MINUTES OF THE ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT Sixty-eighth Session June 13, 1995 The Committee on Labor and Management was called to order at 3:30 p.m., on Tuesday, June 13, 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: Ms. Jan Myers, Industrial Insurance Regulation, Division of Industrial Relations (DIR) Mr. Lenard Ormsby, General Counsel for the State Industrial Insurance System (SIIS) Ms. Barbara Gruenewald, Nevada Trial Lawyers Association Ms. Nancyann Leeder, Nevada Attorney for Injured Workers Mr. Sam McMullen, Nevada Self-Insurers Association Ms. Alice Molasky, Commissioner of Insurance Mr. Jim Smith, Attorney General's Office Ms. Cecilia Colling, Assistant General Manager of SIIS Chairman Krenzer drew attention to the work session document dated June 13, 1995. See (Exhibit C). She informed the committee of her intention to work through this today. Beginning with item I, she reminded the committee, at the last meeting, they had approved Mr. Hettrick's amendments to Assembly Bill 552. She explained rather than submitting them as a floor amendment, bill draft had informed her they could incorporate them into the bill as usual. In regard to item II, Ms. Krenzer asked Assemblyman Goldwater to give a subcommittee report. Mr. Goldwater referred the committee to the report on sections 32, 101, and 153 regarding the American Medical Association's (AMA) Guides. See (Exhibit D). He pointed out the subcommittee recommends leaving sections 32 and 153, as they currently appear in S.B. 458. In section 101, the subcommittee recommends, "Amend subsection 4 to clarify that a rating evaluation must include an evaluation of the loss of range of motion, sensation, and strength as long as the second edition of the Guides is used. If a more recent edition of the Guides is adopted, then the approach to ratings contained in that edition shall be used. However, if a more recent edition is adopted which offers a choice of rating approaches, then the administrator must select an approach to be used." Assemblyman Anderson asked how the concern with the second edition being out of print and unavailable was addressed. Mr. Goldwater explained currently, the ability to use the second edition is found in statute and not in regulation. The law states it can not be adopted in regulation because it is out of print. Until everyone agrees the fourth edition should be adopted, use of the second edition will continue by statute. The choice to use one or the other is not available because of the desire for uniformity. Jan Myers, northern district manager, DIR, interjected, as S.B. 458 is currently written, the fourth edition, being the latest edition, would be under study until January 1, 1996. It would be scheduled for adoption at that point in time. ASSEMBLYMAN GOLDWATER MOVED TO ADOPT THE AMENDMENT. ASSEMBLYMAN NOLAN SECONDED THE MOTION. THE MOTION CARRIED. The committee moved on to address item V. Lenard Ormsby, general counsel for SIIS, testified the change in section 105 of S.B. 458, is in subsection 3. He explained given many of the changes proposed in S.B. 458, on the Senate side, this clarifies what is to be done if vocational rehabilitation is eliminated. The problem arises from when some of these people were injured, prior to this law becoming effective, vocational rehabilitation existed and yet when they might qualify for vocational rehabilitation, it no longer exists. Mr. Ormsby stressed this language defines the amount of compensation and benefits remain the same. They are established on the date of the injury but a person would not be eligible for the benefits or a program until the date in which the insurer determines the person is eligible. Chairman Krenzer asked for clarification. Mr. Ormsby reiterated if a person is in a program or receiving benefits upon the effective date of this law, it would continue. They would not have to re-qualify. But if the person had not qualified prior to the effective date of the law, they would have to meet the new qualification criteria. Assemblyman Anderson and Mr. Ormsby engaged in discussion concerning the intent of this section, focusing on the injured workers' benefits and how they would be effected. Mr. Ormsby emphasized subsection 3 allows the law to be flexible and to change. He explained this has been a heavily litigated area. Mr. Ormsby stressed benefits are not "vested rights", but "contractual rights". Until a person qualifies the rules can change. Attempting to better clarify, Mr. Ormsby stated, "The amount of benefits and compensation are established at the date of injury." As an example, he spoke about vocational rehabilitation. "S.B. 458 eliminates vocational rehabilitation. That is a public policy decision. If this was not the law, then we would have to leave vocational rehabilitation staffed for every person who was injured and may at some point in their life require it. That is unworkable and not my understanding of the law." Mr. Anderson asked if the concept is preconceived based upon the elimination of vocational rehabilitation. Mr. Ormsby responded no. He explained the stimulus for subsection 3 was to clear up any confusion and to codify the system's interpretation that a person must meet the eligibility criteria as things change. Barbara Gruenewald, Nevada Trial Lawyers Association, expressed discomfort with the promise of benefits not changing. She believes this rests too heavily on the insurer's interpretation of "eligibility". Nancyann Leeder, Nevada Attorney for Injured Workers, said there has been a lot of litigation in this area because in the past couple of years, SIIS has been interpreting S.B. 316 provisions as if this particular provision of S.B. 458 had already been passed. Ms. Leeder proceeded to give examples which would happen even more frequently if this provision is passed, allowing retroactivity. Chairman Krenzer asked what the committee's recommendation was in regard to section 105. ASSEMBLYMAN BACHE MOVED TO DELETE SECTION 105. ASSEMBLYMAN ANDERSON SECONDED THE MOTION. Ms. Krenzer recognized Mr. Nolan's request to wait for more members to arrive before taking a vote on this provision. ASSEMBLYMAN ANDERSON WITHDREW HIS SECOND TO THE MOTION. Chairman Krenzer announced there will be a subcommittee on the employee leasing sections of the bill on Wednesday, June 14, 1995, at 2:00 p.m. Therefore, the committee will hold amendment 4 of item VI. Moving down to the amendments which relate to confidentiality of records, Mr. McMullen came forward to explain them. Sam McMullen, Nevada Self-Insurers Association, pointed out there is agreement between Alice Molasky and himself in regard to most of the provisions. There is one issue with his amendment 11 and her amendment 16. He explained it is a fundamental difference between how they want records to be treated. His proposal provides for records to be clearly confidential unless used for administration of the chapter. Her amendment says there would be a decision made on an issue by issue basis. Mr. McMullen stressed his desire to see a blanket cloak of confidentiality. Chairman Krenzer reiterated Mr. McMullen's suggestion of deleting the word "necessary" from section 8, subsection 1, line 21. She inquired if Ms. Molasky objected to that. Alice Molasky, Commissioner of Insurance clarified her proposal is to delete subsection 1, in its entirety and replace it with the language in amendment 16. She explained the ability of the commissioner to deem records confidential is consistent with all other provisions that exist as far as public records are concerned. The burden is placed on the person who wishes their records to be held confidential. They must support their request in order to demonstrate that their records are appropriate to be deemed confidential rather than having an all encompassing provision. Mr. McMullen stressed they are not all declared confidential for all purposes. They are declared confidential so the person does not have to go through a case by case, document by document, review of each issue. He clarified from there, the commissioner has the discretion to use the records for a disciplinary proceeding, or for administrative or regulatory purposes. He believes his amendment is clear. Under prior interpretations of this law, people were allowed, for other reasons such as union negotiations and labor disputes, to seek out this type of information. Jim Smith, Attorney General's office, testified. He explained the public policy of the state is to have public records be open for inspection. He brought up the subject of the implementation of associations. Mr. Smith stated this provision would close off all their records. For example, there would be no objective, state repository of records where somebody could find out who the other people are in the association and whether they are solvent. He feels this would allow risk to be taken by people who are fairly unsophisticated about this. Mr. Nolan suggested if the information pertains to their solvency, it should be provided by the state. He stressed the businesses do not seem to have a problem with this. The problem is with displaying proprietary information to people who wish to use it for a competitive edge or similar purposes. Mr. Smith recognized the concerns but stated to close all the records is a very big step. Ms. Leeder expressed she had not been overly concerned with this section because the Nevada Attorney for Injured Workers (NAIW) is a state agency covered by subsection 2, (d), (4). There could be a problem for those workers who are not represented by NAIW because in subsection 1 it states, "upon lawful order of a court of competent jurisdiction." Injured workers are frequently in front of an appeals board and that is not a court. Chairman Krenzer explained in difference to time, she put this issue into a subcommittee. She stated she will chair it and asked Mr. Hettrick to also participate. The committee proceeded with item VII on the work session document. Chairman Krenzer explained in order to move these conceptual amendments to bill draft she would like to hear the committee's recommendations. In regards to vocational rehabilitation, Mr. Ernaut explained Mr. Hettrick is working on language and will present it to the committee. Mr. Goldwater stated he has also been working on language. Chairman Krenzer urged the committee to wait on this issue until true language is returned from bill draft. Ms. Krenzer disclosed she works for Sierra Health Services and is advocating neither for nor against these sections. While by law she is allowed to participate in discussion she has decided to turn the gavel over to Vice-Chairman Goldwater. The committee moved on to discuss managed care claims prior to S.B. 316. Mr. Hettrick referred the committee to his proposed amendment for managing pre- S.B. 316 claims. See (Exhibit E). He then referred to Mr. Ernaut. Mr. Ernaut explained the basis for this proposal is a collective mind set to install managed care in all those claims pre-S.B. 316 of the 1993 session. For those persons who are currently in the system with a pre-316 claim who are being treated by a primary physician who is not a member of a MCO, they can keep their own doctor unless the doctor refuses to come under managed care. Mr. Ernaut declared however, there needs to be some case management done on those claims. He estimated 25 percent of those claims could be closed merely by working the claim. He stated there are too many people who have been left on temporary total disability (TTD) because it is unworkable for the system to manage the claim. He summarized the benefits stay the same and they are allowed to keep their own physician, unless their physician objects or in the rural counties where managed care does not exist. Chairman Goldwater asked if the physician must accept the reimbursement rates set forth by the MCO. Mr. Ernaut replied, "not reimbursement rates", just utilization review and case management. In response to an inquiry for more clarification, Mr. Hettrick explained what is envisioned, is having SIIS be able to contract to pick up those people not currently covered by case management or MCO type oversight. In the two larger areas of Nevada, managed care organizations are abundant and there are plenty of doctors to choose from. Mr. Hettrick reiterated they can keep their primary physician as long as the doctor agrees to work with the standard MCO procedures established in S.B. 316. "The rationale for this stems from the fact there are 11,000 claims which are pre-316. For them, we have reserved $861 million. We have 9,000 claims since S.B. 316. For them, we have reserved $78 million." This is because of full case management and some of the other changes. Full case management has had a major impact on the reserve. Mr. Hettrick stressed the intent is to get these cases resolved and this is the single largest thing that can be done to impact SIIS and the unfunded liability. Mr. Ernaut expressed his opinion of the number of people actually being effected by this being very small. He justified most doctors handling a myriad of cases are going to be part of a MCO. Mr. Nolan interjected another caveat provided by this amendment is allowing the system to have discretion over which claims will go into managed care. Chairman Goldwater asked research to place this proposed amendment on the committee's next work session. The committee moved on to discuss number 3 of item VII. Mr. Ernaut stated the initial idea was his but the specifics were worked out by a collective whole. He explained the basic idea behind this is when three-way insurance is available in 1999, there will be $500 million worth of premiums available to the private sector. They will not take all of it but they will take some. The premium dollars will be subject to the existing insurance premium tax. In the interest of trying to retire the debt and keep adequate reserves, this would provide a cash infusion to relay the fears that three-way insurance will ultimately harm the system. The premium tax will generate approximately $17.5 million and it would be dedicated to SIIS until the manager determines a point of solvency has been reached. Currently, this money would be going to the general fund. Chairman Goldwater asked if Mr. Ernaut was advocating the system also pay this tax. Mr. Ernaut replied absolutely, because otherwise the system could charge 3.5 percent less than everyone else. This would keep everyone on a level playing field. Mr. Hettrick noted it also makes the system "a player" in the assigned risk pool. Instead of being stuck with all of the "poor cases", by being equal to all of the rest of the participants in the three-way market, the system could turn down certain business. The business would then be divided equally amongst all of those providing three-way insurance. The committee proceeded to the subject of claim filing, specifically section 87 of S.B. 458. Mr. Nolan explained the intent is to address a change which created some controversy. The change was in regard to the filing period of time in statute. Previously, it had been within 30 days after the accident. In the amended language of S.B. 458, claim notification was changed to 7 days following the accident. Ms. Krenzer resumed the chair. Mr. Goldwater expressed his desire to leave it at 30 days. He does not see a justifiable reason to reduce it to 7 days. Mr. Hettrick stated he recalls there is a requirement for an employer in the case of a death to file a report. He does not see how it would be a major issue to have a filing from the employee within 7 days to correspond with that. In the case of a death, it would only speed the process up for the dependents. Mr. Goldwater replied it does not say they can not file a report in 7 days. He does not want to see "the window closed." Barbara Gruenewald, Nevada Trial Lawyers Association, testified. She explained there are times when a claimant can not get in to see a doctor in 7 days. She believes this change would hurt the claimant and expressed her desire to see it left at 30 days. Mr. Ernaut pointed out the bill is requiring 7 days, only for written notice from the employee that there was an injury. A doctors appointment only speaks to the fact of whether it is a compensable injury. Cecilia Colling, assistant general manager of SIIS, stated, "notice of an injury" pertains to a form she calls a C-1 form. It is filled out by the employee and filed with the employer. As time goes on, the body starts to react and then an actual claim exists. Section 87 would require the C-1 to have been filled out within 7 days rather than 30 days. Sam McMullen, Nevada Self-Insurers Association, said this subject had been discussed in the Senate and this language is the compromise between labor representatives, self-insurers, and other employers. He reminded the committee, self-insurers requested notification be given by the end of the shift. A discussion developed among the committee concerning the different forms an employee is required to fill out and their related time frames, when an injury happens at the place of employment. Mr. McMullen declared, in summary, shortening the notification period to 7 days, the form being a C-1, is not a bar to a claim. Employers have rights also in the sense they should be able to look at what the circumstances are. This does not effect the time, of 90 days, for the C-3, which is an information report from the employer to the system and to the Division of Industrial Relations. Mr. Nolan interjected a level of conformity is reached being immediate reporting is also required by Occupational Safety and Health Association standards. Chairman Krenzer stated she wished to move on to the subject of fraud. She explained the committee has already passed these provisions, but they were included in A.B. 587. Therefore to have them included in S.B. 458 is unnecessary duplication. ASSEMBLYMAN NOLAN MOVED TO DELETE SECTIONS 9-11, 69, 96, 108, 118, 124, AND 128-129 FROM S.B. 458 AS THEY ARE ALREADY PROVIDED FOR IN A.B. 587. ASSEMBLYMAN MANENDO SECONDED THE MOTION. THE MOTION CARRIED. Chairman Krenzer took this opportunity to enter into the record a number of documents the committee received in regard to various sections of S.B. 458, a letter from Judi Sabo, (Exhibit F), a fax transmittal from Dare to Dream, (Exhibit G), and studies concerning the AMA Guide, submitted by Paul Aakervik, (Exhibit H). The committee moved on to address section 96, relating to intoxication. Chairman Krenzer referred to a proposed amendment submitted by the Las Vegas Chamber of Commerce and the Nevada Self-Insurers Association. See (Exhibit I). Sam McMullen explained this is another clarifying amendment. When this issue was discussed in the Senate committee, the intent for "intoxication" to relate only to alcohol was not clear. The purpose being section 97, subsection c, would address intoxication as it relates to alcohol. Section 97, subsection d, would relate to controlled substances. Leonard Ormsby concurred with Mr. McMullen's explanation. He further explained this distinction is requested because there is no medical testimony that will prove intoxication due to a controlled substance. Mr. Ormsby, Mr. McMullen, and Ms. Krenzer also discussed the laboratories being certified by National Institute of Drug Abuse (NIDA). Mr. McMullen stated if the test for chemical detection is not done under NIDA standards, it will not be valid nor verifiable. He explained on the Senate side there was a lot of discussion concerning whether the bill should include language requiring a laboratory to be under NIDA but it was decided it just was not necessary. Mr. Nolan inquired about the definition of "intoxication" for the purpose of this statute. Mr. Ormsby explained the labs in northern Nevada define .04 percent or higher as positive and a person is considered under the influence of alcohol. When driving a car, a person is considered to be under the influence if their blood alcohol content is .10 percent. Mr. Nolan expounded he does not have a problem with the section. He commented he has worked for companies with heavy drug and alcohol testing procedures. When establishing programs though, a problem developed when trying to define intoxication and determining whether or not it was the cause of impairment. Nancyann Leeder concurred with Mr. McMullen in that there is a lot of case law focusing on this issue. Basically, "intoxication" is impairment. ASSEMBLYMAN CARPENTER MOVED TO ADOPT THIS AMENDMENT TO SECTION 97. ASSEMBLYMAN SANDOVAL SECONDED THE MOTION. THE MOTION CARRIED. Being there was no further business before the committee, Chairman Krenzer adjourned the meeting at 6:00 p.m. RESPECTFULLY SUBMITTED: Jennifer Carnahan, Committee Secretary Assembly Committee on Labor and Management June 13, 1995 Page