcohol Treatment Program, Reno, Nevada:
[Introduced himself and explained his organization served women and families]. Mr. Chairman and members of the Committee. I’m here to represent Nevada Adapts, a coalition of treatment and prevention providers. Previously, in tracking this bill, we had some concerns and all of those concerns have been addressed in the rewrites that have occurred, and we’re very supportive in recognizing the separate jurisdiction, so that the Native American practitioners can serve the people that they are intended to, and the other provisions of the bill that are mentioned. Thank you.
Chairman Goldwater:
Further questions? Thank you very much for you testimony. Is there anybody else here that would like to testify on Senate Bill 248?
Assemblyman Beers:
Thank you, Mr. Chair. With your permission, if staff could tell us if there are any other instances in NRS of a regulatory body that has the like authority to waive renewal requirements?
Chairman Goldwater:
We’ll find that out for you. It’s a good question. Is there anybody else here who would like to testify on Senate Bill 248? We’ll close the hearing on Senate Bill 248. We’ll open the hearing on S.B. 193.
Senate Bill 193 (1st Reprint): Revises provisions regarding coverage of industrial insurance for certain employees. (BDR 53-782)
Senator Mike Schneider, Senatorial District No. 11, Clark County:
[Introduced himself] Mr. Chairman, this bill covers two matters in worker’s comp. The first one is covering legislators. As I checked, two years ago, with Legal [Division], I asked for an opinion of how legislators’ worker’s comp is covered. It came to my attention, Ms. Erdoes did an opinion, and she said we’re only covered when we’re on the Floor voting. It could be that narrowly interpreted. Then, she came back and said, “Actually, it could be as narrowly interpreted as, you’re only covered when you’re on the Floor voting, while you’re being paid,” which would only be for the first 60 days [of session]. So, I bring this bill before you that says, “Legislators should be covered under worker’s comp,” just to clarify it, “while engaged in doing their business.” So, Mr. Chairman, if you were to go to speak to the Chamber of Commerce in Las Vegas and something would happen to you and you’re speaking before that group, you would be covered under this bill. Also, Assemblywoman Giunchigliani brought forward an amendment on the Senate side and asked if I would consider it. [It] regarded schoolteachers. I thought this was very important because schoolteachers are doing extracurricular activities in the evening, doing the dances, football games, they’re even playing, maybe in “donkey basketball games” for fundraisers, and the school district was saying that teachers weren’t covered under that because they weren’t being paid. It’s kind of like the army where they are required to volunteer for the football games, at night, or basketball, or to be chaperones at dances. I agreed with Assemblywoman Giunchigliani that they should be covered while they’re representing the students out there. So we’ve amended that in on the side. This bill will both take care of a teacher situation and then legislators, so you’re covered while you’re exercising the duty of your office.
Chairman Goldwater:
Questions for Senator Schneider? If Ms. Erdoes’ interpretation was that narrow on the course and scope of employment, then would the legislator have the ability to find remediation in tort?
Senator Schneider:
I would defer that question to the Vice Chairman of the Committee, Mr. Chairman.
Chairman Goldwater:
You are obviously subject to the sovereign immunity cap.
Senator Schneider:
I don’t know. Downstairs, in our house, we started talking about that, and some of the legislators didn’t realize how they could be affected on this. You could be in a serious accident out at a speaking engagement, off the legislative session, and it would affect you because your normal employer would back out from that and wouldn’t cover you because you were doing legislative work, and you could really wind up hurting your family very badly on a situation like that. There is no fiscal note on this. All we are doing is clarifying, because we do have worker’s comp insurance, what we’re covered for.
Chairman Goldwater:
Senator, we appreciate the bill, but with all due respect, any thoughtful legislator would know, very well, the limitations of their coverage. They look how everyday folks are struggling on worker’s comp and how often they’re denied for these bizarre reasons, where they are and what they’re doing in almost any job. If anyone knew how little they were covered under worker’s comp, they would have a bill like this for almost every single discipline there is.
Senator Schneider:
That’s why we brought the teachers in here too, Mr. Chairman. I think the school district does want to propose an amendment, Mr. Chairman.
Rose McKinney-James, Clark County School District:
[Introduced herself] I appreciate the opportunity to offer an amendment to the amendment. When Ms. Giunchigliani presented this amendment, we were not present. I had the opportunity to chat with her about the substantive aspect of it, and also share with her our suggested amendment, which we think brings her language into compliance. As Senator Schneider indicated, this relates to teachers who are working within the scope of their employment, but have volunteered or been assigned to certain extracurricular activities.
If you will turn to page 3 of the bill, in the first reprint, Section 3, subsection (b), and then take a look at the marked portion of what I have handed out (Exhibit E), we are simply asking that the employee secure written request and that request be given to either the principal or the site administrator. This tightens it for our risk management folks and allows the amendment to be acceptable. Without that language, we did have a fairly substantial potential fiscal note, simply because we would not be able to control the activities of the teachers and we wouldn’t have any ability to verify if we didn’t, at least, have the request in written form.
Chairman Goldwater:
Couldn’t you just deny the claim? The onus would be on the injured employee. Having done this area, now after a while, we will for sure miss somebody that should have gotten covered with something like this. This reminds me a lot of the cause stuff that we had in there where originally is was “Oh sure, we have primary cause and that’s no problem, we just need to verify the primary cause.” Now that is being used to deny a lot of legitimate claims. I can see an instance with this language that somebody is going to be asked to be out there coaching, leading a band, or doing something, not have it down in writing and approved, and we’re going to miss it.
Rose McKinney-James:
Mr. Chairman, I can’t suggest that might not happen on occasion. What you outline is purely a reasonable potential. All we’re trying to do is find a way to tighten this language so that from a risk-management standpoint, we limit the pool of opportunities for that type of slippage. The language, in its form, absent this amendment, in our view, would create a huge liability in exposure for the district. As a result, we’re offering this amendment to the amendment.
Chairman Goldwater:
And I would beg to differ with the districts’ assessment of their exposure in that they would just simply do what they do normally and say “No, unless you can prove yes.” Other questions from the Committee? I don’t see any. Thank you. We’ll take it under advisement. Is there further testimony regarding this bill? Anybody against S.B. 193? We’ll close the hearing on S.B. 193 and open the hearing on S.B. 319.
Senate Bill 319 (2nd Reprint): Makes various changes to provisions regulating insurance. (BDR 57-599)
Bob Ostrovsky, Employers Insurance Company of Nevada:
Senator Shaffer submitted this bill by my request and he asked me whether I was going to testify on S.B. 319 and S.B. 320 and I said yes, so I don’t think he had intended to attend the hearing. Senate Bill 319 is a bill dealing with procedural matters regarding worker’s compensation insurance. I would like to point out that Section 1 of this bill is an amendment that applies to [NRS] 680A.310 that is titled “Exceptions to the requirements for counter signatures for resident agents.” In the original draft of this bill, there was specific language regarding that. At that time it was Section 2 of the bill. Because Section 1 had been later removed, it was renumbered.
Unfortunately, in the final amendment that was adopted on S.B. 319, language appeared, and I can’t readily explain how it got there. We would like to request that the Committee return to the original language that is in the first reprint, Section 2 that says, “A policy issued to a person who is not a resident of this state.” The language you’ll see in Section 1 says, “A policy that is not subject to taxation pursuant to NRS 680B.025,” which is the section applying to premium insurance. It says that the counter-signature is not required on any policy without subject to premium taxing. We can’t find any of those policies, so we’re not sure what the meaning of that is. I’m going to let our resident expert from Employers Insurance Company of Nevada step you through the bill and then we’ll come back to talk about it as a whole.
Ann Nelson, Employer Insurance Company of Nevada:
As Mr. Ostrovsky indicated, we would propose that Section 1 be returned to its original language. That original language deleted the requirement to have a counter-signature apply to a policy that was sold to an out of state resident. Currently, in the world of industrial insurance, if an Oregon company wishes to buy insurance in Nevada, that Oregon company’s agent will contact, in this case, Employers Insurance Company of Nevada, request to purchase insurance, and Employers Insurance Company of Nevada [EICON] will underwrite the account. If the account fits within our criteria, we will offer that person or business a policy. The policy must be signed by a Nevada agent. Let me be very clear here because there was some confusion on the Senate side, the phrase “resident agent” in the insurance world is not the same phrase as “resident agent” in the corporate world. In this case, we’re talking about insurance agents and “resident” simply deals with the fact that that insurance agent does business in the state of Nevada. It’s not the same kind of resident agent who receives service of process on behalf of a corporation. So, the Oregon business purchases a worker’s compensation policy from Employers Insurance Company of Nevada. That worker’s compensation policy, under current Nevada law, must be countersigned by a Nevada resident agent who is authorized to receive a commission of 5 percent of the premium, whether or not that agent had anything to do with the policy; whether or not that agent had anything to do with placing that policy with Employers Insurance Company of Nevada. It’s a provision that the insurance companies feel is not necessary and simply drives the cost of worker’s compensation up, so we would recommend a deletion of that requirement.
Chairman Goldwater:
So we’ll see premiums go down in this case, right?
Ann Nelson:
Again, for out-of-state policies, potentially. Section 2 deals with the Insurance Guarantee Association. As many of you are aware, we are seeing an increasing number of insurance companies become insolvent. When insurance within the state of Nevada become insolvent, the remaining insurance companies are assessed to pay for the insolvent insurance companies claims. We would request that the Board of Directors of the Insurance Guarantee Fund be required to place upon it at least one member who is an officer of a domestic insurer. That gives the domestic insurance industry that much more of a finger on the pulse of what’s happening with the insurance industry within the state of Nevada. That would be Section 2. Section 3, does the same thing.
Section 4 brings NRS 687B into compliance with the federal acts in that original signatures, facsimile signatures, or electronic signatures can be provided on an endorsement for an insurance policy. The Insurance Commissioner, about a year and a half ago, found herself in the position of potentially needing to require what’s called a wet signature, or an original signature of the CEO of an insurance company, on every insurance policy issued in the state of Nevada, because Nevada law did not provide for the exception of fax signatures or electronic signatures. Section 5 does the same thing.
Section 6 indicates that if there is an assessment made by the Division of Industrial Relations [DIR] in any part of that assessment is returned to the insurance company because the insurance company has been overassessed, that that return shall also include the interest that was actually earned by the Division of Industrial Relations. If there were some poor investments, and the Division of Industrial Relations did not actually earn any interest, then no interest would be due to be returned. Same thing for Section 7.
Chairman Goldwater:
Would there be losses included in that, so if DIR returned money, would they return less?
Bob Ostrovsky:
I suppose the answer is yes. They now do pay us interest. We just want to get it into the statute. Though they’re not statutorily required to, they have customarily paid us interest. We want to make sure that continues. I’m assuming that these funds are in fixed income accounts and not subject to loss, unless, of course, banks go negative. DIR is here, so perhaps they could answer directly.
Roger Bremner, Administrator, Division of Industrial Relations:
These funds are held by the State Treasurer, so they’re not invested by us. They draw interest. At the present time, it is our policy and procedure that at the end of the year, any unexpended funds that are to be refunded include the interest, so it’s what we do now. This just puts it in statute.
Ann Nelson:
Mr. Chairman, that brings us to Section 8. Section 8 deals with a situation where, right now, if an injured worker requests a hearing in front of either the Appeals Officer or the Hearing Officer, that injured worker must travel to Carson City or to Las Vegas, regardless of where he lives. The Reno area, the Washoe County area, which has a large number of injured workers, does not have hearings held there. This language was worked out on the Senate side in an effort to allow hearings to also be held in Reno, or wherever else the parties would prefer to have them held. Section 9 does the same thing only with hearings in front of the Appeals Officers, as opposed to hearings in front of the Hearing Officer.
Section 10 requires the Commissioner of Insurance to conduct a study to look at Nevada’s current insurance investment laws. Right now, Nevada’s investment laws for insurance companies have not been updated in approximately 20 years. As many of you are aware, there are a large number of additional investment opportunities, derivatives, and a whole bunch of other things. We don’t know whether those are investments in which insurance companies ought to be allowed to participate. The National Association of Insurance Commissioners has put together an Insurers Model Act, which has been updated in the last year, or so. We would like to have the Insurance Commissioner review that Act, with Nevada’s specifics in mind, to see if it would be appropriate for Nevada to adopt that Act. The Insurance Commissioner testified on the Senate side that she did not have a concern with this provision.
Bob Ostrovsky:
Mr. Chairman, that concludes our presentation on the individual sections of this bill. We’d be happy to answer any questions about any of these matters. Thank you.
Chairman Goldwater:
It seems like a pretty straightforward bill. Do we have questions from the Committee? The Insurance Commissioner, I’m guessing that’s where the fiscal note will come in, so I can reassure that Chairman of Ways and Means when the question arises, will this study impact our budget at all? Do you know?
Ann Nelson:
My understanding is, no, it will not.
Chairman Goldwater:
We’ll verify that and move on. Thank you. I see no questions. Is there further testimony regarding Senate Bill 319?
Ray Badger, Attorney, Carson City:
Ninety-five percent of my law practice is representing injured workers. I have comments on Sections 8 and 9, and I wouldn’t call it opposition, but I think there’s clarification needed. As written, presently, the hearings are heard in Carson City or Las Vegas for injured worker. This bill says that if one party agrees to pay costs of travel, that a hearing could be held elsewhere. The question I have from this language is, does the other side have to agree? If one party makes a motion that “I want to have a hearing in Elko,” would that be mandated if they offered to pay the travel cost? I think this provision doesn’t answer that question. More importantly, we have a Hearings Division that holds these hearings and they’re State of Nevada employees. It’s unclear to me whether the Hearings Division, that is our work comp judges, can say, “I do not believe the request is appropriate in this case.” I think, if you gave the discretion to the Hearings Division, that if they felt it was convenient, it could be done. If they felt not, then this would be acceptable. I think those are open-ended questions. There are a lot of parties to a case potentially. I’m an injured worker, you have the employer, Nancy Leeder’s office, the Nevada Attorney for Injured Workers, as well private attorneys. Those are the two questions. I apologize to the authors of the bill because I did not attend the Senate hearing; it was just in a different form.
Bob Ostrovsky:
Just to reply, briefly, to Mr. Badger’s comments, this bill was amended on the Floor of the Senate to include this language. We had other language in an earlier reprint. It clearly was the intent that the parties involved would have to get the permission of the Appeals, or the Hearing Officer to move the hearing. You couldn’t just individually decide that they wanted to move it some place and, by the offer of making the payment, force that movement.
On the other hand, we also feel strongly that – we know that the appeals and hearing officers are all state employers – but most of the injured workers in northern Nevada are in Reno. We’ve had some concerns about the fact that all of the hearings have been in Carson City. We think it’s just as much of an imposition on the injured worker as it is for the insurance company, probably more on the worker, to have to travel to Carson City, to get into a stacked calendar, and may sit for hours on end before they get an opportunity to appear before the appropriate judge.
We thought it was easier if all of those hearings were in Reno. The Senate decided that instead of just moving the Appeals Office to Reno, they would instead, permit the appeals for a Hearing Officer, to move those if the insurance company, injured worker, or either one wanted to pay for it, and so apply to the Hearing or Appeals Officer. I understand this raises concerns. It was never intended to circumvent the judge as to where the hearing would be held, and so we’re trying to make it easier, not harder. If there is better language, we are more than willing to look at that language.
Chairman Goldwater:
What do you think, Raymond? Do you have some language for us?
Ray Badger:
I think that it would be in the sound discretion of the Hearings Division to determine where a hearing would be held, something to that effect.
Chairman Goldwater:
We’ll let the Hearings Division determine where it should be held?
Ray Badger:
Both the Hearings Officers and Appeals Officers, that’s their department, that’s their title.
Chairman Goldwater:
What do you think about that, Bob?
Bob Ostrovsky:
We thought that if you look at that section, on line 39, page 6, it says, “as determined by the Hearing Officer,” and if we wanted to strengthen that language to what was proposed, we would have no problem with that. I would like to look at the final draft of it.
Chairman Goldwater:
We sure will [let you]. That’s what we’ll do. Diane will help us with that. Other then that, Raymond, it’s all right? [Mr. Badger indicated that it was]. Further testimony on Senate Bill 319? I don’t see any. I’ll close the hearing on Senate Bill 319. We’ll bring up the hearing on Senate Bill 320.
Senate Bill 320 (1st Reprint): Makes various changes to provisions governing industrial insurance. (BDR 53-600)
Bob Ostrovsky:
Senate Bill 320 deals with a number of issues relative to benefits in the worker’s compensation field, many of which have some direct impact on the way an individual claim is handled. Therefore, we’re asking for due consideration and we’ll try to indicate why we thought, with the direction that we’re moving in that, this bill was appropriate. I know that many people leave when an insurance industry brings forward a bill. It’s for the purposes of reducing benefits and cutting costs, we will argue before this Committee. You will probably hear people who have a different view about what the affects of this Section of this bill is. I will let Ann Nelson of Employers Insurance Company of Nevada give you a quick review through a short bill and then I’d like to make some comments about it.
Ann Nelson:
Just very briefly, I’ll run through each section of Senate Bill 320. Section 1 indicates that, now, for evaluating permanent impairment in injured workers, we will go to the fifth edition of the American Medical Association’s Guides to the Evaluation of Permanent Impairment. Section 2 deals with an issue that I think everyone’s been grappling with for number of years. Mr. Chairman, you indicated a few minutes ago, we used to have a standard for proof dealing with preexisting conditions and whether or not a current workplace injury was the cause of an injured worker’s condition or whether the preexisting condition was [the cause]. We used to have a provision in the statute that required that the workplace injury be the primary cause of the worker’s current condition. We amended that several years ago to require that the workplace injury be the substantial contributing cause of the injured worker’s current medical condition. The problem that the insurance company has run into with substantial contributing is that there’s no definition for substantial contributing. It doesn’t exist in the law and it doesn’t exist in medical literature. So, we attempted to put some words in that our advisors felt would be easily ascertainable by both doctors and lawyers, and that is “the major cause.” The other issue that insurance companies have and that Hearing Officers and Appeals Officers grapple with is that it’s virtually impossible to prove a negative. We’re asking that the physician or chiropractor establish that the workplace injury is the major cause of the injured worker’s current condition. That language is contained in Section 2.
[Ms. Nelson, continued] The language contained in Section 3 deals with automobiles that injured workers may be entitled to receive. We’re asking that Mr. Bremner’s shop, the Division of Industrial Relations, adopt regulations establishing a maximum benefit to be paid under the provisions of that section. Section 4 deals with an issue that we’ve had come up over the last couple of years.
Section 5 is the same issue. Since we went to open market in the state of Nevada, we have hundreds of insurance companies writing worker’s compensation insurance. Unfortunately, when hearings are requested at the hearing or appeals level, the injured worker does not always include the insurance company, the determination that insurer is appealing, or the claim number. The Hearing Office and the Appeals Office has been grappling with, as have the insurance companies in this state, the issue of receiving a notice of hearing without the determination letter or the claim number. The insurance company has no idea what issue it is that is being litigated and is unable to prepare for the hearing.
We’ve had a number of meetings with Bryan Nix [Senior Appeals Officer] regarding this issue. Mr. Nix, while very sympathetic to the problem, is concerned because he is constrained by a statute that requires that hearings be set within 70 days of receipt of request for hearing. To his credit, Mr. Nix did attempt, at one point, to put a regulation into place that required that hearings not be set unless this information was provided by the injured worker, and then became very concerned that he was out of compliance with the Nevada Revised Statutes. This legislation and this language is an attempt to provide Mr. Nix with the ability to require that an injured worker would provide this information.
What currently happens in a number of the hearings is an injured worker says, “I appeal the determination that this insurance company gave for me.” Nobody knows what the determination is and nobody knows what the injury is, everyone shows up at the hearing, and either the Hearing Officer requires the hearing to go forward anyway, or it gets continued because the insurance company is finally notified of what the issues are. Then everybody has to go home, redo the work, and show up again. This is an attempt to ameliorate that problem, and that issue is found in Section 4 for the Hearing Officer level and Section 5 for the Appeals Officer level. Section 6 simply indicates the effective dates of these new provisions. Bob, you had some comments you wanted to make.
Bob Ostrovsky:
To point out that in the matter relative to the granting and dismissing of hearings, we tried to work out language that I don’t know is totally acceptable to all parties yet. That was the question: if the determination letter wasn’t available, then at least try to give us the date of the determination and state the issue. It’s very difficult not to know why you’re going to a hearing. We thought this was ascertainable. We said it wouldn’t be granted unless the Hearings Office can provide the forms, insurance companies can provide the forms at the time the notice is given, and we think this is language that assists all parties. One of what we heard about was it takes delay after delay to get a hearing and appeals done. Part of the problem is if you go to court and you’re not prepared, that just leads to more delays. We think that anything that gets all the parties there, with all of the evidence at the right time, leads to better decision-making and quicker decisions. We think that this does that. We might hear people that want to resist that.
Just my comment, with regards to “primary” versus “substantial contributing” versus whose burden it is to prove, we have been searching for a number of years in worker’s compensation to solve this problem. We’ve dealt with language that’s unclear. We don’t have a statutory reference or definitions to go by. We go by case law as best we can in these matters. We’ve tried to get it done, though I don’t think always successfully, Mr. Chairman. We have people who are denied, probably for the wrong reasons. We have people whose claims were probably accepted for the wrong reasons. I wish there was language that was quite clear. I think it’s been a policy of the Legislature not to just open the door and say we’ll take any claim, but we want to take those claims which the employer should be responsible for, regardless of fault. I think Section 2 leaves the policy decision with this Committee about whether it wants to try to resolve that issue or live with the existing flaws that are in the system. By not processing Section 2, of course, that’s the end result. We’d be happy to answer any questions that you’d have.
Chairman Goldwater:
Questions from the Committee? In a bill we passed out, rather then say “the fifth edition” in statute, we used the term “most recent edition.”
Bob Ostrovsky:
The current statute says that the administrator of the DIR must take into consideration the most recent edition. I don’t think it says that he has to adopt it. I have the statute with me, but he has to take it into consideration to have hearings and so on. The purpose of that was so that the Legislature could get out of the business of picking what edition. This Committee in A.B. 168, which will be heard tomorrow in Senate Commerce and Labor, put back in “the fifth edition.” Now, “the fifth edition” is in this bill. I want to clearly point out, though, that the language, in this bill, is a little bit different, and maybe, in fact, significantly different from the language in Assembly Bill 168. [In S.B. 320], let me point out Section 2, subsection 1(b) and (c), state you “must not incorporate any contradictory matter from any other edition or printing “and” must not consider any factors other than the degree of physical impairment of the whole man in calculating entitlement to compensation.”
This Committee has already heard testimony that, at one time, we thought that adopting the fifth edition would be a 6 percent increase in rates for employers. Then, I think, in A.B. 168 this Committee heard testimony from the NCCI [National Council on Compensation Insurance], at least written testimony, that it would be about 3 percent increase. The difference between 3 and 6 is the measurement of pain, and by saying that you’ll only use it to the degree of physical impairment, which is parroting words elsewhere in the statute, indicates to us that pain won’t be rated, therefore you have a reduction in the overall cost of adopting the fifth edition.
It’s my personal feeling that this Legislature can adopt the fifth edition, or eventually, the DIR would have to. What happens is, eventually, the fourth edition goes out of publication, the AMA says you can’t use it; we get forced into using the most recent edition, somewhere. I think it’s good policy for this body to review those every two years if necessary, if that’s what it takes, because this is a significant cost factor in worker’s compensation. Just to say that we’ll adopt the most recent edition is going too far. They don’t come very often, so I think this is a perfectly legitimate question, which should come before the Legislature on a regular basis. So, that’s why we said the fifth and we put the caveats in.
Chairman Goldwater:
I know stress is an ugly word, but there are times, and I think both you and I know some of the horror stories that are out there, where we are so limited by “the degree of physical impairment to the whole man” and the way the court has interpreted “physical impairment.” There are times, surely through the regulatory system, we should be able to have the ability to accommodate that. For that reason, do we need [paragraph] (c) there in Section 1? And, not to say that we should do anything regarding stress, because we don’t, and I don’t, and I’ve said so, but I know that there are instances, very extreme, where there is not an actual physical impairment but any reasonable person, without question, would say there’s an injury.
Bob Ostrovsky:
Mr. Chairman, I’m not an expert in this area. I do know that whether you put paragraph (c) in or not. When they adopted a fourth edition, I think the Nevada Self Insured Employers Association got court relief, of some kind, with regards to pain, as it was rated in that Section of the fourth edition, because there were arguments, whether you put this in or not, that Nevada’s a state that measures the degree of physical impairment. There are arguments that you can’t measure this psychological impact or these pains, which occur without other manifestations. There’re no broken bones, no disc degeneration, lower back pain is a good example, and how do you rate that? The way we rate it here is, you do measurements to determine whether that individuals back can be moved right, left, up, or down. If it can’t do what’s expected, then you rate that. If they just say, “I have pain. I can do all the things, but it’s painful,” under Nevada law there are no permanent partial disability payments that that individual can get, nor is there any compensation for that psychological factor involved in any of these claims. Understand, that’s a huge policy decision and we’ve gone one way whether that’s the right way or not. The problem is, there are probably cases where it’s not.
Chairman Goldwater:
We could eternally struggle with that question, as we have since I’ve been up here. Certainly, regulations maybe are where you can take care of some of those nuances, and are we specifically precluding those kinds of regulations in this bill?
Ann Nelson:
Mr. Chairman, I might be able to help a little bit on this one. As Mr. Ostrovsky said, Nevada worker’s compensation benefits are a creature of statutory implementation and statutory description. What benefits injured workers are entitled to receive are found in Nevada statute. As we drafted this section, the concern was exactly what happened with the adoption of the fourth edition; that is the adoption of this, without paragraph (c), would simply lead to litigation because there are provisions in the fifth edition that contradict statutory language elsewhere in [NRS] 616A through 617D. Paragraph (c) was put in to bring the fifth edition into compliance with the remainder of the statutory benefit outline. If, in fact, the Committee decides that as a matter of public policy it wants to amend and change the benefits that injured workers receive, they can certainly do that. I’m not sure this is the provision to do it, though. There are other statutes that deal with what injuries are compensable under Nevada’s law. This is simply put in to keep the various provisions in line and noncontradictory.
Chairman Goldwater:
This area, “physical impairment,” is close to my heart. I introduced a bill a while ago [when] a woman was raped on the job. She wasn’t “physically” impaired after. She wasn’t hurt after. Without question, she deserves some sort of compensation. I’ll never vote for anything that will preclude, in some way, finding some compensation for something like that.
Bob Ostrovsky:
I agree with you, Mr. Chairman. That individual was probably entitled to temporary total disability payments if that individual was off work, for example. But, when that case was closed, that employee came back to work, the psychological impact of that event would not, under the current scheme, lead to an award of a benefit.
Chairman Goldwater:
That is correct. Further questions? I don’t see any. Thank you. Is there further testimony regarding Senate Bill 320 from anyone who wants to be a proponent of this bill? The opponents? Come on down.
Ray Badger:
As Bob pointed out, Section 1 conflicts with Section 7 of your A.B. 168. Part of this section, we think, is excellent. We use a medical guideline by a national group of doctors and right now in Nevada we’re using an out-of-date book. They put in their preface that we’re using an out-of-date book, but under present law we have to come to the Legislature any time a new guideline is adopted. We think your policy decision requiring the adoption of the current edition would [assist] everybody involved in the regulatory process who would still be required to hold hearings, and DIR would have the right to amend the bill.
Regarding your comment about physical impairment, we have a Supreme Court case that you ought to know about. It’s called Maxwell. It [involved] a person who had a devastating physical injury and when they had their disability evaluation, the examining doctor not only said they were impaired in their back and shoulder but they had a psychological permanent injury. That case went to the Nevada Supreme Court and that Court, in analyzing the law, said that the statute states “physical impairment.” [The Court] threw out the “any psychological award.”
[Mr. Badger, continued] Two years ago, this Committee passed a bill that would have changed that and I think it lasted four minutes in the Senate. Right now, under the Assembly bill, Roger Bremner’s outfit could hold hearings. He would have no choice but to not allow to keep the existing law unless you made a change. Our bill did not ask you to. We thought that baby steps were better than no steps. The other thing that you ought to be aware of is a conflict in effective dates. The bill that you passed on the AMA Guides would have made it October 1, 2003. This section under this bill is January 1, 2004. It has to be one or the other. The fifth edition has been out and in use, in some states, for up to two years. If you pass your bill, October 1, 2003 is sufficient. DIR may tell you that they need more time.
As a worker’s comp lawyer, Section 2 is something that has come up in my 22 years of practice. When someone has a preexisting medical, then they have an incident or an injury at work that combines with that preexisting condition, [the question] is [should] worker’s comp be responsible and what are they responsible for?
I gave you a handout (Exhibit G). The Nevada Supreme Court case SIIS v. Kelly was a law in this state for 15-plus years. That case said if the on-the-job injury is an “A cause,” A meaning it wasn’t defined, it could have been 1 percent potentially of how you end up after this incident and worker’s comp is responsible for the medical bills. In permanent disability they can apportion, or not pay, what was clearly due to your preexisting condition. In 1993, when EICON’s predecessor was a state agency and said they were going broke, one of the changes was to abolish SIIS v. Kelly, and the law changed to primary cause. Primary means 51 percent or more.
When I asked a doctor to give me an opinion, they would ask me, “What does primary cause mean?” You know, if there are two causes of a condition to a doctor, it’s not real important which is bigger. They know the two causes, and the only reason cause may be important is how they treat it. They weren’t trained on how to give an opinion. We thought that was the most onerous standard we could find in the United States.
[Mr. Badger, continued] In January 1, 2000, when EICON was given the blessing to go private, one of the benefits that was given back, and in my opinion perhaps the most important, was to get rid of that onerous standard. We passed a bill that’s been the law since January 1, 2000, that has two elements. Number one, it says the insurance company has the burden of proof once the worker shows that he had an on-the-job injury that aggravated his condition. I’ve got an old football knee, but I haven’t seen a doctor in ten years. If I were to twist my knee badly in court, as I was losing a case, I would have to prove that incident aggravated the condition. But once I did that, if my insurance company was going to properly deny me, they now have the burden of proving that incident was not a substantial contributing cause of [the injury]. This bill takes both of those benefits away.
I looked in Random House College Dictionary for a definition of the word “major.” The first definition was “Pertaining to the majority,” so to me the words “majority” and “primary” are absolutely synonymous. I believe [the definition of] substantial is somewhere between the Kelly case and the primary cause. I think it was a compromise. I think it’s more than an “A cause,” it’s something of materiality, something of significance. There’s a big difference between that and requiring it to be the biggest cause, especially when medicine doesn’t define for doctors, [how to determine if one] cause is bigger than [another]. This would be a major step back, in my opinion, to injured workers.
The second issue is that it puts the burden of proof on the treating doctor. When you go to court, one side of the case always has the burden of proof. The doctor is not part of the case, so [placing] the burden of proof [on them] makes no sense to me. If I’m charged with a crime, the District Attorney has the burden of proof. In a work comp case, generally the injured worker does, with the exception of the aggravation case. I don’t know what a court would do with it because it places a burden of proof on a doctor who’s not there and a doctor who the injured worker does not have an unfettered choice [of] when he chooses his doctor under today’s compensation law. [Concerning] Section 4 and 5, I just want to tell you how you get to a hearing so you understand what this is about. [Let’s take] the example Senator Schneider gave, [in which] Assemblyman Goldwater is punched because of his speech at the Chamber of Commerce. He files a claim as a legislator; they deny it. He’s going to get a letter from Joe’s insurance company that’s going to say, “Date of injury, January 1, we have denied your claim.” At the bottom of it, state law requires a sentence that says, “you, Mr. Goldwater, or your employer can ask for a hearing, but you have to send in a form attached to this within 70 days.”
My second handout (Exhibit F) is a Supreme Court case called SIIS v. Partlow-Hursh. It’s tough because it says that if that form doesn’t get in within 70 days, that case is over. There is absolutely only one exception: they sent the letter to the wrong address. So, under present law, if Mr. Goldwater was stuck in a hospital for 90 days and didn’t see the letter and didn’t get his form in, that case is over. I don’t think it’s their intent, but when they put in here that if you don’t put certain things on this form then you won’t have a hearing, I don’t think it clearly says that issue is not done. If it was redrafted, in some way, that the information should be gathered before a full hearing is held, I think everybody would agree to that. But, especially in the companion section of Section 5, line 27, where it says, “it must be dismissed, to me, that says, “[you lost], your rights are done, and there’s nothing else we can do.” You have a lot of unrepresented [injured] workers who get these letters. You have employers who also are getting letters.
[Mr. Badger, continued] I think the language needs to be changed to make sure that you are not saying that if you don’t list all these items, you lose your right to have a hearing, even though you sent the form in on time. What if somebody loses the letter? I have people calling me and saying, “I know I got a letter denying my claim, but I can’t find it.” Well, if I can’t write a letter saying, “I want to have a hearing,” and at least get that in within 70 days and then try to get them the information later, I don’t think that’s what you intend, and that should apply to an employer as well as an injured worker that they should have some right. I don’t think we should throw out a case because somebody made a mistake in filling out a form.
The last handout I gave you (Exhibit H) is a regulation passed by DIR and the number is 616C.264. It says, ironically, the insurer must put in all their information when they send a letter that says we’re either denying or accepting a claim and this statute, as proposed, switches and puts [the burden] on either the injured worker or the employer who is asking for the hearing. I would think the insurer who has the claim would be most likely to know all of this information. The employer might not have an injured worker’s address. The employer, surely, might not know the number of somebody’s worker’s comp claim. That’s probably not what they spend their day watching. I think it just needs to be amended to make it clear that you don’t lose the [right to a hearing] by not perfectly filling out a claims form or a hearing form. Thank you.
Chairman Goldwater:
Questions for Mr. Badger? You made some good points, Ray, thank you. Ms. Leeder or Mr. Jeffrey?
Jack Jeffrey, Southern Nevada Building and Trades Council:
I really can’t add anything much to what Mr. Badger said. We do have major concerns with the majority language. Of course, I’m not an attorney, I’m an electrician, but the majority still tells me it’s more than half. Under the primary cause language we had in the statute, which was [inserted] in 1993, the first question asked of an injured worker when they reported an injury was if they’d ever had a previous injury. Most of us have, of some kind. If a person was honest and said they had a previous injury, the claim by some of the third-party administrators were routinely denied. It was up to the injured worker to make the case to prove that injury that he reported was the primary cause of the disability he was suffering. This puts the onus on the person that has the least resources to try to prove a case. If a person is off work due to an injury and has no income, their claim has been denied or may soon be denied under this language, they’re the least likely to be able to come up with the resources to prove a claim.
[Mr. Jeffrey, continued] Going back to the beginning of the worker’s comp system, it wasn’t really to protect the injured worker, it was to protect the employer from lawsuit. The trade-off was that the employer took care of the injured worker on a no-fault basis. If there was a doubt it went to the injured worker, then the injured worker couldn’t sue the employer. In most of the years I’ve been involved, the doubt went to the injured worker. That’s no longer the case. The injured worker has to prove their case and now they may have to prove it twice.
This change in the statute is just unfair to injured workers and we’re strongly opposed to that. By the way, Danny Thompson had to be at another hearing at the same time and I’m also speaking for him with the Nevada State AFL-CIO.
I have a similar problem with Section 4, not nearly as serious a problem, but if a claim is denied and the appeal is denied, then that gets very serious. The injured worker is often un-represented and not very sophisticated. They’re going to know their name and they should have a claim number, if they haven’t lost their paperwork. That happens sometimes, too. The people that would be most likely to have most of this information would be the insurer. I don’t really understand the need for this, but, again, if we have to depend on the claimant to supply all the information, I think it puts them at risk of having an appeal denied. That shouldn’t be happening.
Chairman Goldwater:
We could do it the other way around. Just say the opinion is already granted unless these things are provided.
Nancyann Leeder, Nevada Attorney for Injured Workers [NAIW]:
In addition to agreeing with what Mr. Badger and Mr. Jeffrey have told you, there were a couple of additional points I would like to make. In Section 2, moving from “substantial contributing” to “major,” in my view, “major” would be even more than “primary,” and every time there’s a change in this language, there’s substantial litigation to determine exactly what is meant by the language. We now are at the point where “substantial contributing” creates less litigation, at least for NAIW, because that is something that doctors are now familiar with. If we move, again, back up past “primary” to “major,” then we start out from scratch again. As Mr. Badger has said, “substantial contributing” is more than our old standard that we had for many years, and somewhat less than asking a doctor to make a legal determination.
[Ms. Leeder, continued] Regarding Section 3, I’d like to state something. The administrator sets regulations based upon what’s foreseeable. The Appeals Officer, acting as a judge, determines real-life issues that are currently pending before him, and sometimes they have little relationship. In order to use the litigation system that we have, we should be looking at the individual circumstances of an individual injured worker and allowing the Appeals Officer to determine what benefit is appropriate rather than going through a whole work shop and regulation hearing procedure to determine what the people who are present at the time can foresee.
On Sections 4 and 5, I concur with Mr. Badger and Mr. Jeffrey that the burden of producing the evidence would be reversed and placed upon the back of the person who is least likely to know the answers. In addition to that, as I read Section C, it almost does away with the other provision that we have, which allows the worker to make a written request. If that request is not responded to within 30 days, then he can ask for an appeal. He would not have a determination letter, so he could neither produce a determination letter, nor the date of the determination and the issues in the determination because there would be no determination. He’s trying to obtain a determination. Therefore, it seems to me that [sections] 4 and 5 would need to be substantially worked on and we should not make a move to “major” from “substantial contributing,” which now is set in the law and final. Thank you.
Chairman Goldwater:
Questions from the Committee? Don’t see any. Sir, welcome.
Paul Aakervik, Lubbock Agency, Compensation Trust:
I just wanted to provide you with a little piece of information in here that might help you in your deliberations regarding the AMA 5 or any AMA Guide. AMA Guides are written to adjust new medical technology. The AMA 2 was written between 1974 and 1979 and actually published in 1979. We used that until the AMA 4 was brought in about four years ago. Much of the medicine was very outdated. AMA 4 was an improvement on that, but it takes approximately 3 to 4 years for an AMA edition to be actually put together, reviewed by multiple physicians, and actually published. The AMA 5 has been out 2 years and is probably medicine that’s 4 to 6 years old, but it’s still an improvement. I checked with the AMA about two weeks ago. There is no plan to come up with an AMA 6 edition. AMA 5, right now, will probably stay as the only AMA Guides for the next several years, probably 5 to 6 years.
[Mr. Aakervik continued] One other point that I wanted to make that I think is a very important one for consideration: Simply by changing the numbers in your statute, you do some strange things to the worker’s compensation system. We recognize that AMA 5 will raise, principally, spinal injuries 40-60 percent. I don’t know what the rest of the AMA 5 will do. There usually have been some toss-ups in making modern medicine in adjusting some of the guidelines. But, when AMA 4 came in, it took all of the rating physicians – I believe there are about 200 of them, Mr. Bremner can probably give you a much better number – for one full week off from their practice, to go in and take a course in how to read, interpret, and report on the AMA Guides. I myself attended four full eight-hour days of classes to learn to read and interpret the AMA 4.
After we got all of this wonderful education done, we found that approximately 25 percent of the ratings we received for the first year after AMA went in full force effect were incorrect. About 60-70 percent of those were in favor of the employer. In other words, the rating physician came up with a rating that was less than what it should have been. We had to send those back for clarification. We had to send them to different rating physicians to make sure that the darn things were right. So when Mr. Badger is recommending that you go in October 1, 2003, to put in this AMA 5, you’ve got to take a few things into consideration. There is an awful lot of training and education that is going to be needed. I would recommend that AMA 5 be adopted, but that it be adopted July 1, 2004 to give everybody enough time to do this. I was in the DIR offices last Friday here in Carson City. None of the people in the offices up here were even aware that AMA was being considered, much less do any of them in that office have a copy of the AMA 5, which is approximately 2-3 times larger than AMA 4. These are very complicated, very technical Guides to read and interpret. Sections appear to contradict one another and you really need to know what you’re doing to be able to interpret them.
Chairman Goldwater:
Sir, you are aware that what we are doing is calling for the administration, the Division, to create regulations, so those issues are usually dealt with full public notice, a great deal of discussion and discussion in the industry. I remember the last time they adopted these regulations. If anyone involved in this area wasn’t aware that they were going on, I don’t think they were involved.
Bob Ostrovsky:
I just would like to ask the Chair’s indulgence. I have met with some persons who have concerns about this bill. I will continue to try to meet with those persons to see if there’s any middle ground relative to some of these issues. I know this Committee has a Friday deadline, but if the Committee members will permit, I will continue those discussions, regarding this bill, because it’s clear that things like, if someone loses his right to an appeal because he didn’t have the right documents or papers ready, that’s not the target of this language. The target of this language is the Department of Administration, which has been totally and absolutely unreasonable, in our position, that they won’t give us any information. If it turns out the bill was drafted to target the worker, that’s not what we want. There may be places we can go if you’ll give us the time, between now and your final session of this Committee, to continue to work toward finding some resolution.
Chairman Goldwater:
Keep working. I think that’s something you need to work on and I would also have you work on the “major” language, as opposed to “substantial contributing” cause. We need to fix that. I happened to be here when we changed it, so the fact that we’re coming back, again…
Bob Ostrovsky:
I was also here and I clearly understand the Chair’s position.
Chairman Goldwater:
Thank you, Bob. Any further questions? Any further testimony on S.B. 320? [Chairman Goldwater closed the hearing on S.B. 320 and opened the hearing on S.B. 428].
Senate Bill 428 (1st Reprint): Makes various changes regarding certain state agencies that regulate real estate practices and professions. (BDR 54‑471)
Gail Anderson, Administrator, Nevada Real Estate Division:
I would just note that staff present in the Las Vegas hearing are Tami Devries, Acting Deputy Administrator; Pam Riebe, Chief Investigator, Compliance Section; Susan Clark, Licensing Manager; Matt DiArio, Education and Information Officer; and also at the table, Melody Luetkehans, Counsel, Nevada Association of Realtors. Senate Bill 428 makes certain technical changes in various chapters over which the Real Estate Division has authority. Specifically NRS 645, real estate licensees, which includes real estate sales, broker sales and salesmen, property management permit holders, and qualified intermediaries; NRS 645C, real estate appraisers; NRS 645D, inspectors of structures; NRS 116, common-interest communities; NRS 119, the sale of subdivided land; NRS 119A, time share licensees and projects; and NRS 119B, campground registrations. Many of the changes in this bill are repetitive and mirrored throughout each of the various chapters. One of the main intentions of this bill is to provide consistency across these chapters. Another aspect of this bill is to put into place certain provisions, which will allow for e-commerce transactions to be in place when the time comes that we are able to do that. Several of the changes to NRS 645 are the results of work by a Division Industry Commission Task Force regarding licensee education. There are minimal fee increases to some licensees, but most importantly, there is authority to collect fees for services to achieve consistency among all the licenses the Real Estate Division administers. At the Chair’s direction, I would go through the sections and note where they are mirrored in other sections and would not address those again unless you wish me to do so. At any time, I either would take questions as I go through sections, or, of course, at the conclusion.
Chairman Goldwater:
I don’t think you need to do section by section. The bill summary on this is one page long and it’s bulleted. You want to give us a summary? It doesn’t seem to me that there’s anything earth-shattering in here. Background checks on your applicants, tell us about that.
Gail Anderson:
We are requesting authority to adopt by regulation the fee to charge each license certificate permit applicant for the processing of the fingerprint cards. Right now, we are not able to process more than 45 a month because that is all we are budgetarily allocated, and we want to [process] 100 percent of background checks for all applicants. That is one area where we’re requesting to adopt by regulation. There are some definitions in the different sections. Section 2 and 3 define a “designated property manger” in the case where our real estate broker does not hold a permit to engage in property management, but intends to have property management activities conducted in their office. It allows for the appointment of a qualified property manger to supervise the property management activities conducted at the office and defines the requirements that qualify that person. This is a definition that’s been adopted and used as policy and this will formalize that policy in the Division.
Chairman Goldwater:
What’s the penalty for engaging in the practice but not having this designation?
Gail Anderson:
Right now, if someone is licensed as a real estate licensee but does not hold a property management permit and is conducting property management, he can be disciplined under his real estate license. If someone is conducting property management activities and not permitted or licensed, we have no recourse against him for unlicensed activity.
Chairman Goldwater:
So, either get a license, and then they have penalties, but don’t get a license and there’s no penalties.
Gail Anderson:
Actually, this bill is proposing authority for an administrative fine for someone conducting unlicensed activity.
Chairman Goldwater:
That’s not a bad idea. I think Ms. Buckley knows far greater than I do, but I represent a lot of people in apartments, and it’s usually not the landlord that we refer to so much as a bad property manager. Of the bad property managers, very few of them are the good, licensed, and well-trained ones. The ones we find that are bad are unlicensed, untrained, and were just put there to watch things and treat people poorly. We get a lot of trouble from those kinds of people.
Gail Anderson:
There is an exception that an owner can hire a manager for just his business, so that may be an occasion, as well, when that could happen.
Chairman Goldwater:
Do we want to keep that? Where is that?
Gail Anderson:
I would defer to my compliance chief in Las Vegas to answer that.
Pam Riebe, Compliance Chief, Nevada Real Estate Division:
We do have an exception in [NRS] 645.240 that does allow an owner to hire a manager of their property and not be licensed. They cannot do more than one owner’s properties.
Gail Anderson:
I’ll continue some summary. There is Section 14 that allows the Real Estate Commission to adopt, by regulation, standards for continuing education and includes in that a post-licensing curriculum will be adopted by regulation for the original licensing period of one year. That change from the original licensing period, from 2 years to 1 year, was passed last legislative session. We come back now to request authority for the Commission to adopt, by regulation, the curriculum for that post licensing curriculum. There are several areas of technical cleanup language in regard to referencing and changing the name of the “Real Estate Division” to just “Division” and “Administrator” and so forth. The fees addressed begin in Section 19.
Chairman Goldwater:
Gail, in Section 8, regarding filing a known and willful misstatement in a project, is gross misdemeanor the right penalty there? Should that be that heavy of a crime?
Gail Anderson:
That was advisement in working with our legal counsel in how to proceed in bringing forth any liability for someone who does this.
Chairman Goldwater:
Wil, do other boards consider it a gross misdemeanor?
Wil Keane, Committee Counsel:
I was just noting that, in particular for Section 8, which is going to be going into Chapter 645, the existing provision of NRS 645.990 does provide a gross misdemeanor for a person who violates any other provision of this chapter. Previous penalties, depending on what was violated, included either a $5,000 fine or a category D felony, but those are more specific crimes so the general catchall was already a gross misdemeanor.
Gail Anderson:
If I may, I would draw your attention to the sections that address fee changes. There are a few chapters where an original license fee was increased by $20 and a renewal by $10. There were other fees added to make consistent the fees for education for applying a continuing education accreditation, for applying for a prelicensing curriculum and accreditation. There were adjustments made to making changes that more accurately reflect the work involved in a change on a license, terminating a license, and then reissuing, reprinting, and processing a license for a change, so that those would be consistent across the chapters that we administer. Most notably, there were sections of law that had no fee authority for services that were being provided, especially in testing, which is required of all licenses and permits. That was an area that we very much wanted to address across the board and have done so in this bill. I would just mention that I would be glad to answer specific questions.
Chairman Goldwater:
Are there questions? I don’t see any and I appreciate it. Is there anybody else here who would like to testify on this bill? Anybody opposed? I’m going to read the bill a little more before we bring it back and vote on it. I will then close the hearing on Senate Bill 428. Is there anything else to come before the Committee? Everyone knows the deadline week, so we will be working hard through the end. We’ll have a big work session on Friday. If you have anything, please get it to me as soon as possible. I have a very nice memo prepared by our staff regarding Senate Bill 400 that I will have distributed to the Committee. It outlines a number of the issues, so I think it will help us think about it better. [Chairman Goldwater adjourned the meeting at 3:59 p.m.]
RESPECTFULLY SUBMITTED:
Corey Fox
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman