MINUTES OF THE ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT Sixty-eighth Session May 23, 1995 The Committee on Labor and Management was called to order at 3:30 p.m., on Tuesday, May 23, 1995, Chairman Saundra Krenzer presiding in Room 119 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. Kevin Higgins, Director of Workers' Compensation Fraud Unit, Attorney General's Office Mr. Leonard Ormsby, General Counsel of State Industrial Insurance System (SIIS) Mr. Jack Jeffrey, Southern Nevada Building and Construction Trade Council Ms. Barbara Gruenewald, Nevada Trial Lawyers Association Ms. Cecilia Colling, Assistant General Manager of SIIS Mr. Dan Williams, Dare to Dream Network Ms. Barbara Castello, Dare to Dream Network Ms. Ruth Guyot Mr. Kevin Chadwick, Safety Officer for Washoe County Ms. Nancyann Leeder, Nevada Attorney for Injured Workers Mr. Sam McMullen, Nevada Self-Insurers Association Mr. John Taylor, Southern Nevada Association for Injured Workers Mr. Danny Thompson, AFL-CIO Chairman Krenzer stated she would like to begin the meeting by asking the committee to review the amendments just returned from the bill drafters on A.B. 554. She reminded the members action had been taken on this bill and if the amendment met with their approval the bill would be taken down to the floor. There were no objections. Ms. Krenzer said the first order of business before the committee would be to address A.B. 587. They would then hear A.B. 601 and end with the provisions of S.B. 458 which relate to the previous two bills. She called attention to a handout prepared by Vance Hughey, senior research analyst, for all the committee members. This will help to summarize and compare the workers' compensation reform proposals. See (Exhibit C). ASSEMBLY BILL NO. 587- Revises provisions regarding workers' compensation fraud. Kevin Higgins, Director of the Workers' Compensation Fraud Unit and senior deputy attorney general with the office of the Attorney General, testified. He submitted a comparison of the fraud provisions between A.B. 587 and S.B. 458. See (Exhibit D) . He stated for the most part, the provisions found in A.B. 587 are identical to those found in S.B. 458. There are a few minor wording changes and two or three sections added in A.B. 587 which are not contained in S.B. 458. Mr. Higgins proceeded to review the written document, section by section, pointing out the intent of each provision. Assemblyman Carpenter, referencing section 2, stated he is reluctant to allow somebody to keep and use fines they have collected. He is afraid the incentive to collect as much as possible is too great. Mr. Higgins replied this provision would only come into play if an employer had refused to pay the premiums and the penalties that SIIS had assessed. This would give the attorney general jurisdiction to go after him. This is found in subsection 1 of section 2. Mr. Higgins went on to explain this is not money his office depends on as far as their budget goes. They have a full budget and would not be depending on these funds. This would go into a fund they could use only if the interim finance committee approved it. The approval is a check and balance which would prevent any abuse. Mr. Carpenter stated he can understand the "amount equal to three times the total amount of the reasonable expenses..", but reiterated his concern with the amount being "not less than $5000". Mr. Higgins expounded this was a suggestion by someone on the Senate committee. He expressed his willingness to discuss this issue, stating he is not by any means locked into asking for this penalty if it is the will of the Assembly not to include it. Ms. Krenzer questioned what Mr. Higgins asked for originally. Mr. Higgins replied it simply stated, "a penalty" and then in another section which talked about suing providers there was a $5000 penalty. The intent was if the providers were going to be charged a $5000 penalty then the employers ought to have a parallel penalty to be fair. This was the logic on the Senate side where this language was originally worked on. Mr. Hettrick stated he concurs with Mr. Carpenter in the sense that some room must be granted for the attorney general to waive or modify some of these fines. To make the fine state "not less than" is acceptable if somewhere else it states the fine may be modified because the unusual will come up and perhaps it was not the employer who did something intentionally but he still did it. He knows it would be a rare case whereby the attorney general would enforce all the listed penalties in the bill and would administer it wisely but Mr. Hettrick stressed his recommendation the attorney general be given some flexibility to adjust. Chairman Krenzer asked if Mr. Hughey would work on drafting some alternative language which would display Mr. Hettrick's intent. Mr. Higgins proceeded with his presentation on A.B. 587, giving brief explanations of sections 5, 6, and 7. In regards to section 7, he recommended, after the word "chapter" on line 20, to insert "or has provided and secured such compensation but has failed to maintain that compensation." Assemblyman Anderson asked if in modeling section 7, increasing employer fraud penalties to gross misdemeanors and felonies, did the attorney general look at how it would impact other bills being considered, specifically in regards to prison capacity. Mr. Higgins explained he has talked to the bill drafters and depending on what penalty provision goes through here as opposed to S.B. 416, it will have to be reconciled between the two. The penalty, in all likelihood, would change to a one to five or one to four year penalty, as most fraud provisions in the entire NRS have been reduced to that. He summarized it depends on which bill goes through first. He also stated these are class D felonies. Mr. Nolan and Mr. Higgins discussed the intention of substituting the language of S.B. 458 into section 7 of this bill. Mr. Carpenter inquired if Mr. Higgins has had any convictions of either employees or employers resulting in a prison sentence. Mr. Higgins replied he has had one employee sent to prison based on his voluminous prior felony convictions. For the most part, Mr. Higgins explained, these people are not going to do prison time. They are viewed as white collar criminals, not as violent criminals. They are placed on probation and if they violate it, they will then be sent to prison. Other than that one employee, there have been no others sent to prison. Mr. Higgins explained misdemeanors do not mean anything to the types of companies that violate these laws on a regular basis. They do not care. The passage of this bill including the increase in penalties would give the attorney general an enforcement tool. Mr. Higgins further reviewed (Exhibit D), summarizing section 8 through section 19. He stated he is satisfied with the bill and it will enable him to enforce some things left out of the law, last session. Mr. Nolan inquired if Mr. Higgins had the opportunity to do a cost analysis on the expected savings of implementing these measures. Mr. Higgins answered there was an estimate made for S.B. 458 but not A.B. 587. It is difficult to anticipate prosecution recoveries but in regards to actual costs to the state, there will be very little from this bill. There might actually be savings. He told Mr. Nolan he would be happy to work up an estimate. Mr. Nolan stated being the differences between the two bills are small, the amount should be comparable. He asked what the calculated amount was for S.B. 458. Mr. Higgins replied, "At this point, through the end of December, we are accounting for about $5 million in savings. Not all of that is collected. On the other side, we anticipated an additional $1 million a year in savings, as a rough estimate that we could account for if these provisions were taken in." Chairman Krenzer questioned if there were any other questions from the committee. There were none. She stated she would now like Mr. Higgins to review only those sections of A.B. 587 that differ from S.B. 458. Mr. Higgins explained section 1 of A.B. 587 adds additional language. It simply states sections 2, 3, and 4 are new. Section 2 differs from section 9 of S.B. 458 by one provision on line 8 in A.B. 587. It says, "not less than $5000 for each failure to pay". The senate bill says, "$5000 for each act of deception". Mr. Anderson asked if Mr. Higgins would elaborate on where that language came from. Mr. Higgins replied the civil authority provided for by NRS 616.684 applies only to providers. This includes a $5000 fine for each act of deception. This provision was amended to include claimants. The language of the bill parallels this language to include employers. The thinking was if they are to fine providers $5000 for each act of deception, it was not fair not to fine everyone else. After some discussion between Mr. Higgins and Mr. Anderson, Chairman Krenzer concluded one of the suggestions is for the committee to amend section 9 of S.B. 458 into section 2 of A.B. 587. Mr. Higgins continued section 6 of A.B. 587 differs slightly from the Senate bill in wording only. The intent is the same. Section 7 also differs slightly from the Senate bill in that it lacks the language about failing to maintain compensation. There is a new subsection in the Senate bill, it includes "or maintaining" as well as "secure". Mr. Higgins reminded the committee they have discussed substituting this language into A.B. 587. Mr. Higgins referred to Mr. Ormsby to provide more information concerning the language provisions due to the SIIS having some concerns with section 107 of S.B. 458. He explained replacing the language in section 7 of A.B. 587 with the language in section 107 of S.B. 458 would solve the problem. Mr. Leonard Ormsby, general counsel of SIIS, stressed the concern comes from the Assembly bill which says the manager shall determine and assess up to a three times penalty. The Senate bill says the manager shall determine and may assess a penalty. SIIS's position is to give the manager discretion. Under the current statute, they have none. This would make it mandatory for them to determine whether there was a violation but discretion to assess the fine or not. Mr. Anderson wished to return to section 2 of A.B. 587 relative to section 9 of the Senate bill. He asked for clarification regarding the standard of bad faith. Mr. Ormsby opined he does not feel section 2 would alter the decision in Falline v. GNLV Corporation, 107 Nev. 1004, 823 P.2d 888 (1991), made by the Nevada Supreme Court which deals with extra contractual remedies. In the Senate bill there is a provision that would alter the liability of an employer, a third-party administrator, or an insurer but he does not see anything under A.B. 587 which would affect the exclusive remedy protection. Mr. Anderson asked if section 9 of S.B. 458, was adopted into A.B. 587, would that not bring it into question. He is concerned an insurance company could turn its back on doing the responsible thing because of a provision allowing for only a $5000 penalty. Mr. Ormsby reiterated section 9 deals with an employer and a remedy by the attorney general against the employer for assessing the fine and otherwise. It does not restrict, under the Falline decision as it stands today, the employee's right in certain circumstances to pursue a remedy outside the exclusive remedy. Mr. Ormsby followed up by stating he would agree with Mr. Anderson's concerns if the $5000 was the only remedy available for an injured worker but as he understands it, it is an additional remedy the attorney general brings. It does not exclude any rights an injured worker may or may not have under the existing law, the Falline decision, or the proposed new laws. Chairman Krenzer clarified any penalties assessed to an employer allowed by the provisions in A.B. 587, do not exclude the person from being able to sue. Mr. Higgins interjected the only thing this section was attempting to address was an employer who was not paying his premiums. Mr. Higgins proceeded to review. He stated section 9 of A.B. 587, is a new section, as well as section 13, and therefore do not parallel S.B. 458. In section 17 of A.B. 587, there are some wording provisions concerning the Contractor's Board that differ from the relative section in S.B. 458. He referred to Mr. Ormsby. Mr. Ormsby explained his concern stems from subparagraph 2 of section 17. The language is the same as section 128 of the Senate bill with the exception of the third line. There is a restriction which reads, "an applicant or holder of a contractor's license, who is subject to the provisions of chapter 616 of NRS..." Mr. Ormsby stated his concern is, since the issue is a notification procedure whereby the Contractor's Board will let people know if there is somebody operating without a license, it opens up a loophole. The Contractor's Board could say we did not know they were subject to the provisions of chapter 616, so we did not tell anybody. The System asks this proposal be deleted from the bill. Mr. Higgins concluded, calling attention to added language in section 18. It requires the records be brought in state if maintained out of state. He stated this is an improvement over the relative section of the Senate bill, section 129. Chairman Krenzer inquired if there were any further questions for Mr. Higgins. Being there were none, she opened the floor for public testimony on A.B. 587. Jack Jeffrey, representing the Southern Nevada Building and Construction Trades Council, testified. He said he has a problem with two sections of this bill. The first one is with section 2, lines 1 through 5. He believes it is currently being operated this way but his problem is with the penalties going to the fraud unit. He is concerned it may provide an incentive to "beef up the till". He believes the money collected should go to the general fund and then be distributed with approval from the money committees during each legislative session. The second problem is on page 3 beginning with line 7, if a criminal action is brought the claims are automatically cut off. He does not believe this is proper. Mr. Jeffrey opined the existing law has done the job and should be preserved. Mr. Hettrick asked for Mr. Jeffrey's opinion on how to handle the situation whereby benefits have been paid out and yet cannot be retrieved in the case of the person who is guilty. Mr. Hettrick wondered if there is any middle ground that can be reached. Mr. Jeffrey stated he believes the attorney general's office has a cause of action to go after someone who has fraudulently collected. His concern is with the worker who is legitimately injured and is caught up in the process on a technicality. By the time the worker is found innocent his family is in a financial mess. Mr. Hettrick expressed his doubt that many cases get to a criminal hearing whereby good cause does not exist. Barbara Gruenewald, representing the Nevada Trial Lawyers Association, wished to respond to Mr. Hettrick's question. She suggested a compromise might be allowing the medical benefits to continue. As far as the attorney general not going forward unless a case really exists, she called attention to a case she has first hand knowledge of. The trial had already begun when the judge dismissed it for lack of evidence. She stressed it is not always the case where it is an open and shut case because the action has been filed. Mr. Hettrick recognized Ms. Gruenewald's point but feels all of the other employers and employees should not suffer because there is someone criminally taking money out of the system and is ultimately proven guilty. He voiced his appreciation for her first suggestion for compromise. Mr. Jeffrey reiterated his concern this provision is contrary to the general law of being innocent until proven guilty. Mr. Nolan questioned approximately how many cases result in being thrown out. Mr. Higgins answered they have had one case out of approximately 130 convictions which they voluntarily dismissed. Every case he had has survived the probable cause test, meaning the justice of the peace bound the case over finding probable cause to continue. Mr. Ormsby remarked he has been on the job for about four and a half months. He reviews every case sent to the attorney general's office for prosecution, probably three a week at a minimum. These people are collecting benefits and working other jobs and he has no procedure to cut off those benefits. Mr. Ormsby explained after the attorney general's office has reviewed his investigation, completes any additional investigation necessary, and makes the decision to prosecute, then he would have the authority to stop paying benefits. He stressed the situation is not always going to black or white but, right now, because of the criminal justice system and the carefulness used to make sure there is probable cause, he supports this provision. Chairman Krenzer asked for clarification because she thinks SIIS does have just cause for terminating benefits if the person is out of compliance. Mr. Ormsby told her the manager may have discretion. He has been attempting to develop a procedure which will protect and give a person due process within SIIS which is totally separate from the action of the attorney general's office upon which SIIS simply responds. Mr. Jeffrey, referring to section 6, subsections 1 and 2, noted SIIS had asked for this remedy in a previous session. It states, "if an insurer determines that an employee has knowingly misrepresented or concealed a material fact to obtain any benefit or payment under the provisions of this chapter, the insurer may deduct from any benefits or payments due to the employee, the amount obtained by the employee because of the misrepresentation or concealment of a material fact. The employee shall reimburse the insurer for all benefits or payments received because of the willful misrepresentation or concealment of a material fact." The committee, at that time, added if the accusation was made and the subsequent appeal was not upheld then the injured worker was due $2000 which would be paid by the system to that employee. This was a remedy for benefits being cut off. In this bill, benefits are being cut before a person is found guilty of anything. Mr. Higgins reiterated the manager has time limits he has to abide by for the payment of funds. By the time the attorney general gets a conviction, the money and the person are gone. Ms. Krenzer stated she would still like more clarification. Mr. Ormsby clarified there is no policy at this time. There are two things that cause him problems. One is the 30 day time period following the filing of the claim. The other is a potential conflict between SIIS and the attorney general's office. This conflict arises when there are parallel investigations occurring. A discussion followed among Mr. Higgins, Ms. Krenzer and Ms. Colling concerning the existing procedures and the authority which would be provided for by this provision. Mr. Nolan inquired what action is available for an employee if the alleged violation is found to be a mistake. Mr. Higgins explained the longest time period a person could go without benefits is 20 days at the most, between the time they were arrested and the time a judge makes the determination that there is probable cause. He stated if the committee wants to compromise this by saying benefits can be cut off for no period longer than 30 days or until a probable cause determination is made, this would be satisfactory language to him. Mr. Nolan further inquired at what point would the attorney general's office suspend benefits. Mr. Higgins replied it is his belief the intent of the statute, as written, is the time at which an arrest is made. Assemblyman Sandoval asked if a person does not waive his right to a speedy trial, what is the time period between when a criminal trial must be set and the preliminary hearing. Mr. Higgins explained he must file information in district court within 15 days and then the arraignment is set. It is supposed to be 60 days but it could be months before the case goes to trial. Mr. Higgins offered there are cases pending two years in Las Vegas. Mr. Sandoval summarized benefits could be suspended in excess of two years. Mr. Higgins clarified they would go to trial tomorrow if they could, but requests for continuances by the defense are often the cause of these delays. Mr. Carpenter asked for clarification of the last sentence of subsection 3, section 6. Mr. Higgins explained this sentence is in there because SIIS is the insurer in this case and yet is not making the decision to cut the benefits off. This decision is the result of the criminal action being filed. The intent being the system should not pay the $2000 fine because it was not their discretionary decision and it would not be fair to assess them. They should only be responsible for the benefits plus interest for the time the employee was not paid. Mr. Hettrick suggested if the attorney general is going to retain the money and not revert it to the state general fund then they should move the $2000 to the individual, if it is an improper criminal action that is dismissed. He believes this would be a fair way to handle it since $2000 was in the law before. In terms of the other issues, he suggested they allow a 30 day withhold of payment or until the probable cause hearing. This way there would be no reason for the attorney general to continue. He also suggested they not withhold medical benefits, concurring with Ms. Gruenewald's suggestion. Mr. Carpenter reiterated his concerns of keeping money collected as penalties being bad public policy. Public officials should have to go through the budget process. Mr. Hettrick justified, " If the money were to go into the attorney general's office and then revert at the end of the year and I am not saying whether we do or we do not do that, before we do that we pay the $2000 fine. Then any money, if it were to revert by your suggestion, would be short just the $2000. That would be the payment to the injured worker who was deprived some payment during the criminal attempt. I am not saying that we leave it out as proposed by Mr. Higgins or not. I am just saying we take $2000 out and then we will decide that issue later." Chairman Krenzer reiterated her concerns. She stated benefits should not be cut because a person is accused. Mr. Anderson stated due process says a person can not be punished until they have been noticed and have had an opportunity to defend themself. These are inherent factors of due process. If payment is being withheld from someone based on no other factor than someone's telephone call, there is a major problem. He explained this does not seem to be due process. Mr. Hettrick asked how often total temporary disability (TTD) is paid out. Ms. Colling replied every two weeks. Mr. Hettrick stated he does not feel stating 30 days or until the probable cause hearing is asking too much. He reminded the committee only one case out of approximately 130 filed has been paid. They are arguing about giving up the benefits on 130 cases to protect one and the time frame has been limited. Once this point has been reached the person has probably done something wrong. It is a reasonable window with a limit. Chairman Krenzer asked if finding probable cause in thirty days is reasonable. Mr. Higgins responded 99 percent of the time it is but cases do exist whereby the defendant files some kind of cause of action and delays the case from moving forward. Mr. Nolan questioned if benefits can be split, in other words can medical benefits be separated from the compensation benefits. Mr. Higgins commented being he is not an insurance attorney he can not answer that question. Mr. Higgins stated he would like to add, he would have to discuss the suggestion of fining the attorney general $2000 with her. He stated he would rather see the provision dropped than allow the attorney general's office to be fined $2000. He would not anticipate that happening but he would not want to be in that position. Mr. Carpenter, Mr. Higgins, and Ms. Colling further discussed the concept of due process and its relation to this section. Chairman Krenzer reiterated one last option she would like to discuss later is deleting subsection 3 of section 6, in its entirety. She then asked if there was anyone in Las Vegas wishing to testify on A.B. 587. Dan Williams, Dare to Dream Network, testified. He agreed there is a remedy in section 6 and stated he does not condone fraud being everyone else ends up paying for it. His concern lies with lump sum awards. He suggested the committee might want to consider suspending the lump sum award if it falls within the 30 days being discussed until fraud is determined. Mr. Williams also stated he would be interested in greater analysis of the numbers Mr. Higgins presented in regards to convictions. He argued if there are 1000 complaints resulting in only 130 convictions, 870 workers might have just lost their homes. Barbara Castello, Dare to Dream Support Network, testified. She suggested looking into creating commercials to reach out to the workers in the state. This could be a way of informing employees who get injured on the job that they will be held accountable rather than destroy the lives of workers who have not participated in fraud. Ruth Guyot testified on behalf of her husband, Wayne Guyot. Ms. Guyot stated she recognizes the fraud among claimants but questioned what about the fraud within the system itself. She stressed this is hurting both the workers and the employers. She proceeded to explain the unfortunate situation which has developed for her husband in dealing with SIIS. Ms. Guyot submitted for the committee's review documentation of her husband's ordeal. See (Exhibit E). Chairman Krenzer reminded the witnesses of her request to hear testimony only on A.B. 587, dealing with general provisions of employer and employee fraud. Assemblyman Goldwater stated he has been working with Ms. Guyot on her husband's claim. He explained it is an involved and complicated claim but he is trying to do his best and get her in touch with the people best able to help her. Chairman Krenzer seeing no others wishing to testify on A.B. 587 closed the hearing. After a short dinner break the committee readjourned. The next order of business before the committee would be to hear testimony on A.B. 601. ASSEMBLY BILL NO. 601 - Makes various changes concerning state industrial insurance system. Chairman Krenzer disclosed she works for Sierra Health Services. She stated she will not be voting on this bill because six of the provisions relate directly to managed care. She will not chair those sections nor will she participate in discussion of those sections. Therefore the committee will not be addressing sections 1, 2, 3, 4, 18, or 19 today. Ms. Krenzer also informed the committee the changes in A.B. 601 and S.B. 458 are primarily technical language changes but Cecilia Colling and Leonard Ormsby will address any of those sections that are not. Cecilia Colling, assistant general manager of SIIS, begin testifying on section 5. She pointed out the portions providing that SIIS contract the majority of the rehabilitation plans to private vendors or other public vendors are being deleted from the bill. In the Senate bill, S.B. 458, the vocational rehabilitation sections have been deleted. She stated these two sections essentially take out of the bill what she calls the "50 percent rule". Moving to section 6, it is similar to the language in S.B. 458. It allows for, in the event a non-paid corporate officer is paid by the corporation, an automatic rejection of the coverage. At that point they are required to cover themselves under SIIS. Ms. Colling stated section 8 is also similar language to S.B. 458, but in this case A.B. 601 does not allow for the requirement of the manager to set regulations regarding the transfer of experience from out of state. Language was added during the testimony on the Senate side which would allow the manager of SIIS to set regulations defining how to transfer out of state "e mods" to the "e mod" for Nevada. The Senate's intent was to apply this to companies who were moving to Nevada and intended to make long term commitment to being a business in Nevada. S.B. 458 adds criteria for establishing when an employer can be taken off the $1000 deductible list, the excessive loss list. Ms. Colling explained in other words, in A.B. 601, the criteria is allowed to be set by the general manager through regulations and S.B. 458 sets out the guidelines for when an employer would be taken off. The present statute requires SIIS to wait three years in order for that experience to develop. In this case, SIIS is asking for the ability to take them off after one year if they have shown a big commitment to safety and to controlling their losses. Ms. Colling told the committee either language is acceptable to SIIS. She continued with section 9. This section is similar to S.B. 458, except A.B. 601 eliminates the $250 penalty for late payments. She is in question as to whether this was intentional or a mistake but in either case believes the language in S.B. 458 to be more appropriate. S.B. 458 also allows the manager the discretion to set up one time payments for premiums under $300 per year. The related section in S.B. 458, is section 77. Mr. Ormsby advised Ms. Colling to clarify this does not necessarily have to be one time. The payments can be negotiated with the manager. Presently, she is required to take it in bi-monthly payments. Section 10 outlines the requirements for subsequent injury fund relief and defines the appeal process. It is the same language as in S.B. 458. Section 11 pertains to electronic transfer. Ms. Colling explained there was broader language allowing different kinds of transfers other than strictly electronic transfers. While either language would be acceptable she would prefer the language in S.B. 458. She pointed out S.B. 458 eliminates sections 2 and 3, which addresses the $200,000 fund. Chairman Krenzer questioned why this was deleted. Ms. Colling replied the requirement is deleted because it is outdated. She expressed her approval of the deletion. Ms. Colling continued with her testimony reviewing section 12. It is similar to S.B. 458 but it clarifies the restriction for providing care for all dependents. Section 13 is also similar to the Senate's bill but they have added the word "injured" before the word "employee". S.B. 458 also provides for a deduction based on a case known as the Hayes case. She explained when a person is declared as permanently totally disabled (PTD) and he has received a lump sum for permanent partial disability (PPD), his deduction is deducted from the PTD until he is 70 years old. The system did not believe this was fair because in some cases that person would be recovering more than the actual lump sum was. A provision was also added prohibiting the reduction of the PTD by more than 10 percent. This would have to be drawn out. This language was developed jointly by Nancyann Leeder and the system. Section 14 gives the injured worker the minimum payment of $600 per month. Currently, the statute allows it only for the dependents. Section 15 gives the manager the discretion to fine the employer who has not acquired coverage or lapsed his coverage by three times the actual amount. A.B. 601 defines it as a gross misdemeanor and S.B. 458 defines it as a felony offense. She reminded the committee, Mr. Higgins reviewed both of these issues earlier. Section 16 of A.B. 601 is different from the related section in S.B. 458 in that certain sentences of new language should be italicized. Chairman Krenzer clarified this was probably overlooked because it is contained in the Senate's bill. Being it is new language in the law though, she agreed with Ms. Colling. Ms. Colling continued section 17 of A.B. 601 differs from S.B. 458. The Assembly bill adds language which allows the manager to set intervals for reporting payroll but again, it deleted the $250 penalty for late payment. She expressed her disapproval stating the system wants to be able to penalize people for late payment. It also allows for negotiating intervals for payment of premiums under $300. She suggested the language in S.B. 458, section 77 be added to section 17 of A.B. 601. She concluded sections 18 through 20 use the same language. Chairman Krenzer thanked Ms. Colling and Mr. Ormsby for their testimony and inquired if there were any questions or any others wishing to testify. Kevin Chadwick, safety officer for Washoe County, testified. He stated he administers the county's workers' compensation program. Mr. Chadwick expressed concern with section 13, subsection 4, of A.B. 601. He pointed out the bill states permanent total disability not permanent partial disability. He explained in Washoe County there is a permanent total with a $600,000 reserve for continuous payments on a monthly basis. He questioned if someone was to die, for example, in a car accident, would this require him to pay a lump sum based on the current value of his permanent total undisbursed amount. He stated this would be a tremendous amount of money. Mr. Nolan and Mr. Chadwick engaged in a brief discussion, to which Mr. Hughey responded he believes this is a bill draft error. It should read permanent partial disability. He recalled testimony in the Senate to be tremendous and stated he would check with bill draft to be sure it was indeed a mistake. Ms. Colling pointed out section 99 of S.B. 458 includes the corrected language. Chairman Krenzer, replying to Mr. Chadwick, stated it is not the committee's intent to pass the bill with this language. It will read "permanent partial disability". Nancyann Leeder, Nevada Attorney for Injured Workers, testified. She expressed section 13, subsection 4, of A.B. 601, does not address the same situation as found in section 99 of S.B. 458. She explained she had submitted language to be placed in A.B. 601 which had been agreed on by many parties but this is not the language. Chairman Krenzer apologized for not having the language with her. She asked if the correct language was in S.B. 458. Ms. Leeder replied it is in S.B. 458, section 99, subsection 1b and section 99, subsection 4. Ms. Colling summarized the language in question should be replaced with the language included in section 99 of S.B. 458. More discussion ensued between Sam McMullen, Nevada Self-Insurers Association, and Nancyann Leeder, Nevada Attorney for Injured Workers. Mr. McMullen concluded by stating, "You have to take section 13, by an amendment, and change it over to a provision that deals with permanent partial disability. That would be number one. Number two, as she testified, there were a number of us who had no objection to the crediting of PPD against PTD which is now section 99. You would have to add that if you intend to give dependents a right to the PPD. You would not want to eliminate this section without changing it into the PPD sections." John Taylor, Southern Nevada Association of Injured Workers, came forward to testify from Las Vegas. He said he is also a permanent total claimant. He drew attention to a letter he had faxed to the committee for review. See (Exhibit F). It includes proposed amendments for S.B. 458 regarding sections 99, 103, and 105. He explained he lost his eye and was compensated. He then injured his back. He is now being asked to repay $60,480 for an eye he received a $5500 lump sum for in 1980. He stressed this allows the system to become a "money making entity on the backs of somebody like me who lost their earning capacity." Chairman Krenzer expressed her appreciation for his testimony and stated they are trying their best to make the law fair. Ms. Leeder noted her desire to see three other provisions of S.B. 458 included in A.B. 601. These would include: section 37; section 92, subsection 8; section 93, subsection 3; and section 90. Chairman Krenzer explained Ms. Leeder's intent is to have these sections of S.B. 458 included in A.B. 601 in the event S.B. 458 does not pass. She also reminded those in attendance any section of A.B. 601 not discussed in today's meeting will be addressed in a later meeting. Chairman Krenzer inquired if anyone wished to testify on A.B. 601. There was no one and the hearing was closed. Being there was no further business before the committee, the meeting was adjourned at 7:30 p.m. RESPECTFULLY SUBMITTED: Jennifer Carnahan, Committee Secretary Assembly Committee on Labor and Management May 23, 1995 Page