MINUTES OF THE ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT Sixty-eighth Session June 1, 1995 The Committee on Labor and Management was called to order at 4:00 p.m., on Thursday, June 1, 1995, Chairman Dennis Nolan 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: 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 COMMITTEE MEMBERS EXCUSED: Ms. Saundra (Sandi) Krenzer, Chairman STAFF MEMBERS PRESENT: Vance Hughey, Senior Research Analyst OTHERS PRESENT: Ed Friel, Self Insured Workers NancyAnn Leeder, Nevada Attorney for Injured Workers Barb Costello, Dare to Dream Danny Williams, Dare to Dream S. Marc Hand, Dare to Dream Harold E. Wilson, Dare to Dream Genie P. Collak, Dare to Dream Carol Jansson, Dare to Dream Lynn Grandlund Bob Leech, Dare to Dream Ralph Trotter, Charles Cravold, Dare to Dream Jeanne Leavold, Dare to Dream Elizabeth Ayers, Clark County The hearing was opened on Senate Bill 458. SENATE BILL 458 - Makes various changes to provisions relating to industrial insurance. Discussion was opened on Section 73, premium collections. Ms. Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS), explained a portion of Section 73 dealing with experience modification factor from other states had been discussed. Referring to Page 27, Line 23, Ms. Colling stated if an individual is on the excessive loss list and demonstrates a good loss record, shows a safety plan has been implemented, SIIS has the discretion to remove the person from the excessive loss list earlier than under the old statute. Assemblyman Hettrick, referring to Line 26, asked if the word "any" should be removed. Ms. Colling explained the reasoning. It is difficult to know what the claim experience over the course of a year will be like. It takes two to three years to develop an experience. It states SIIS "must" if there are no claims and discretion is allowed if there are claims. Chairman Nolan stated the first portion of Section 73 dealt with the ratings systems. On page 26 new language regarding experience for out of state providers was pointed out. Ms. Colling said the language gives the manager authority to adopt regulations defining how experience modification transfers into Nevada will be made. Different states use different systems. Employers may have experience in more than one state. Several definitions need to be established for equitability. Contractors or subcontractors temporarily in Nevada bidding on a project are not allowed to have their experience modification factor transferred. Chairman Nolan asked if this system had been established to set a baseline. Ms. Colling agreed. She said it was a tool the economic development agency could use to attract long term businesses into the state. It aids in start up costs by allowing businesses to pass on their good experience. Ms. Lyn Grandlund, Employers of Nevada, supported the new provisions on Page 27. She noted many employers had been put on the unfortunate 500 list when they had one bad claim. The discussion was closed on Section 73. A discussion was opened on Section 77. Ms. Colling explained Section 77 deletes the requirement to bill the policyholder on the 25th of the month. This allows SIIS to stagger payments throughout the month, manage the work flow and better meet the needs of the policyholders. It establishes a penalty provision of $250 for late payments. SIIS is allowed to bill on an annual or biannual basis for any premium under $300. The penalty is discretionary. There are approximately 17,000 employers who pay less than $200 annually. Mr. Hettrick, referring to Page 30, expressed concern over late payment fees for those who pay less than $200 annually. Ms. Colling said the $250 fine was discretionary. If a policy lapses, three warnings are sent through the mail. Mr. Hettrick noted a $250 fine on Page 30, Lines 9-13. On Line 45 it states the system may impose a penalty not to exceed 4% for failure to submit information and premium required within the time allowed. He felt these areas were contradictory. Mr. Leonard Ormsby, General Counsel, SIIS, agreed. A discussion ensued involving Ms. Colling, Mr. Hettrick, Chairman Nolan and Mr. Ormsby regarding fines. The discussion was closed on Section 77. A discussion was opened on Section 136. Ms. Colling stated Section 136 reflects the graduated increase in the salary cap placed in S.B. 316. The increase goes from $33,000 to $36,000. Mr. Hettrick asked if the change would take place upon the effective date of the bill. Ms. Colling stated Mr. Hettrick was correct. A discussion ensued between Mr. Hettrick and Ms. Colling regarding the effective date. Chairman Nolan summarized the changes. Subsection 136 under Section 154 would be changed by adding Subsection 6 stating the effective date would be January 1, 1996. The discussion was closed on Section 136. The discussion was opened on Section 137. Mr. Ormsby proposed adding another sentence to both Sections 136 and 137 and not delete the language in Line 3. He suggested adding: 4) for the period beginning January 1, 1996 and ending December 31, 1996 or beginning January 1, 1996 the maximum pay of $36,000 per calendar year. This would show the chronological increase reflected in the statute rather than changing what has been done in the past. Mr. Hettrick identified a conflict between lines 5-9 and lines 45-48 on Page 65. Chairman Nolan recommended deleting Lines 5-9 and keeping Lines 44-48. Mr. Hettrick recommended using caution because the language was discussing a segregation of employment together with a premium due thereon. Chairman Nolan requested Ms. Colling review Section 137 and return new language to the committee. The discussion was closed on Section 137. The discussion was opened on Section 106, dealing with pensions. Ms. Colling explained Section 106 was a technical amendment. Minimum compensation in the pensions was raised to $600 in S.B. 316, but only included the dependents. Section 106 corrects that to provide compensation to the injured employee also. Chairman Nolan asked if it had been previously specified that the funds would be equally distributed among dependents. Ms. Colling stated the problem was it was not applied toward the injured worker Assemblyman Goldwater inquired about the statutory citations in the section. Ms. Colling stated 580 set the benefits for permanent and total disability and 615 was for death on the job. Chairman Nolan requested Ms. Colling review Section 137 and return new language to the committee. The discussion on Section 106 was closed. The discussion on Section 107 was opened. Mr. Raymond Badger, Nevada Trial Lawyers, explained the changes in the section include penalties for employers who secure but do not maintain worker's compensation coverage. The three times penalty becomes discretionary for the manager which allows more cooperation with the attorney general's office in certain cases of prosecution. Section 3 provided for a gross misdemeanor as opposed to a misdemeanor and the penalty is increased. A second or subsequent offense becomes a felony. Mr. Dan Williams, Dare to Dream Network, Las Vegas, explained the uninsured employers had been addressed in proposals. He suggested adoption of language which stated the uninsured employer had no right to participate in medical except for a second opinion nor in vocational rehab. The election of remedy, which is an implied contract the injured employee signs with the state, is solely between the insurer and the injured employee. It is felt the uninsured employer has no right to interfere. The reason is to prevent the insurer denying benefits because it feels the fight will be between the uninsured employer and the injured employee. This causes undue hardship on injured workers due to the time needed to resolve his claim. Mr. Ormsby stated the system was comfortable with the penalty provisions not having an effect on the treatment of injured workers. Chairman Nolan asked if an uninsured employer could protest a claim. Ms. Colling stated it was possible through a hearing system to protest the viability of a claim. If it is determined they are the employer and do not have an account, they must pay the actual costs of the claim and could face a fine. Chairman Nolan asked if the employee's benefits would be affected. Ms. Colling said if the claim is accepted by the IIRS and SIIS administers it, they may not be treated under the uninsured claim provisions. Mr. Williams explained injured employees were up against two factions in the denials. The insurer may approve treatment but the uninsured employer's attorney disagrees and files an appeal. The treatment is then tied up in litigation and time. The insurer is going along with whatever the uninsured employer's attorney is recommending. The insurer should be making decisions and dealing with the injured employee only. The insurer should be dealing with the uninsured employer's attorney separately. Where uninsured employer's attorneys are involved their recommendations are to deny the treatments and fight it out with the injured employee. Mr. Williams felt it unfair to the employers who did pay into the system. Ms. Nancyann Leeder, Nevada Attorney for Injured Workers, discussed cases in which it is not clear whether the insurer or the uninsured benefits fund should be paying the claims. Chairman Nolan requested Mr. Williams submit suggested language for the committee's consideration. The discussion was closed on Section 107. The discussion on Section 119 was opened. Ms. Colling explained Section 119 was proposed by the Senate Commerce committee and others. SIIS would not advocate for or against it. Chairman Nolan asked Ms. Colling and Mr. Ormsby to discuss Sections 119 through 123. Mr. Ormsby explained Section 119 identifies the provisions and where they will fall within the Nevada Revised Statutes. Section 120 creates a legislative committee dealing specifically with worker's compensations. Mr. Ormsby discussed the various subsections. Section 121 provides the committee will meet at least quarterly at times and places specified by the call of the chairman. A quorum is identified and compensation is discussed. Section 122 provides the agenda to be reviewed by the interim committee. The various subsections were discussed. Section 123 provides for witnesses and a provision to compensate witnesses for their fees and mileage. An extensive discussion ensued regarding the interim legislative committee. Chairman Nolan, Assemblymen Goldwater, Carpenter, Anderson, Bache, Hettrick, Mr. Vance Hughey, Senior Research Analyst, Legislative Counsel Bureau, Ms. Barbara Costello, Dare to Dream Network, Mr. Arthur Busbee, Horseshoe Hotel and Casino, and Mr. Paul Aakervik, W.R. Gibbens, Inc., contributed to the discussion. The discussion was closed on Sections 119 through 123. The discussion was opened on Section 126. Mr. Ormsby noted Section 126 provided the funding for full time employees of the Legislative Counsel Bureau, Fraud Unit and Legislative Committee created under the prior sections. The discussion was closed on Section 126. The discussion was opened on Section 6. Ms. Colling explained Section 6 gives the manager authority to contract for services or functions in the system. The contracting must be done through a reasonable competitive bidding procedure established by the manager. Chairman Nolan asked if the definition of reasonable competitive bidding was determined by SIIS or by the manager. Ms. Colling said rather than going under the state purchasing rules the contracts would be bid competitively. The concept was to have SIIS operate more like a business and function with more flexibility. Chairman Nolan discussed the liability aspect. He asked if there were any current standards to aid in the definition. Mr. Hettrick said the language was commonplace within Ways and Means. The standards are well established within state government. They would be bound by requirements of a fair procedure allowing all qualified bidders to bid. Mr. Ormsby said the section gives more latitude in certain circumstances if necessary. He anticipated the same procedures followed in the past would continue to be followed. Mr. Arthur Busbee, Horseshoe Hotel and Casino, offered his support. It is public knowledge SIIS had previously contracted services out without putting it out for bid. This would create a more level playing field for other businesses offering similar services to be allowed to bid for contracts. The discussion was closed on Section 6. The discussion was opened on Section 41. Mr. Ormsby explained there was a deletion of language opening up the latitude the system would have under the direction of the manager as far as not being required to use services provided by any other state agency. The intent from the Senate was to allow SIIS to create programs and compete better and more efficiently as three way and group self insurance grows nearer. Assemblyman Anderson asked if the language was permissive enough to allow SIIS to use state services if they desired. Mr. Ormsby stated there was no prohibition. The manager could contract with whomever he deemed necessary and appropriate. Mr. Anderson noted it was deleted language and why he was concerned. Ms. Colling explained it took SIIS outside the purchasing act. SIIS would not be required to go through the purchasing division for purchase of supplies and services. Mr. Anderson asked if SIIS was currently required to use services provided by other state agencies. Mr. Ormsby referred Mr. Anderson to Page 12, Section 41, Paragraph 3, Line 13, where the language says "shall". Assemblyman Carpenter said he thought it was unclear as to whether SIIS could use state purchasing. Chairman Nolan said he thought it was permissive. Mr. Ormsby agreed. He suggested a slight rearrangement of amended language. Mr. Anderson agreed. The discussion was closed on Section 41. The discussion was opened on Section 127. Ms. Colling explained Section 127 goes with Section 41 and gives SIIS an exemption from the requirement to use the purchasing division. Chairman Nolan said he thought the proposed amendment in Section 41 was unneeded. The discussion on Section 127 was closed. A discussion was opened for general testimony on S.B. 458. Ms. Barbara Costello, Dare to Dream, read a letter from Mr. Benson Lee, Esq., referring to Sections 5, 94, 102 and 105. Mr. Lee was the former general counsel and rating plan specialist, Nevada Industrial Commission, 1978-1980, former owner of TPA, Third Party Administrator Company, former property and casualty insurance company vice president and claimant's attorney from 1991 to present. Mr. Lee's comments addressed the above referenced Sections. Ms. Costello stated a copy of the letter would be sent to all committee members. Mr. Dan Williams. Dare to Dream, addressed Section 105. Mr. Williams discussed his experiences in vocational rehabilitation. He expressed concern over Subsection 3. Mr. Hettrick assured Mr. Williams the committee was aware of potential problems in Section 105 and the section would be reexamined. Mr. Williams explained people injured before 1995 had certain rights and benefits. Section 105, Subsection 3 would take those rights and benefits away from them. He emphasized how unfair this was. Mr. Jack Jeffrey, Southern Nevada Building and Construction Trades Council, expressed concern over the lack of legislative discussion on benefits. Specifically Mr. Jeffrey wished to discuss the PPD lump sums, the vocational rehabilitation and the retroactivity. Mr. Hettrick said there would be discussion on those issues. He assured Mr. Jeffrey the issues would be posted. Mr. Danny Thompson, Nevada State AFL-CIO, expressed the same concerns as Mr. Jeffrey. Mr. Robert Leech, Dare to Dream, discussed his experience with SIIS and his denial of a variety of services and medical needs. A recess of the committee was called at 6:00 p.m. The meeting was called to order at 7:30 p.m. Chairman Nolan apologized for opening the meeting 30 minutes late. He announced a subcommittee would be formed. Several committee members were attending another meeting which should adjourn shortly. The subcommittee addressed the amendments of A.B. 498 and attempted to begin work on the work session document. A short recess was called. Chairman Nolan announced no action would be taken due to the inability of the committee to gather all committee members. He apologized to those who had scheduled their time to work on the bill. The meeting was adjourned. RESPECTFULLY SUBMITTED, ___________________________ Barbara Prudic Committee Secretary Assembly Committee on Labor and Management June 1, 1995 Page