MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
March 24, 2003
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Monday, March 24, 2003, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4412, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Warren B. Hardy II, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Joseph Neal
Senator Michael Schneider
Senator Maggie Carlton
GUEST LEGISLATORS PRESENT:
Senator Mark E. Amodei, Capital Senatorial District
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Makita Schichtel, Committee Secretary
Johanna Downey, Committee Secretary
OTHERS PRESENT:
John O’Connor, Lobbyist, IUE-CWA, Local 89177
Danny Thompson, Lobbyist, NevadaAmerican Federation of Labor and Congress of Industrial Organizations
Matthew W. Parker
Barbara Gruenewald, Lobbyist, Nevada Trial Lawyers Association
Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada
Ann W. Nelson, Lobbyist, Employers Insurance Company of Nevada, and Care Network, Incorporated
Don Jayne, Lobbyist, Nevada Self Insured Association
Rose McKinney-James, Lobbyist, Clark County School District
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry
John E. Jeffrey, Lobbyist, Nevada Trial Lawyers Association
Raymond C. McAllister, Lobbyist, Professional Firefighters of Nevada
Lawrence P. Matheis, Lobbyist, Nevada State Medical Association
Ronald P. Dreher, Lobbyist, Peace Officers Research Association of Nevada
Michael Gillins, Nevada Conference of Police and Sheriffs
Lynette Alexander, Reno Police Partners Network, and Reno Police Protective Association
Carolyn Sullivan, Families of Slain Officers
Kami Dempsey, Lobbyist, City of Las Vegas
Jim Fry, Workers’ Compensation Analyst, Risk Management Division, Department of Administration
Jim R. Jeppson, Lobbyist, Washoe County
Dan Musgrove, Lobbyist, Clark County
Paul H. Aakervik, Lobbyist, Public Agency Compensation Trust
Chairman Townsend:
I now open this hearing on Senate Bill (S.B.) 268.
SENATE BILL 268: Requires payment of compensation for lost wages of certain injured employees who receive medical treatment. (BDR 53-1085)
John O’Connor, Lobbyist, IUE-CWA, Local 89177:
I would like to play this 4-minute introductory video (Exhibit C. Videotape is on file in research library.). I am here in support of S.B. 268. I will now read from prepared testimony (Exhibit D).
Danny Thompson, Lobbyist, Nevada American Federation of Labor and Congress of Industrial Organizations:
We represent the workers at the munitions depot in Hawthorne and Fallon. Workers sustaining an injury on the job do not have access to the necessary types of physicians. It could be a day’s travel for an injured worker to receive appropriate medical treatment. The provider list for Care Net has been depleted. Fallon is not unique in this problem. I would like to propose an amendment to S.B. 268.
Matthew W. Parker:
On August 1, 2001, I was injured on the job at Lockheed Martin where I was an electronics technician. I have a fused back. I have a condition known as retrograde ejaculation, which means that I cannot have children. I have been fired. This has been a huge burden on my wife, my family, and myself. I have lost a large amount of money due to medical bills.
Chairman Townsend:
Are there other contracts that currently exist covering the distance issue of medical treatment?
Mr. Thompson:
Medical facilities are available in a patchwork form. Assemblywoman Guinchigliani introduced an assembly bill installing a 20-mile rule for medical care. This aspect affects people who work in rural areas. Care Net is the managed care organization (MCO) for Employers Insurance Company of Nevada (EICON). The EICON writes the majority of fully-insured policies in Nevada. Many doctors have chosen not to remain on the provider list. If an injured worker is further than 20 miles from treatment, the worker can go to any doctor who is not on the provider list.
Barbara Gruenewald, Lobbyist, Nevada Trial Lawyers Association:
I am here in support of this bill. This bill asks for compensation for each hour that the worker would be absent. The Nevada Revised Statutes (NRS) 616C.400 states in order to get temporary total disability (TTD), the worker has to be gone from the job for 5 consecutive days or 5 cumulative days within a 20-day period. This bill addresses the issue of having to take off work for short increments of time in order to receive required medical treatment. There is a statute that says if an injured worker does not get medical treatment, the insurance company can cut off that worker’s benefits because the doctor’s treatments are not being followed. By statute, the claimant is required to receive the doctor’s treatment, however, the claimant will be docked pay because he is gone for short periods of time to receive treatment, even though he is working with the employer to stay on the job as much as possible.
Mr. Parker:
The company has not picked up one day for me in the past 2 years that I have been off work. I used all of my vacation time in a very short period of time. Human Resources with Lockheed Martin specifically told me that it does not have to pick up those days because there is no law that tells them that they have to do so. I have been treated poorly. The company hired and relocated me from Seattle to Fallon to do my job. Now they tell me that they cannot take care of me.
Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada:
The number of available physicians in rural areas is substantially less than those available in larger areas such as Washoe and Clark Counties. The requirements for the size of a medical panel for treatment of injured workers are substantially less than several years ago. This is because EICON has 28 percent of the insured market. Since the advent of the tragic events on September 11, 2001, changes in the language of reinsurance have affected how rural areas receive treatment. Section 2 of this bill gives the benefit to people injured prior to the date of the effective date of this act. Most employers pay on the day of injury. Employers try to reschedule so workers can get medical care and continue to work at the same time. If workers were forced to seek medical care while continuing to lose pay, they would tend to take 5 days off to get compensated.
Chairman Townsend:
If a worker comes to work when they are not healed, it only prolongs the injury.
Ann W. Nelson, Lobbyist, Employers Insurance Company of Nevada, and Care Network, Incorporated:
I completely concur with Mr. Parker’s comments regarding employers who refuse to provide light duty or sick-leave compensation for injured workers. Total temporary disability (TTD) pays up to 66 2/3 of the workers’ salary. These payments are tax free. Mr. Ostrovsky indicated the date of injury and the effective date as problematic if this is to apply to insurance companies. The reason for that is the rating. If this bill is to be clarified as an insurance benefit, I would like the effective date to begin January 1, 2004 to give National Council on Compensation Insurance (NCCI) time to rate this.
Chairman Townsend:
Does this affect the insurer or the employer? If it affects the insurer, then it affects the NCCI rating issue.
Don Jayne, Lobbyist, Nevada Self Insured Association:
The primary issue I have is the compensation of the regular and full hourly pay versus the TTD award of 66 2/3. The current law allows for the latter. We agree this insurance problem is a rural area problem.
Senator Neal:
In reference to Nevada Revised Statutes (NRS) 616C.400, when does the TTD take effect?
Mr. Jayne:
Ms. Gruenewald properly represented the 5 consecutive days of missed work, or 5 out of 20 days of missed work.
Senator Neal:
If the employee is incapacitated for at least 5 days or 5 consecutive days in a 20-day period, chances are the worker could be injured and not draw any monetary compensation.
Mr. Jayne:
If an employee missed less than the criteria of days from a work-related injury, he or she does not receive a TTD. If an individual missed 2 days of work in a month, 1 day at the beginning of the month and the other day at the end of the month, the individual would not qualify for TTD under Nevada law.
Senator Neal:
Would you say this particular section of the law favored the employer or the employee?
Mr. Jayne:
I do not know if my opinion is a relevant matter. The current law is the public policy of Nevada. If you are asking me for my personal opinion, I believe if an injured worker needs to go to the doctor, the employer should make arrangements for the employee to do so during normal working hours, or reimburse the employee. This is my personal opinion.
Chairman Townsend:
In NRS 616C.400 where it states: “In addition to any other benefits an injured employee is entitled to receive …” Are not those benefits received from the insurer? Would it not lead us to believe that the insurer would pay the hourly rate?
Mr. Ostrovsky:
All of the benefits spelled out in NRS 616 are provided through the insurer. There are no current mandates in the law that state an employer pays directly to an injured worker.
Rose McKinney-James, Lobbyist, Clark County School District:
The general counsel for the school district has reviewed this measure. I am here in opposition to S.B. 268, but I have benefited from the discussion so far. The committee is considering an amendment that would exclude the larger population. It may not be necessary for me to oppose this bill. This bill would add a new worker’s compensation benefit. It would potentially increase the cost to the district requiring the insurer or the self-insured employer to pay the employee for time off work to receive medical treatment. It appears that an employee must be off work for 5 consecutive days or 5 days in a month to be eligible for this benefit. If the employee is off that long, then he or she receives two-thirds of their average monthly wage. They can receive their full pay only if they have sick leave available and sick leave is drawn down by one-third for each day of absence. This bill would prohibit an employer from requiring the employee to use any sick leave. The bill also requires the employee to receive his or her regular pay. Many of the district employees continue to see a doctor or physical therapist after returning to work. This potentially can encourage employees to seek more physical therapy treatment than is necessary. We have to be sensitive to potential abuses. The suggested amendment from general counsel states an employee is entitled to receive compensation only if he or she demonstrates a good faith effort to schedule the medical treatment outside the workday and is unable to do so.
Senator Neal:
It states in NRS 616.245 subsection 2, paragraphs (a) and (b), every injured employee is entitled to prompt medical treatment. The action word is “entitlement.” The employer cannot deny treatment.
Ms. McKinney-James:
There is no challenge to the entitlement. There is a requirement under the current law that days of sick leave and/or other leave be exhausted before an employee can secure benefits. This bill would eliminate that provision
Senator Neal:
If there is an entitlement to be treated, that does not give the employer authority to substitute sick leave for the traveling time an employee takes to get to the medical treatment. This puts the injured employee at a disadvantage.
Ms. McKinney-James:
I do not disagree with you. However, this is the current law.
Scott Young, Committee Policy Analyst:
Just by way of background for the committee, part of the difficulty in understanding some of the issues about the 5 days and 5 in 20 days comes from the fact that workers’ compensation is a unique type of system. It is not like a tort system. In a tort system, the goal is to completely reimburse a party for all of their loss. A workers’ compensation system is not designed to do that. One example would be that an injured worker only receives 66 2/3 of their lost wages. Even that is capped at a maximum. Certain very high wage earning employees actually get less than 66 2/3 of their compensation if they are off the job. The 5 days off before one collects, or the 5 days in 20 days cumulatively, are also a reflection of that principle in workers’ compensation that there is not always a total recovery of all of the loss. In response to Senator Neal’s question about the reference of the term “entitlement,” in that particular section the entitlement is to the medical treatment. The wage reimbursements for time off are dealt with in another section. It is a policy matter for the committee and the Legislature to determine whether or not there is a need for a system that does not entirely reimburse people. Currently the law says that if an employee is off more than 5 consecutive or 5 cumulative within 20 days, there is no obligation to reimburse the worker and therefore, if the worker needs to use sick leave or vacation time, that is usually an option for them. They are forced, in a sense, to do that. That is what the law establishes in terms of the workers’ compensation system.
Senator Neal:
The compensation law is to have the employer not be held liable in the medical treatment of injuries sustained by an employee. Perhaps this should be made a State agency again.
Chairman Townsend:
The research under NAC 616C.150 talks specifically about the insurer shall reimburse an employee for cost of transportation if he is required to travel 20 miles or more and transportation only from his residence or his place of employment. I think that is governed by federal law.
Mr. Young:
In that regulation that you just cited, NAC 616C.150, it is the same rate that State employees receive. If it is thirty-eight cents a mile, I do not know, but I can check on that.
Chairman Townsend:
Reimbursement is for transportation only, not time. We will address this in subcommittee. Otherwise, we will take this directly to work session.
I now close this hearing on S.B. 268 and open the hearing on S.B. 292.
SENATE BILL 292: Revises circumstances under which Nevada Attorney for Injured Workers is required to represent injured workers. (BDR 53-784)
Senator Michael (Mike) A. Schneider, Clark County Senatorial District No. 11:
This is a consumer bill. My goal is to put more money into the pocket of the injured worker. The whole process of workers’ compensation is so complicated that an injured worker cannot work their way through the system properly without assistance. I feel that the State should demand the Nevada Attorney for Injured Workers (NAIW) do more in helping the injured worker. There is a fiscal note attached to this bill. It will be picked up by the businesses that employ workers.
Mr. Ostrovsky:
I am here to describe the public policy issue as I see it from an employer’s perspective. I started representing the workers’ compensation market for employers in Nevada in 1973. If there was an appeal, it frequently went before commissioners who would decide for or against on a particular issue involving a claim. Employees represented themselves. If they were part of a labor union, the union would employ representatives who assisted and appeared with the employee at hearings. It was much more informal than it is today.
Some years later, we introduced the concept of an appeals officer through the Department of Administration. Employees and employers were allowed to represent themselves before an appeals officer. In order to appear before the appeals officer, a person had to be a member of the Nevada Bar Association, that is, one had to be an attorney. Attorneys became involved with good reason. The hearings were subject to review by the district court and the record became very important. This legislative body decided the advantage was falling to the employers who would bring a lawyer to the appeals officer hearings to create a record. The employee needed representation. The Legislature decided to give injured workers the use of what was formerly known as the State Industrial Insurance System’s (SIIS) attorney, and is now called the NAIW.
Nevada Attorney for Injured Workers provides legal counsel. Employers pay for this legal counsel through an assessment process. The budget for this office emanates from the Division of Industrial Relations. The injured worker has a choice to either use the free services of the NAIW, or seek private legal counsel. There is a requirement in the law that the employee be notified of those choices at the time appeals claims are filed at the hearings officer level. No percentage of the claim recovery goes to the NAIW attorney. The worker would get 100 percent of what he or she was entitled to receive under the law.
When an injured worker seeks private legal counsel, the attorney has to weigh the value of the case against the facts and issues. That attorney has a substantial monetary contribution to pursuing that case. Payment is made when the case is won. The employee is not charged up-front fees.
The State’s office does not have to weigh that risk. It gets its money regardless. The NAIW is more likely to take a case on appeal than a private attorney who must consider the monetary risks of potentially losing a case.
Senator Hardy:
You said one of the downsides to this is you will not have the attorney making any judgment on whether or not the case has merit. As I read it, the NAIW would also have the ability to make that recommendation. Are you saying it is more difficult for them to make that case?
Mr. Ostrovsky:
I am a firm believer in the right for employees to be represented by lawyers of their choice. Private lawyers are very helpful in settling issues. No one wishes to litigate forever.
Senator Hardy:
Under this bill, the NAIW has the ability to make a determination whether the case is frivolous or lacking merit, not about their ability to advise the claimant about expected compensation.
Mr. Ostrovsky:
Yes, the NAIW does make that determination.
Senator Hardy:
You indicated exclusivity required claimants to be represented by the NAIW. The wording reads “may.” The injured worker still has the ability to retain independent counsel.
Mr. Ostrovsky:
The word “may” means they do not have to have a lawyer, but if the injured worker does have one, they have to use NAIW.
Chairman Townsend:
What percentage of your cases goes to the hearings level, what percentage goes on to the appeals level, and then to the district court? What is your total budget? What percent of those on appeal are represented by private counsel versus NAIW?
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry:
We currently do not represent at the hearings officer level; however, once in a while we do represent a worker. That occurs when the appeals officer appoints us an injured worker who needs assistance at that level. Since the bypass procedure exists, we will bypass the hearings officer level and consolidate the two cases we are already representing at the appeals officer level. On occasion, the opposing attorney does not agree and this is the reason we conduct a hearing at the hearings officer level. It is not a full hearing. The trial level is where entire evidence is presented at the appeals officer level. We appeal 2 percent of our cases from the appeals officer level to the district court and about 0.7 percent go to the Nevada Supreme Court. We handle about 41 percent of all cases at the appeals officer level, which means we do not handle 59 percent. Private attorneys handle most of those. A few injured workers insist on representing themselves.
The reason for the huge nature of our fiscal note is because S.B. 292 contains issues which may create a problem with representation of an individual. The NAIW needs to know the facts, the legal concerns, and the medical issues in order to properly represent an individual. We do not simply give advice based on generalities. We are appointed counsel at the trial level. Presently, our duty is to put the argument of the worker into an understandable, legal format. I have submitted a nonexecutive agency fiscal note (Exhibit E).
Senator Neal:
How would that differ from the request of going to the hearings officer or the administrator under the present statute?
Ms. Leeder:
We are appointed by the appeals officer upon written request of the worker. The burden is to take the request and administratively make the appointment.
Senator Neal:
They do not do any investigation?
Ms. Leeder:
No. Since 1983 it has not been necessary for there be an investigation prior to our being appointed.
The second reason for the huge nature of our fiscal note is because we handle claims in addition to appeals. I do not know how many claims there are at the present time. Each insurer has those records. In order to procure some dollar figures, I used the number of appeals made to the hearings office from the hearings division.
Chairman Townsend:
You made reference that the NAIW has appointed legal counsel to approximately 41 percent of all cases Statewide. What is your current budget for that?
Ms. Leeder:
Currently the existing budget is $2,500,000. The next reason for the huge nature of our fiscal note is for the removal of discretion and the requirement to take the case to district court or the Nevada Supreme Court. The existing statutes dictate we present the case in district court or the Nevada Supreme Court. The Nevada Attorney for Injured Workers dictates if the appeal has merit or not. This is a different standard than one which continues to exist in appeals, which is whether or not a case is frivolous or lacks merit. To determine a case as frivolous requires a great deal of research. It requires that no cognizable legal argument be made in support of whatever position the injured worker is espousing. The fourth part is representation at the vocational rehabilitation buyout stage.
Senator Neal:
Is the appeal a de novo hearing?
Ms. Leeder:
Yes, the appeals officer level is a de novo level.
Senator Neal:
You are not bound by the facts of the hearings officer?
Ms. Leeder:
That is correct. The problem with representation at the vocational rehabilitation buyout level is we may know nothing about the case. If we are representing, as opposed to merely giving advice, then we need to know about the case before we can advise as counsel.
Chairman Townsend:
We will put this hearing in abeyance while we identify and address several bill draft requests (BDRs).
BILL DRAFT REQUEST 54-472: Makes various changes relating to veterinarians. (Later introduced as Senate Bill 427.)
BILL DRAFT REQUEST 58-1286: Establishes statewide procedures for approval of applications for construction of facilities for personal wireless communications. (Later introduced as Senate Bill 426.)
BILL DRAFT REQUEST 22-1270: Revises provisions relating to composition of membership of redevelopment agency. (Later introduced as Senate Bill 424.)
BILL DRAFT REQUEST 53-476: Makes various changes relating to unemployment compensation benefits. (Later introduced as Senate Bill 423.)
BILL DRAFT REQUEST 52-1071: Revises certain provisions relating to operation of service stations by refiners. (Later introduced as Senate Bill 422.)
BILL DRAFT REQUEST 58-442: Makes various changes relating to utility service and powers and duties of the Consumer’s Advocate of Bureau of Consumer Protection in Office of Attorney General. (Later introduced as Senate Bill 421.)
BILL DRAFT REQUEST 54-530: Makes various changes relating to pharmacy. (Later introduced as Senate Bill 425.)
BILL DRAFT REQUEST 54-471: Makes various changes regarding certain state agencies that regulate real estate practices and professions. (Later introduced as Senate Bill 428.)
Senator Shaffer moVED to INTRODUCe bdr 54‑472, BDR 58‑1286, BDR 22-1270, BDR 53-476, BDR 52‑1071, BDR 58-442, BDR 54-530, and BDR 54-471.
Senator Hardy secondED THE MOTION.
THE MOTION CARRIED. (Senator O’Connell and senator Carlton were absent for thE vote.)
Let us continue this hearing on S.B. 292.
Mr. Thompson:
I am neutral on Senate Bill 292. If this bill is processed, ensure there will be adequate funding to make the changes so injured workers are fairly represented.
Chairman Townsend:
There was testimony at one time that approximately 90 percent of claims were resolved at the hearings level.
Mr. Thompson:
When SIIS privatized into EICON, the ombudsmen were moved to the Office of Consumer Health Assistance. They do not exist as individuals today, but that is where a person is referred if he or she calls with a complaint. I do not recall the number of claims that are settled at the hearings level, but the majority are. A claimant needs an attorney to go to the appeals level because if one appeals further than the district court, they only consider the case as it was up to that point.
Chairman Townsend:
It is the court of record. What percentage of cases is resolved at the hearings officer level?
Ms. Leeder:
According to the figures given by the hearings division, there are almost 12,000 requests made to the hearings officer level. There was an excess of 8,000 hearings. The hearings division projects an excess of 4,000 hearings at the appeals officer level.
Chairman Townsend:
The theory behind workers’ compensation is the employer and employee have each agreed to abandon certain things for the right to make resolution. Employees who are legitimately injured and have a legitimate claim should get appropriate medical care and get back to work.
I will now close the hearing on S.B. 292 and open on S.B. 388.
SENATE BILL 388: Provides for increase in compensation paid for permanent total disability. (BDR 53-794)
Senator Mark E. Amodei, Capital Senatorial District:
Senate Bill 388 boils down to money. I have a distant relative who received permanent total disability (PTD) designation in his late thirties approximately 20 years ago. The good news is that he is in the system now. He receives total disability. The bad news is that his wages were frozen. As the cost of everything goes up and workforce wages go up, people on PTD are faced with having their initial award continue unadjusted over time. Being young is not an advantage because a person has to make do with the settlement given at the time of judgment which could have taken place as much as 15 or 20 years ago. We Legislators have to look at our growing State and make a commitment to the disabled population, which has found itself in the very system we created with no mechanisms for adjustment to monthly income.
Senator Neal
Where do we get the money?
Senator Amodei:
The fiscal note on this has been requested and it is significant. One of the concerns with S.B. 388 is that it would have to be billed back to insurance rates for the employers. In order to generate that type of money, it would require a significant increase in those rates. Employers in this State are in a competitive situation for their revenues. It is built into premiums.
Senator Neal:
Would EICON be the source that would distribute the money?
Senator Amodei:
Yes, EICON would distribute the money.
Chairman Townsend:
If a claim were with EICON, then EICON would be the responsible party. If the claim were with a self-insured employer, then the self-insured employer would be responsible.
Mr. Thompson:
I support this bill. I remember under the old SIIS system when people were categorized based on the date of their injury. We had different starting and ending points. A bill would be introduced every now and then to give people who were injured an increase in their compensation. Today’s dollars are not going to meet tomorrow’s needs.
John E. Jeffrey, Lobbyist, Nevada Trial Lawyers Association:
The case made by Senator Amodei and Mr. Thompson says it all for me. I am here to support this bill.
Ms. Gruenewald:
I am here to support this bill for the same reasons that the others have stated.
Raymond C. McAllister, Lobbyist, Professional Firefighters of Nevada:
I stand in support of S.B. 388. People with PTD get paid 66 2/3 of what the average worker in this State makes. The Legislature has approved at various points in time, two increases to disability payments. They were lump sum amounts. The federal government allows for yearly increases to disabled veterans. If an increase is good enough for disabled veterans throughout the United States, it should be good enough for the disabled workers here in the State of Nevada. Senate Bill 388 is prospective, not retrospective, so it can be built into insurance premiums.
Chairman Townsend:
We have to deal with this in two separate discussions. The first is in regards to people who are currently called active permanent disability, and the second are to those who might be prospective.
Mr. Ostrovsky:
Section 2, subsection 1, is retroactive and needs to be recalculated. The concept of insurance is the employer pays a premium and the purpose of that premium is to pay for the injuries of employees. We cannot go back and recapture those premium dollars from employers. If we were to pass this bill into law, how do we fund it? Because it has all of the old SIIS claims, EICON would probably be impacted more than any other insurer, but it affects all insurers. It is difficult to project over a 50-year lifetime of a claim what that inflationary number might be.
Chairman Townsend:
How is the monthly stipend determined?
Mr. Ostrovsky:
The amount of the PTD award is based on the wages the individual makes at the time of the injury.
Chairman Townsend:
The amount is fixed. From the insurance perspective there is no actuarial setting, so recapturing rates is not possible.
Mr. Ostrovsky:
When we had self-insurance in 1982, it was fairly simple for the Legislature to decide that we were going to raise benefit costs. We socialized it because every employer in the State was required to have a policy that was bought from one place. Today, it is a much more complex issue because private industry with private dollars are involved. This is the fallout of a policy decision made 20 years ago.
Ms. Nelson:
This is a public policy decision. The effective date needs to be January 1, 2004, so that rates can be built in. Insurance companies will have difficulties in rating this because it is difficult to predict insurance. Insurance companies will be conservative in their premium setting.
Mr. Jayne:
I have concerns about this bill. We need to develop a way to address the fiscal impacts that could result from S.B. 388.
Senator Neal:
I do not see the retroactive nature of this bill. Where is that shown here?
Mr. Jayne:
Senate Bill 388 would require one to go back and calculate from a point in time forward to the current date what the increases would be.
Scott Young, Committee Policy Analyst:
Senator Neal, in section 2, it says that any claimant or dependent of a claimant who on July 1, 2003, is receiving compensation, etcetera, is entitled to this. It is retroactive in the sense that it applies to claims that occurred before the effective date of the act. I believe there are approximately 2400 pension claims that are open in our State workers’ compensation system. Those would all be entitled to the benefit of this, even though part of the operation of this is prospective in the sense that they only began to receive benefits starting on July 1, since it applies to a class that was established prior to July 1, it is retroactive in that sense. One other issue that I think has been touched on here is that those claims are generally reserved at the time they happen, and because this provision is not in effect when those claims, prior to July 1, 2003, occurred, they would to that extent be unfunded as far as the insurers were concerned and that is why we get the discussion of how would you come up with the money to pay for those particular people who had claims that occurred prior to July 1.
Senator Neal:
What makes using a percentage of wages retroactive?
Mr. Young:
It applies to a class of people who are in existence prior to the effective date of the act. Everybody who is injured prior to July 1, 2003, and there are approximately 2400 … the payment portion is prospective, but the bill is retroactive in the sense that it picks up a class of people who were not previously entitled to that benefit.
Senator Neal:
Mr. Ostrovsky, you used the word “socialized.” Is that supposed to be a frightening word?
Mr. Ostrovsky:
No, it is just a question of whether or not the cost is going to be absorbed by all the citizens of the State, or is it going to be a targeted benefit paid for only by the employer that caused the injury.
Vice Chairman Hardy:
I now close the hearing on S.B. 388.
Chairman Townsend:
We have just received our last bill draft request.
BILL DRAFT REQUEST 58-1072: Makes various changes relating to community antennae television systems and video programming services. (Later introduced as Senate Bill 429.)
SENATOR SHAFFER MOVED TO INTRODUCE BDR 58‑1072.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend:
I now open the hearing on Senate Bill (S.B.) 320.
SENATE BILL 320: Makes various changes to provisions governing industrial insurance. (BDR 53-600)
Mr. Ostrovsky:
Senate Bill 320 is an attempt to request the Legislature to make some policy decisions regarding workers’ compensation. This bill will require a number of amendments, which I have prepared (Exhibit F).
Sections 2, 3, 6, and 13 provide for external review of medical issues. This would provide that the appeals officer would refer medical issues to an outside reviewer, selected and licensed by the Division of Industrial Relations, a third party to make medical decisions rather than ask the judge to make those medical decisions.
Section 4 is conforming language.
Section 5 has a substantial amendment. It is about credentialing fees. Insurance companies are asking that they be allowed to recover third-party costs, not a fixed fee. If there is a credentialing service that charges a fee, we would like to be able to charge that back and pass it on to the physician.
Section 7 has been deleted in its entirety.
Section 8 addresses the issue of which guide should be used to determine permanent disability.
Section 9 is the largest policy decision of this bill. It is whether or not we should go back to using primary cause in determining what areas will pay for medical care that is not directly related to the injury. I am proposing that we go back to the language used prior to 1997 to determine what the relationship is between an injury and a preexisting condition not related to the accident.
Section 10 would limit what kind of automotive vehicles we could provide injured workers.
Section 11 addresses providing information regarding what a claim is about. We frequently get notices of appeals and we have an injured worker’s name and not much more. We believe we have the right to prepare for any hearing. This requires access to information.
Sections 14, 15, and 16 have been deleted from this bill. The remainder of this bill just gives guidance to State agencies on how to impose this law.
Lawrence P. Matheis, Lobbyist, Nevada State Medical Association:
I would like to be on record because one section is in direct contradiction to S.B. 163. This is the policy on panel fees. The reason policy fees were not banned in the past was because no workers’ compensation or managed care organizations were charged a panel fee. The EICON started doing this last January. That is why we do not fix problems until somebody has made one.
SENATE BILL 163:Revises provisions governing certain contracts with providers of health care. (BDR 57-683)
Chairman Townsend:
I now close the hearing on S.B. 320 and open the hearing on S.B. 240.
SENATE BILL 240: Revises various provisions relating to benefits payable to surviving spouses and children of certain police officers and firemen. (BDR 53‑696)
Ronald P. Dreher, Lobbyist, Peace Officers Research Association of Nevada:
I appear before you today on behalf of the families of the professional peace officers of our great State and on behalf of the Peace Officers Research Association of Nevada (PORAN), to request your support for S.B. 240. The need for S.B. 240 came to light after University of Nevada police sergeant, George Sullivan, was murdered at the University of Nevada, Reno campus, on January 13, 1998. Sergeant Sullivan told his wife, on several occasions prior to his death, that if anything ever happened to him while he was on the job that she and their children would be taken care of by the State. George and Caroline Sullivan have four children.
Subsequent to his murder, Caroline Sullivan was informed that if she were to remarry, George’s workers’ compensation benefits would cease after she received a small lump sum amount. However, if she did not remarry, she would receive George’s industrial insurance benefits for the rest of her life. If Mrs. Sullivan chose to remarry someday, she would be penalized by the State of Nevada by losing her benefits. Senate Bill 240, section 1, allows survivors to remarry without losing their industrial insurance benefits. Ironically, if Sergeant Sullivan had survived and had been permanently disabled, he would have received the same benefits without a remarriage penalty. Why does this not apply to the surviving spouses? The current system does not support the original intent of industrial insurance.
Senate Bill 240 corrects this inequity and provides stability and assurances to our surviving spouses. Senate Bill 240 is needed legislation. Every day, police officers are called upon to “protect and serve.” They are trained to enter dangerous and violent environments. They are trained to be the protectors of our communities. They are the soldiers on the home front fighting terrorism, vandalism, child abductions, murders, domestic quarrels, and every imaginable disturbance. That is their job. On behalf of the families of the professional peace officers of the State of Nevada, we ask for your support of this needed Legislation.
Senator Carlton:
I am married to a State peace officer. This bill will affect me, hopefully not, but not in any other way that it would affect anyone else in this State. I know the remarriage penalty does not exist in a number of other places, it just exists in State workers’ compensation. Senate Bill 240 would eliminate this penalty for policemen and firefighters, but it would not eliminate the penalty for anyone else under workers’ compensation that had a deceased spouse, such as a construction worker or highwayman.
Mr. Dreher:
That is correct. Policemen and firefighters, who are killed in the line of duty, are the focus of this bill.
Chairman Townsend:
Mrs. Sullivan, thank you for coming. It was never my intention when I introduced this to have to bring you back here and listen to this again. I admire your courage. Was there one other spouse that is affected by this bill?
Michael Gillins, Lobbyist, Nevada Conference of Police and Sheriffs:
To the best of my knowledge there is one other individual. She is currently in the process of being married.
Lynette Alexander, Reno Police Partners Network, and Reno Police Protective Association:
I am the wife of a 14-year Reno police veteran. My husband has survived three shootings. I am here in support of S.B. 240. I have seen my husband go through what most people simply watch on television. The general population does not know the ramifications and toll that a death of a spouse killed in the line of duty has on families.
Carolyn Sullivan, Families of Slain Officers:
I know that I visited with you individually, but I just want to tell you that when one becomes a single parent due to the death of a spouse in the line of duty, there are so many issues with which to deal. It is important to me and to George, when he was here, to raise our children in the right way. Our children are everything to us and they continue to be everything to me. My children are doing very well today. Truly I believe this is because I am available to my children. I continue to work part time, as I did prior to George’s death, but I do not have to work full time. I am home and there for the children. I urge you to consider this legislation very diligently. It is important to these young people we are raising.
Mr. Thompson:
“I want to go on record as in support of this bill.”
Mr. McAllister:
I am here in support of S.B. 240. People ask all the time why firefighters and police officers do what they do. It makes it a lot easier to answer that question if you think that no matter what happens, your family will be taken care of. A good portion of firefighters and police officers hired today are young. It would be unfair if a firefighter or police officer were killed in the line of duty and their spouse was equally young, then had to make a decision about whether or not to remarry based on whether or not they were going to continue to receive a workers’ compensation benefit.
Mr. Jeffrey:
I agree with this bill. The question I have is in regard to a person killed on the job, whether policeman, firefighter, or otherwise, what the fiscal impact would be? This Legislation should extend to all workers killed on the job.
Senator Neal:
When these death-on-the-job incidents are funded, is it for the life duration of the surviving spouse?
Mr. Jeffrey:
The reserves are established and redistributed according to an actuarial process. With the percentage of people who are killed on the job in Nevada, this will not involve a very big premium increase to cover the funding problem.
Senator Neal:
Does this apply to construction workers killed on the job?
Mr. Jeffrey:
Yes, as far as the reserves are concerned.
Ms. Gruenewald:
Last time this bill came up I brought a client as a witness, Mrs. Eloise Ritter. I did not bring her today, but her husband was a deceased firefighter. She was in her late forties when he died. She established a relationship with a significant other and could not marry him because she would have lost her benefits. He subsequently died. The testimony she would have given today was that it was an emotional decision for her not to marry him because the sole reason was she would have lost her benefits. To improve the quality of life for these surviving spouses, she and I support S.B. 240.
Mr. Ostrovsky:
I need to go on record regarding S.B. 240 that this is clearly an actuarial matter. I believe the increased cost of this bill on an individual claim basis is about $640,000 over the cost of an initial 20-year life of a claim. There may be a number of widows that did not remarry and continued to collect the benefit. We do not have many claimants on this matter, but it still is a high cost.
Kami Dempsey, Lobbyist, City of Las Vegas:
The incident rate is low. We are still gathering information and will present it at the time of the work session.
Ms. Nelson:
The EICON does not have a position on this bill. It is a benefit increase that would need to go into effect in January 1, 2004, so it can be built into the rates. My concern is the retroactive application of these benefits and how they are funded.
Jim Fry, Workers’ Compensation Analyst, Risk Management Division, Department of Administration:
We did put in a fiscal note and you should have it on the bill. We have one claim for a death and the widow received benefits. In reading this language, I do not see the terms “peace officer,” and “firefighter” defined. Since it is in NRS 616, I do not believe there is a definition. Nevada Revised Statutes 617 contains the language and it reads that a firefighter could be an inmate that is assigned to a conservation crew.
Ms. Nelson:
My comment is that Mr. Fry is correct. This adds to the policy concern that Senator Carlton brought up about limiting this to policemen and firefighters. Do we want to expand this to all workers’ compensation?
Ms. McKinney-James:
Mr. Fry has hit upon the very point that I wanted to raise on behalf of the district. The citation that I have is NRS 617.135.
Chairman Townsend:
Nevada Revised Statutes 617.135 addresses police officers and firefighters killed in the line of duty. In the new language we do not mention that at all. Is that defined or is that an assumption once it goes into this section?
Ms. Nelson:
This is a benefit provided under the workers’ compensation statute, NRS 616 A through 616 D, and NRS 617. It is presumed to be in the line of duty or in the course and scope of work.
Chairman Townsend:
If you look at page 2, line 10, the current statute under NRS 616C.505, if an injury by an accident arising out of and in the course of employment causes the death, does that apply to anyone injured on the job?
Ms. Nelson:
If you are talking about death benefits in general, then yes, that is correct.
Chairman Townsend:
“In the line of duty” means that the person is employed and is performing their scope of duty. We are narrowing this definition.
Ms. Nelson:
“In the line of duty” translates to “arising out of the course and scope of duty.”
Jim R. Jeppson, Lobbyist, Washoe County:
I have testified previously on the financial impact of S.B. 9 regarding public agencies for this group of benefits that are available for public safety officers. I spoke about unfunded liability facing Washoe County. We are ill equipped to face these types of budget deficits. I ask that we look at ways to help the public entities offset the costs for these programs or in some way spread the cost of these programs among the insurance base. We are increasing the charge of worker’s compensation to the sheriff’s department from $1100 per person to $2500 per person. Excess insurers are refusing to cover public entities in Nevada because of the huge exposure faced by the public safety benefits. We are being required to increase our deductible from $500,000 per claim to $2,000,000 per claim.
Chairman Townsend:
There have to be ways to exhaust all creative ingenuity regarding funds.
Ms. McKinney-James:
Let me point out it is unusual for school police to be included in the definition of police officers and firefighters for this kind of coverage. The reason for the reference to the statute regarding that definition is if that language were in section 1, the school district would not have an interest in the measure.
Dan Musgrove, Lobbyist, Clark County
I will echo the comments that came before me.
Paul H. Aakervik, Lobbyist, Public Agency Compensation Trust:
I have to reserve some of these claims. We have done a fiscal note on the actual death claims of police officers and firefighters. I have submitted testimony that I will not read at this time (Exhibit G). I am not advocating for or against S.B. 240.
Chairman Townsend:
I now close this hearing on S.B. 240. There being no further matters, this hearing is now adjourned at 10:27 a.m.
RESPECTFULLY SUBMITTED:
Johanna Downey,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: