MINUTES OF THE ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT Sixty-eighth Session February 21, 1995 The Committee on Labor and Management was called to order at 3:30 p.m., on Tuesday, February 21, 1995, Chairman Saundra Krenzer presiding in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Ms. Saundra (Sandi) Krenzer, Chairman Mr. Dennis Nolan, Chairman Mr. David Goldwater, Vice Chairman Mr. Lynn Hettrick, Vice Chairman Mr. Bernie Anderson Mr. Douglas A. Bache Mr. John C. Carpenter Mr. Mark Manendo Mr. Brian Sandoval COMMITTEE MEMBERS ABSENT: Mr. Pete Ernaut - Excused GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: Mr. Vance A. Hughey, Senior Research Analyst Mr. Fred W. Welden, Chief Deputy Research Director OTHERS PRESENT: Kevin Higgins, Director of WCFU Danny Evans, OSHA Eric Cooper, Las Vegas Chamber of Commerce Amy Halley, Las Vegas Chamber of Commerce and Nevada Retail Assn. Pat Coward, Nevada Bell and Nevada Retail Assn. Tom Grady, Nevada League of Cities Paul Aakervik, W.R. Gibbens Chairman Krenzer introduced Mr. Kevin Higgins, Director of Workers' Compensation Fraud Unit (WCFU). Mr. Higgins began with an overview of his department. (See Exhibit C). As of December 1994, WCFU had received 2,110 requests for investigations, made 132 arrests, opened 162 prosecutions and sustained 101 convictions. In the ten years SIIS was handling it, there were 12 -15 convictions. The total monies saved and imposed include $4 million plus in fines, fees and premiums plus SIIS reserves of $1 million for a total of over $5 million. The caseload continues to grow, with the number of cases being handled limited only by available investigators and prosecutors. One of the primary goals of the unit is public education. Deterrents are one of the major things the unit has to offer. SIIS has told WCFU total premiums are up and total claims are down, so it is Mr. Higgins' assumption the arrests, convictions, and fines are affecting the overall picture. The majority of the funding for their unit came from a premium increase in SIIS premiums and fees charged to self-insured employers by DIR. Mr. Higgins referred to his department's proposed legislation for A.B. 59, which would be heard later in the meeting, stating they were asking for some discretion and changes in penalties. He briefly touched on BDR 53-626 pointing out it had been sent to them, they made some corrections and sent it back to LCB, and it will be submitted on the Senate side. He noted they asked for the authority to collect fines, fees and assessments. Chairman Krenzer asked if Mr. Higgins would address the fiscal issues and as the BDRs came before the committee, they would address them individually. Assemblyman Anderson queried what the reaction of district court is, having these cases come before them from the unit versus the district attorney. Mr. Higgins replied the reception was fairly good. In Clark County, the cases are prepared and filed by the district attorney, whereas up north, WCFU can take care of the process. Chairman Krenzer inquired how the amounts in the reserves column in the Statewide Revenue Impact graph were calculated. Mr. Higgins answered when somebody is injured, money has to be reserved for their lifetime care, which includes paychecks and medical treatment. If a person is convicted of fraud and fined, the money goes back into the system, the debt is reduced and SIIS becomes more solvent. Chairman Krenzer asked what the penalties and premiums column was composed of. Mr. Higgins explained this was the total amount of fines assessed by SIIS and levied on employers convicted of not paying their premiums. Some of these fines are not collectible and that is why WCFU is asking for the authority to collect them. Chairman Krenzer questioned what was collected in SIIS Restitution and Reserves in 1994. Mr. Higgins responded he did not have that information, but SIIS has indicated they would provide it. Chairman Krenzer asked the research staff to request the information from SIIS. Mr. Higgins said it would be hard to determine actuals because if a person is on probation they have two to three years to pay back the monies and if they do not pay they go to jail. Mr. Anderson inquired if the fines are separated into employer or employee categories in terms of the fines and if there are payment plans for employers also. Mr. Higgins replied they are currently running about one-third employer and two- thirds claimants in both arrests and convictions, and yes employers are allowed a payment plan. Assemblyman Bache asked about medical fraud. Mr. Higgins said he would provide a spreadsheet showing the breakdown of employer, employee and provider fraud. There are only six or seven provider cases under investigation as opposed to the one-third, two-third employer/employee ratio. Assemblyman Sandoval questioned if employees want to settle or fight when they have been caught. Mr. Higgins stated about 10 percent will go to a preliminary hearing, but most plead guilty and do not go to court. Assemblyman Nolan asked if there was any mechanism in place for hearing or appeal officers to report fraud to WCFU. Mr. Higgins said there was no formal procedure to do that. Mr. Nolan then suggested they might try to include that in a statute. Mr. Higgins concurred. Mr. Anderson commented, clearly, one of the positive things to come out of S.B. 316 was the creation of WCFU and he wanted to commend the department on a job well done. As there were no further questions of Mr. Higgins, Chairman Krenzer opened the hearing on Assembly Bill No. 59. Assembly Bill No. 59 - Makes various changes to provisions governing investigation, prosecution and punishment of crimes related to industrial insurance. Mr. Higgins began his testimony by asking the committee to refer to page four of the proposed legislation. (See Exhibit C). These are technical amendments, which are divided into three sections. The first section amends NRS 616.640 to give WCFU discretion in some charging decisions. Currently, the statute makes it mandatory to charge the employer who is taking money out of employees' paychecks to pay for SIIS premiums even if they do not have sufficient proof for trial. The added two lines (a) and (b) would ensure they had someone to testify and evidence of a violation. Section two differentiates between a felony and a misdemeanor. Last session, S.B. 316 bumped claimant fraud from a misdemeanor to a felony, no matter what the price. This amendment would make anything under $250 a misdemeanor and anything $250 or over a felony. This would give WCFU discretion in charging and make some cases easier to plea bargain. Section three concerns subpoena authority. Even though S.B. 316 gave the department great latitude in subpoenaing records, WCFU would like to amend the statute so they can subpoena records without notifying the target of the investigation. Assemblyman Carpenter asked if the Section one amendment put the burden of proof on the employee and would it make it harder to make a case. Mr. Higgins replied it would make the prosecution easier and would eliminate the problem of an employee using the statute to get even with an employer. Mr. Carpenter felt the language of the amendment might work against the progress of a case if no witness would come forward. Mr. Higgins responded he was not against changing the wording of the amendment. He would like the intent to remain the same as many times his department is getting cases to prosecute that they cannot prove. Assemblyman Hettrick expressed he understood Mr. Carpenter's point that S.B. 316 was meant to prosecute people that were defrauding the system. He would suggest the wording is not going to be a problem, their record will speak for itself. Mr. Hettrick felt the intent of the amendment was to avoid having the fraud unit prosecute cases when they know full well they have no evidence to win, as they have to now under the current statute. He inquired if WCFU could eliminate line (a) regarding testifying and just use the second line (b) that states they must have proper and substantial evidence as there appears to be a double limitation to this statute. Mr. Higgins suggested they change the word "must" to "may" in line 11 and eliminate line 14 (a) altogether. Mr. Hettrick agreed, then questioned whether they needed (a) and (b) at all. Mr. Anderson stated he had some problems with the changes. He feels there is some inherent danger of weakening the statute by adding this language. The statute was passed so it was mandatory to find and prosecute fraud cases and eliminate discretion in that area. Mr. Higgins agreed with Mr. Anderson that their job is to prosecute fraud cases, however, the statute as it reads now states if someone calls anonymously and simply says John Doe Company is charging me and hangs up the phone, WCFU must prosecute that company because they have some evidence. WCFU would like enough evidence to make prosecution realistic. Mr. Higgins suggested changing "must" to "may" in line 11 and taking out substantial in line (b). Mr. Hettrick pointed out leaving the word "must" in line 11 and dropping line 14 altogether would clarify what is proper and substantial. Chairman Krenzer stated she felt the committee had an amendment to A.B. 59, Section 1, subsection 3 which would read: Any employer violating any provision of this section must be prosecuted by the attorney general upon complaint of any employee who [submits]: (b) as determined by the attorney general, submits proper and substantial evidence of a violation. She then inquired if defining monetary amounts for misdemeanor and felony meant WCFU was hoping to get more convictions. Mr. Higgins testified more people would plead guilty to a misdemeanor than to a felony and some people do not deserve a felony for what they have done. Chairman Krenzer asked if there was any more testimony in favor of or opposition to A.B. 59. As there was not, she closed the hearing on that bill and opened the hearing on A.B. 60. Assembly Bill No. 60 - Makes various changes to provisions governing reporting and investigation of certain accidents occurring in course of employment. The first to testify in favor of A.B. 60 was Danny Evans, Chief Administrative Officer of Occupational Safety and Health Enforcement (OSHA). He would like to see language added to Section 1 which would compel people to leave the accident scene untouched until investigators could arrive and assess the situation. Mr. Nolan inquired if Section 2, Subsection 1, Line 8 of the proposed amendment might be in conflict with the Federal OSHA standards, which are adopted straight across the board by the state. Mr. Evans replied Section 2 is the new federal requirement. He referred the committee to his proposed amendment (Exhibit D) which recommends any accident must be reported orally, deleting "or in writing to the nearest office" in lines 7 and 8 and adding "to the Carson City office" of the division within [48] 8 hours after the accident has occurred. He stated the agency has installed a toll free number to enable the accidents to be reported timely and also allow the investigators to respond to the scene before witnesses leave and equipment moved. Mr. Nolan agreed reducing the reporting time to 8 hours from 48 hours is employer-friendly as it frees the scene of an accident sooner. Assemblyman Goldwater asked if OSHA works seven days a week, 24 hours a day to respond to any accident which had to be reported within eight hours. Mr. Evans answered there were inspectors that could be called and sent out to the scene. Chairman Krenzer asked if there would be an objection to a time frame for response being added to the amendment and what did the current law require. Mr. Evans said the current law was unclear and it would be reasonable to add a time frame for response unless the accident occurred in the rural areas. Mr. Bache called attention to the fact in the new amendment there was no longer a requirement to file a written report and he feels that could be a problem. Mr. Evans said there was a requirement under the OSHA 200 law that a written report follow up. Mr. Carpenter declared the new amendment allows removal or dismantling of equipment only to the extent necessary to free someone who is trapped, but does not address the issue of safety for other people. He feels there should be some time limit in effect so equipment can be moved if it is a safety hazard. Mr. Hettrick questioned who makes the determination of what is likely to result in a fatality as specified in line 4 of Section 1 which states "if any accident.... results in or is likely to result in the fatality of" and what happens when a person is injured but not considered likely to be a fatality and later dies. Mr. Hettrick, although he agreed with the intent, felt the amendment needed tighter language. He also voiced his concern with Section 1, Subsection 3 where it states the employer shall make available for questioning any person....determined by the investigator to be necessary for the completion of the investigation...Mr. Hettrick wondered if the accident occurred on Christmas eve, would the employer make the employee stick around if he did not know whether this would be a fatality or not because he might be breaking a law. Based on the concerns voiced by the committee, Mr. Hettrick felt a subcommittee should be formed to further discuss this amendment. Mr. Evans stressed basically all his department wanted was the earliest notification possible of an accident and the site maintained until they could arrive. They would not delay releasing equipment back to the employer any longer than absolutely necessary as has been demonstrated in the past years. Mr. Anderson inquired if OSHA had problems with employers denying access to employees who might be germaine to the investigation. Mr. Evans responded yes and no, as they have suspected the employer might not have totally cooperated but could not prove it. Mr. Anderson then asked how would the employer necessarily know who was at the site of an accident and would he hold everyone at the site or conduct a screening process prior to letting them go. To which Mr. Evans responded, the employer would usually know who was assigned to that task and not everyone would need to be interviewed at that moment. They would like the people to be present but that was not always possible. Mr. Evans stated the new language in Section 1 was borrowed from the state of Washington, where it has worked very effectively for a number of years. Mr. Evans declared his department would be more than willing to sit down with a sub- committee to work on the language of the amendment as they felt it would definitely help them in their investigations. Chairman Krenzer asked if there were any more questions for Mr. Evans, if not, they would proceed with testimony in opposition to A.B. 60. She called Mr. Eric Cooper to come forward. Mr. Eric Cooper, representative of the Las Vegas Chamber of Commerce, said he was concerned with response time to accidents. He noted the wording of Section 1, Line 17 would appear to require the employer to keep witnesses and employees at the scene until the investigators respond, this would not be practical if the response time was going to be several hours. He would like to hear more from OSHA on that subject. Another area of concern was the closing of a business affected by the accident while the investigation continued. He concluded by saying he was not unmindful of the necessity of a thorough investigation but he is concerned with the effect it would have on the surrounding area, the citizens of the area, and the employee. He asked to have some questions answered along these lines. Ms. Amy Halley, representative of the Las Vegas Chamber of Commerce and the Nevada Self-Insurers Association, stated most of her questions had been raised by the members of the committee but she would be more than happy to sit with a subcommittee for further discussion. Mr. Goldwater disclosed he was related to Ms. Halley. Mr. Pat Coward, representative of Nevada Bell and the Retail Association of Nevada, testified both groups had no problems with the intent of the bill however they shared the same concerns regarding the wording of "...is likely to result in the fatality..." of Section 1, Line 4 and Section 1, Line 17 and 18 "...make available for questioning any person ...". He feels if the employer is required to report in eight hours then the agency should respond in like time. He said he would be happy to work with the committee to make the language more reasonable. Mr. Anderson observed the eight hour time frame would probably not be a problem in the two urban areas in the state, however it could be a problem if an accident occurred in one of the rural areas. Mr. Tom Grady, Nevada League of Cities, testified he agreed with the intent of the bill but also felt the language was too loose. He was bothered by the toll free number as he could foresee a liability situation if the employer said he called the number and the recorder was down. He suggested perhaps the phones should be manned 24 hours a day, although that would be a real expense. He agreed this needs to go into a subcommittee so more questions can be answered by more people. Mr. Paul Aakervik, Account Executive with W.R. Gibbens, was the next to testify in opposition of A.B. 60. He related an experience he had a few months ago when someone reported to him a person suffered a heart attack on the job, which was not considered an industrial accident but probably should be reported. Since it was the end of the day, Mr. Aakervik called the Reno OSHA office the next morning who referred him to the Las Vegas office. He spoke to three people in the Las Vegas office before being connected with the correct person who informed him he was late in reporting and could be fined. He hopes if there is an 800 number, it is listed clearly in the phone book so the eight hour time frame can be met. Mr. Anderson inquired if Mr. Aakervik had never had an industrial death accident in his experience. Mr. Aakervik responded he had never personally had to notify OSHA before. Mr. Anderson further inquired if Mr. Aakervik's organization knew the process to report a death. Mr. Aakervik replied he knew to call the OSHA office, the problem was the office could not find the person to report it to. Chairman Krenzer asked for further questions, as there were none, she closed the hearing on A.B. 60. She declared a subcommittee would be formed comprised of Mr. Goldwater, Mr. Hettrick, Mr. Nolan and Mr. Anderson. (Mr. Sandoval was included after adjournment.) As no further business was brought before the committee, the meeting was adjourned at 5:00 p.m. RESPECTFULLY SUBMITTED: Susanne Mund, Committee Secretary APPROVED BY: Assemblyman Saundra Krenzer, Chairman Assemblyman Dennis Nolan, Chairman Assembly Committee on Labor and Management February 21, 1995 Page