MINUTES OF THE ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT Sixty-eighth Session February 28, 1995 The Committee on Labor and Management was called to order at 3:30 p.m., on Tuesday, February 28, 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. Pete Ernaut Mr. Mark Manendo Mr. Brian Sandoval STAFF MEMBERS PRESENT: Mr. Vance A. Hughey, Senior Research Analyst Mr. Fred W. Welden, Chief Deputy Research Director OTHERS PRESENT: Mr. Raymond Badger, Nevada Trial Lawyers Assn. Mr. Jack Jeffrey, Nevada Trial Lawyers Assn. Ms. Barbara Gruenewald, Nevada Trial Lawyers Assn. Ms. Kay Ellen Armstrong, Nevada Trial Lawyers Assn. Mr. Danny Thompson, Nevada AFL-CIO Mr. Danny Evans, Chief Administrator, OSHEA Mr. David Going, Senior Industrial Hygienist, OSHEA Mr. Bill Huss, Attorney Mr. Raymond Badger, member of Nevada Trial Lawyers Assn., stated he was going to give an overview of what has happened since S.B. 316, present proposals for this year and address the proposals of various interest groups he felt would be a problem. He stressed the injured worker does not deserve any more major benefit cuts as outlined in Summary of Benefit Cuts from S.B. 316. See (Exhibit C). Briefly, these cuts consisted of: reduction in TTD, rehabilitation and PPD, limitation of reopening certain cases and filing stress claims, restricted choice of physicians, time limits on vocational rehabilitation, and vocational rehabilitation not available out of state. Mr. Badger pointed out S.B. 316 abolished or amended 11 Supreme Court cases. Assemblyman Carpenter asked if the six percent cut for TTD and rehabilitation was every year. Mr. Jack Jeffrey of the Nevada Trial Lawyers Association interjected it was not a decrease every year, but there was no increase allowed as the TTD rates were frozen from 1993. Assemblyman Ernaut inquired what the average increase was in that rate over a year's time. Mr. Badger replied he could supply the 1994 number, which would have been $2,996 per month without the freeze. Mr. Ernaut pointed out no one would have been affected in 1993 anyway because $2,820 was the maximum TTD rate. Mr. Ernaut questioned how stress claims were handled prior to S.B. 316, or if there were ever any stress claims processed. Mr. Badger replied there were never any specific laws regarding stress claims so SIIS dealt with it through general laws and yes, there were stress claims processed prior to S.B. 316. Chairman Krenzer disclosed she works for Sierra Health Care Options, a managed care organization, but feels she can participate in the discussion as she is neither advocating for nor against a position. Ms. Krenzer indicated it was her understanding stress related claims involved a one time incident. Mr. Ernaut remarked he was under the same impression. A discussion followed with Chairman Krenzer asking Mr. Badger to continue with his presentation while Mr. Hughey located that information for the committee. Mr. Badger began his discussion of proposals he felt could be a problem. First, there is a proposal that states if a worker removes a safety device and gets injured, their benefits are reduced by 25 percent. However, Mr. Badger had a client who lost his arm because his employer modified a machine; the employer was fined $500 and the employee got nothing, could not even sue. He maintains if there is going to be fault levied, do it on both sides. At that point, Chairman Krenzer recognized Mr. Hughey. He recited from NRS 616.5019 which stated "...except as otherwise provided in this section, an injury or disease sustained by an employee that is caused by stress is compensable pursuant to the provisions of this chapter... if it arose out of and in the course of his employment ...an injury or disease caused by stress shall be deemed to arise out of and in the course of employment only if the employee proves by clear and convincing medical or psychiatric evidence that: (a) He has a mental injury caused by extreme stress in times of danger; (b) The primary cause of the injury was an event that arose out of and during the course of his employment; and (c) The stress was not caused by his layoff, the termination of his employment or any disciplinary action taken against him." Mr. Badger continued stating the second problem proposal disallows reopening of claims for five years. He felt this should not be so finite as there have been circumstances where reopening is a necessity. Mr. Badger expressed concern at another proposal he read which limits or discontinues lump sum PPD payments. This is a two-fold problem as the lump sum is usually used by claimants to catch up delinquent bills, and it is under limited survivorship, which means if the claimant dies, the family does not receive the benefit. Finally, there is a proposal to apply vocational rehabilitation laws retroactively. He felt this is not only unconstitutional but violated some real basic principles of fairness toward the employer who paid for one thing but would receive something different. Ms. Barbara Gruenewald of the Nevada Trial Lawyers opened by stating the positive aspects of S.B. 316. She said the seven year plan which started in 1993 appears to be working as in the last two years SIIS has recouped $141 million. She asked the committee to continue to let this bill work, to continue to let it cure the financial problems of SIIS and not make any more changes to it. Ms. Gruenewald explained the proposals of the Nevada Trial Lawyer Association are composed of six areas: PPDs, Stays, Hearings Officers, MCOs, Wage Base and Mental/Physical Injury. See (Exhibit D). She would like to see a regulation codified that every insurer shall provide the claimant with a copy of the PPD written report upon receipt; if no stay is granted within 30 days of the hearings officer's decision, the insurer must comply with that decision; the hearings officer be appointed by the Governor for a two year term; MCO hearings must comport with due process standard; the claimant should be given exact basis of calculation and notice that one year's wages can be used; and, if an employee suffers permanent mental or physical impairment as a result of being a victim of crime at the place of employment, that employee is entitled to permanent partial disability. Mr. Carpenter inquired if the use of outside counsel for SIIS has dropped off or increased since S.B. 316 and if those attorneys present had seen an increase in SIIS caseloads. Ms. Gruenewald replied the appeals office kept records of how many claimants used attorneys but she did not know if they broke it down into private or NAIW and, personally, she had a lot more calls. Mr. Badger remarked two years ago at the appeal level, 75 percent of the claimants in northern Nevada chose the free attorney compared to 20 percent in southern Nevada. Mr. Carpenter questioned why the private attorneys were getting more business from claimants. Ms. Gruenewald responded, under S.B. 316, certain conditions, such as pre-existing conditions, stays and acceptance of claims, were created allowing insurance companies to deny claims and delay payment of benefits to claimants. Mr. Carpenter asked for clarification on stays. Ms. Gruenewald pointed out stays are used to stop a hearings officer's decision. Since the stay provision was deleted from the law in 1993, many decisions are not being complied with for as long as 90 days which, in turn, means the claimant has to employ an attorney to file an appeal with the appeals officer. Assemblyman Nolan asked if the rise in personal injury claims could account for the increase in the use of private attorneys. Ms. Gruenewald said she did not know because she strictly worked with worker compensation claims. Mr. Badger commented he got less calls now because of attorneys advertising on television. Ms. Kay Ellen Armstrong, private attorney, testified she was concerned about the delay in treatment and decisions. She had a client who initiated court action for an injury in March 1991 and was still in the court process trying to beat a stay in April 1994 when she committed suicide. She had another client who waited one year for an MRI. She stressed the lack of promptness increases expenses dramatically. Mr. Danny Thompson, representative of the Nevada AFL-CIO, stated he and Mr. Badger calculated some samples of lump sum distributions based on age, income levels and injury ratings. See (Exhibit E). He pointed out the monthly amounts were so small, it would be of greater benefit to the claimants to take the lump sum and do something with it. Mr. Ernaut noted if a person took the monthly amount it would be tax free money and could amount to much more than the lump sum. Mr. Badger agreed but stated the monthly amount was so low, it would be hard to meet expenses whereas the claimant could take the lump sum and pay bills or invest it himself. He just wanted the claimant to have a choice. Mr. Jeffrey interjected the point was the decision needs to remain optional. In the cases he has seen, by the time the worker gets the PPD award, he is usually behind in his mortgage and other bills for a number of months and needs the lump sum to catch up. Mr. Ernaut concluded the claimant could be forced to take the lump sum because of the lack of promptness in the system. To which Mr. Jeffrey replied it would depend on the financial position of the claimant. He reiterated his prior statement that the decision should remain optional. Assemblyman Anderson pointed out the tragedy was the PPD lump sum was usually eaten up trying to repay the bills that accumulated while waiting for the award because of the lack of timeliness. Mr. Jeffrey continued by stating one of the biggest problems he has seen was the tendency of the MCO's and SIIS to try to force the construction worker back to work too soon. There is no light duty in the construction business. It is the position of organized labor that if SIIS is going to be an insurance company of last resort maybe the premiums should be based on that and not punish the injured worker for what happens to the groups that leave the system. He stressed one of the most onerous things that happened last session and one he would like to see improved was the primary cause language of the pre-existing proposal. If a worker over a period of time develops a back problem from bending and stooping, he has to prove that injury was the primary cause of the disability. If there are any signs of arthritis, the claim is denied. The total injury is job-related, but because it happened over a period of time with maybe some traumatic injury at the end and it cannot be proved it is over 50 percent of the cause of the disability, the claim is denied. He concluded by saying the difference between the self-insureds and SIIS is the number of available providers. The system should work the same for all injured workers, no matter who they work for, and at the present time it is not. Chairman Krenzer opened the hearing on Assembly Bill No. 61. ASSEMBLY BILL NO. 61 - Expands authority of division of industrial relations of department of business and industry to impose administrative fine for violation of certain provisions relating to control of asbestos. Mr. David Going, Senior Industrial Hygienist for OSHA Enforcement, testified in favor of A.B. 61, which will allow the agency to impose an administrative fine on individuals that perform asbestos abatement activities without a license. Most illegal asbestos removal activities were done to save money, not because of ignorance of the license requirements. Under the existing statute, licensed individuals can be fined, whereas unlicensed individuals are only guilty of a misdemeanor. It has been Mr. Going's experience that county district attorneys are not interested in prosecuting this type of white collar violation, therefore he asked that his agency be given that authority. Mr. Anderson complimented Mr. Going on behalf of the committee for receiving an award from the Governor for bringing greater efficiency to his department. Mr. Carpenter commented he thought the asbestos abatement was finished. Mr. Going said the size of the projects and the number of people licensed have decreased. He pointed out most of the projects now are due to renovations. Mr. Carpenter asked if Mr. Going thought he could really collect from the unlicensed people or if the cost of man hours spent collecting would be more than it was worth. To which Mr. Going replied there was always a problem collecting but this was one way to make people comply with the law. Chairman Krenzer asked for a motion from the committee. ASSEMBLYMAN ANDERSON MOVED TO DO PASS A.B. 61. ASSEMBLYMAN ERNAUT SECONDED THE MOTION. THE MOTION CARRIED WITH ASSEMBLYMAN CARPENTER VOTING NO. Chairman Krenzer closed the hearing on A.B. 61 and opened the hearing on A.B. 62. ASSEMBLY BILL NO. 62 - Revises requirements for establishing quorum of occupational safety and health review board. Bill Huss, attorney, stated he would testify in favor of A.B. 62. He pointed out the OSHA review board, which meets monthly, is comprised of five individuals appointed by the Governor, two from Washoe County and three from Clark County. The current statute which requires one member from labor, one from management and, at all times, one member from the public at large to be present to conduct business causes a problem. Meetings can be set up with people scheduled to appear and if one of the required members cannot make it, the meeting cannot convene. He feels the amendment as presented would correct the problem and permit the board to conduct business in a more efficient manner. Mr. Ernaut inquired as to the current makeup of the board regarding the division of labor and management. Mr. Huss responded the statute requires there be two representatives from labor, two from management and one representing the public. Mr. Anderson pointed out, if this amendment was passed, a quorum might not have a representative from one of the three groups. Mr. Ernaut commented he understood the point to be the representative of the public always had to be present or there was no quorum and this amendment would change that. Mr. Huss responded that was correct. Mr. Nolan suggested the board dealt with specific issues so attendance at the meetings would be limited to people that were party to those issues. Mr. Huss agreed. Chairman Krenzer asked if there were any further questions. As there were none, she asked for a motion. ASSEMBLYMAN ERNAUT MOVED TO DO PASS ON A.B. 62. ASSEMBLYMAN GOLDWATER SECONDED THE MOTION. Mr. Carpenter stated he has a problem with passing this bill as it gives unfair advantage to management or labor. He feels he cannot support this bill as written. Mr. Nolan declared he concurred with Mr. Carpenter. Mr. Ernaut expressed support for the bill although he had reservations it could open up an opportunity for the balance to be tilted one way or the other. He felt it placed more responsibility on the members of the board to be at the meeting so that did not happen. He asserted the committee should not impede the review board from working by placing onerous practices on their ability to have a quorum. Mr. Anderson pointed out the only person being freed from the burden is the public representative. He feels those people who have a general interest are going to show up at the meeting. Assemblyman Sandoval suggested the peril of an imbalance already exists if two members of one group are at the meeting and only one from the other. It would basically be a distinction without a difference. Mr. Carpenter remarked he felt the board was set up to create a balance and this amendment would destroy that balance. He restated he could not support this bill as written. Mr. Ernaut elucidated on Mr. Sandoval's point by stating as it stands right now even if they did not pass the bill, if two labor representatives on the board showed up and only one management representative, there would already be a voting imbalance. In effect, if they passed the bill, nothing would be changed except the public representative would not be required to be at each meeting. Chairman Krenzer stated she felt it was incumbent upon the participants to maintain the balance. Assemblyman Manendo inquired how board members were notified. Danny Evans responded notification was done by mail backed up by phone the day before. Mr. Nolan commented he felt there must be a problem getting a quorum on the board or the bill would not be in front of the committee. He suggested the board should remain the way it is and an attempt should be made to bring the board into quorum in accordance with the way it is. Chairman Krenzer called for a vote. THE MOTION CARRIED WITH MR. NOLAN AND MR. CARPENTER VOTING NO. As there was no further business before the committee, the meeting was adjourned at 5:00 p.m. RESPECTFULLY SUBMITTED: Jennifer Carnahan, Committee Secretary APPROVED BY: Assemblyman Saundra Krenzer, Chairman Assemblyman Dennis Nolan, Chairman Assembly Committee on Labor and Management February 28, 1995 Page