MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 20, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Friday, January 20, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Randolph J. Townsend, Chairman Senator Ann O'Connell, Vice Chairman Senator Sue Lowden Senator Kathy M. Augustine Senator Raymond C. Shaffer Senator Jack Regan Senator Joseph M. Neal, Jr. STAFF MEMBERS PRESENT: Scott Young, Senior Research Analyst Molly Dondero, Committee Secretary OTHERS PRESENT: Bryan A. Nix, Senior Appeals Officer, Department of Administration, Hearings Division Nancyann Leeder, Nevada Attorney of Injured Workers Ron Swirczek, Division of Industrial Relations, Administrator Larry Zimmerman, President, CDS of Nevada Danny Evans, Assistant Administrator, Department of Business and Industry, Division of Industrial Relations, Occupational Safety and Health Enforcement Section Richard R. Romero, Independant Safety Consultant, Compliance Assistance Officer Dennis Hoffma, Contract Safety Inspector, Compliance Assistance Officer Senator Randolph Townsend opened the meeting with an introduction of presenters. Brian Nix, Senior Appeals Officer, Department of Administration, Hearings Division, introduced Exhibit C, The Department of Administration Hearings/Appeals Division 1994 Annual Statistical Report. He gave a general overview of the report in two parts. The Hearing Office statistics were represented by graphs depicting, hearing growth, State Industrial Insurance System (SIIS) claims, and graphs, showing who represented claimants during hearings, and how those hearings were finalized. Mr. Nix stated there was little problem with continuances bogging the system down. There was a 3 to 4 week average turnaround time for scheduling hearings. Most of the time cases were scheduled quickly and heard quickly with very little continuance at the hearing office. Mr. Nix gave a general overview of the Appeals Office graphs. Las Vegas has had a significant growth in appeals during the past year. The Reno-Carson City area has had a greater percentage of lawyers handling cases dealing with SIIS appeals than in the Las Vegas area. Mr. Nix showed on page 17 (Exhibit C) how 50 percent of the cases at the appeals level end up in continuance. Page 19 dealt with dispositions of cases excluding continuances. Sixty-three percent of the cases were settled prior to hearings in Carson City, where 46 percent of the cases were settled prior to hearings in Las Vegas. Mr. Nix presented Exhibit D, a breakdown of staffing during the past 9 years. On the charts (Exhibit D) the numbers to the left were inadvertently placed on the graph. He asked those numbers to be disregarded. Senator Lowden asked what qualifications were required to be a hearing officer and an appeals officer. Mr. Nix stated there were very detailed qualifications to be a hearing officer. Hearing officers were declassified and were no longer hired by the state personnel guidelines. Hearing officers have been selected on qualifications and abilities. Mr. Nix explained they are developing new, stricter guidelines for minimum qualifications. Mr. Nix stated his intent is to go back to a panel hiring method, bringing in a representative from the Department of Industrial Relations and the State Industrial Insurance System and reviewing the applicants under the state personnel system. Senator Lowden stated that since there had been no strict guidelines, there had been a lot of latitude in the selection process, something which lead to controversy in the past. Mr. Nix stated after the declassification there were three vacancies which had to be filled right away to keep up with the caseload. Now that those positions have been filled, Mr. Nix stated he would like to see the positions filled in a more formal way. Senator Lowden questioned how much latitude a hearings officer has in allowing evidence into a hearing room. She has received complaints the hearings officers are not uniform in their acceptance of evidence. Mr. Nix stated the policy is to broadly accept all evidence and then determine what weight the evidence will receive. Because of the tremendous pressure of the work load, it is often difficult to hear all lengthy evidence. Eighteen thousand hearings by eight hearing officers is a significant number of cases to hear. The hearing officers require the people presenting video tape evidence to supply the equipment necessary to view the evidence because the hearings officers do not have the equipment in their offices to view video tape evidence. There are times when the presented evidence is not pertinent to the case. As a general rule no hearings officer will refuse to view evidence even if it has little to do with the case. Senator O'Connell asked if there is a reason there is not an employer representative on the panel to review a new hire. Mr. Nix stated there was not. He would look forward to having one on the panel. Senator O'Connell referred to (Exhibit C) and asked if the data is broken down far enough where they do not have employers showing up for the hearings. Senator O'Connell wondered if those not attending hearings were large employers or small employers. Mr. Nix stated he could not obtain that information from the data. He assumed more large employers would be able to come to a hearing. They may have a third party administrator available in the hearing. Small employers have less hearings. Senator O'Connell commented that perhaps the small employer was intimidated by the process. She asked if there was anything the legislature could do to make them more comfortable with the process. Mr. Nix said he felt the hearing office has made the proceedings more informal making the small business employer comfortable with the process. Senator O'Connell stated she felt that perhaps the small businessman has not come to the hearings enough to realize the process is now more informal. Mr. Nix stated SIIS provides a representative at the hearings and often the small employer feels this is enough. Senator Lowden asked Mr. Nix to clarify page 7 (Exhibit C) in reference to the Permanent Partial Disability (PPD) percentage shown on the chart. She asked why this number was not smaller. Mr. Nix explained it was because of money. A PPD is the lump sum money paid to claimants. Mr. Nix stated he would try to break down the chart further and get the chart to the senator as soon as he could. He also wished to show the progress of the issue over the past 5 years. Senator Lowden stated the statute requires a list of doctors. Scott Young, Senior Research Analyst clarified the way the system works. There is a panel of rotating physicians to whom the worker is referred. The worker may choose a second rating. The hearing officer and the appeals officer may also order a second rating if there is an issue which needs to be addressed. Mr. Nix stated the 18 percent (Exhibit C) reflects the appeals sought when a claimant's appeal is rated too low by an insurer. The claimant may appeal the first determination and seek a second rating through the rotational list of doctors. The more cases resolved between the claimant and the insurer the better for the system and the better for the claimant. Resolution between the insurer and the claimant makes both parties a winner. If the hearings department must intervene, there is a winner and a loser. Senator Lowden asked what a doctor charges for a rating. Mr. Nix responded he did not know exactly, but it was somewhere between $300-$500 per rating. Mr. Young stated sometimes the charges were a little higher, up to $400-$600 per rating. It also depended on the nature of the rating. A specialist will run higher. Senator Lowden asked if the doctors on the list were chosen by SIIS to be on the list or had they applied. She wondered if the cost of a second rating is what stops many people from appealing. Since employers pay for the second rating, lower rates would decrease the disagreements over the need for second ratings and would open those ratings up to those who need them. Mr. Nix was not certain. The person who requests the second rating is responsible for the payment of the rating. The statute states: In the event the hearing officer or the appeals officer orders the higher rating, if the claimant, for instance, challenges the insurers initial rating, goes to the panel, pays a physician for a second rating, submits that and the appeal or hearing officer orders the higher rating, then that charge reverts back and is the responsibility of the insurer. If the rating does not increase, then the claimant must pay the cost of the rating. Senator Lowden asked if there was a way to reduce the cost of the rating. Larry Zimmerman, President, CDS Nevada, stated the Department of Industrial Relations (DIR) medical fee schedule addresses ratings rates. It specifies fees at $450. If there are multiple body parts, the doctors may charge more for the rating. The Managed Care Organizations (MCOs) give discounts below the medical fee schedule. Senator Lowden specified the discount only applies if the doctor is in an MCO. If the doctor is on the list and is not a part of an MCO then the doctor may charge the $450 rate fee. Senator Lowden asked Mr. Nix if he agreed they should make the pricing more competitive to lower the prices. Mr. Nix responded he felt they would be encouraging more appeals if they were to do that. Most appeals are filed by claimants. If the appeals were more affordable, then more would appeal. He emphasized he did not care. To him this is a policy issue, but the increased load of appeals had to be considered. Senator Townsend asked Mr. Nix to express any concerns he might have with the system. He stressed it was crucial for the committee to be aware of any problems. Senator Townsend stated David Dirks, Director, SIIS, covered some of the problems in the Commerce and Labor hearing held on January 21. Senator Townsend stated there were several points covered during the presentation which need to be compared to where they used to be and not just where they were in 1994. This would help determining the direction of the appeals. It would help to know which issues were being regularly appealed by claimants and which were being appealed by employers. That is critical for evaluation of the system. He referred to page 7 (Exhibit C). He would like to know which percentage of those appeals were coming from claimants and which from employers. He stressed the need for an historical perspective on the issue and not just a "snap shot." The MCOs need to keep their determinations within their jurisdiction so as not to spill over into the hearings office work. Non appearance by the employer at hearings needs to be addressed. Senator Townsend wanted clarification of the issues which propel the people to the appeals process. The committee would like to resolve the issues before those issues reach the appeals process. The appeals office would have more time to work with the really important conflicts. Wage determination issues, state wide, were only 2.33 percent of the issues, yet the wage formula is an extremely complex mechanism. In regard to staffing, Senator Townsend asked if the appeals office has applied or received authorization in the new budget for increased staffing. Mr. Nix responded they have asked for two additional appeals officers, one for Carson City and one for Las Vegas. Senator Townsend stated one complaint he consistently receives and feels is a legitimate complaint is about the length of time it takes for an appeal. There is a 50 percent continuance problem. He asked if there is something in the statute that is wrong, producing these continuances, or is it the volume of appeals. Senator O'Connell asked if the viewing of videos affects the caseload. Do they add to the time element problem. Mr. Nix stated they do. There are at least 20 hearings per officer each morning. There are time restraints, but the hearing officers often take the videos home, or view them at another time. They do try to hear all the evidence. They do try to limit hearing evidence to only what is pertinent to the hearing. Senator O'Connell asked how far ahead do the hearings officers receive the evidence. Mr. Nix responded the evidence is submitted the day before the hearing. He addressed the continuance problem. Previous legislation from 1991 Senate Bill (S.B. 7) of the Sixty-sixth Session required a hearing to be scheduled within 60 days. SENATE BILL 7 Makes various changes relating to industrial insurance OF THE SIXTY-SIXTH and other rights of employees. SESSION: Notice had to be sent out within 10 days to schedule the hearing within 60 days. Continuances increased dramatically. Last session the required time frame was changed to 90 days. Continuances decreased slightly. Mr. Nix would like to eliminate the cap on when an appeal can be scheduled. This would allow a case to be scheduled in the appropriate time frame. Some cases cannot be ready within the 90 days. A lot of time is wasted on continuances on cases not ready, and could not be ready during the required time frame. Fifty percent of the staff time is wasted processing continuances. There are so many hearings scheduled, some people give up and say they will come back in 2 or 3 months because they cannot wait 2 or 3 hours for their hearing. The office is working on some alternatives to help with this problem. Senator O'Connell stated the time restriction was set up to help the claimant so they would not have treatment held up while waiting for an appeal. Senator Townsend stated the reason behind the requirement was to help with determinations. He asked Mr. Nix if they could accommodate those who want a quick determination without a statutory requirement. Mr. Nix stated it was their goal to get cases to hearing as quickly as possible. Unfortunately all parties are not ready to go to hearing as quickly as the office is ready. Some times claimants are ready but the employer is not. A more flexible scheduling process at the appeals officer level would allow the office to be much more effective at hearing the cases which need to be heard quickly. If benefits have been cut off, and the worker is 90 days away from getting an appeal hearing, the worker is without income. That person needs the hearing faster than someone who is not even ready for the hearing, but must, by law, be scheduled for a hearing. That time could be better spent on the worker in need of the earlier hearing. The 30 day requirement at the hearing level is good, but the 90 day at the appeal level is not. Senator Shaffer stated the committee needs more detailed information to understand where the problem lies. Is it the employer, the claimant or the office who is holding up the system. Mr. Nix responded it really is not anyone's fault. Cases are ready to hear at different times. They are not all ready within the same time frame. Senator Neal discussed the graphs with Mr. Nix in some detail. Senator Neal was not available for the first overview of the charts. Senator Neal and Mr. Nix discussed page 9 (Exhibit C) and Senator Neal expressed his feelings that the claimant does not have much chance of winning an appeal. Mr. Nix disagreed. Most appeals to the district courts are filed by the insurer or the employer. Most claimants cannot afford the district court procedure. Mr. Neal stressed the appeals officer level, for most claimants, is their last hearing. Mr. Nix agreed. Mr. Nix stated the claimant has 3 to 4 weeks to appeal. This time frame is difficult to work with. He illustrated using page 8 (Exhibit C), showing how more than 30 percent of all cases are resolved at the hearing officer level. The insurer is affirmed 34 percent and reversed 9 percent of the time. The dismissal figure is significant. At that level the parties involved come into a hearing with their evidence and are able to resolve the despite. Senator Neal stated 78 percent of the cases going to appeal are filed by the claimant. Mr. Nix agreed. Fifteen percent are filed by the employer. Seven percent are filed by the insurer. Mr. Nix stressed only 5,600 of the original 17,000 cases ended up going to appeal in 1994. Mr. Nix referred to page 19 (Exhibit C). Senator Neal asked about page 4 (Exhibit C). Mr. Nix explained in Nevada, by statute, the Nevada Attorney for Injured Workers cannot appear at the hearing officer level. Mr. Neal referred to the chart again on page 4 (Exhibit C) and Mr. Nix explained the employer did not appear at the hearing, but SIIS usually does. Senator Neal stressed the first hearing for most injured workers is an adversarial hearing between the injured worker and the insurer. Mr. Nix responded in most cases that was true. He would like to see the dispute settled without the "battle out the positions" attitude. Senator Neal discussed pages 6 and 7 (Exhibit C). On page 7, Senator Neal asked for a breakdown of the Claim Accept/Denial section of the chart. Senator Townsend asked what the percentage was of claimant vs. employer. Mr. Nix stated he did not have the breakdown yet. It was his opinion most of the percentage was claim denial appealed by the claimant. Senator Neal questioned the 34 percent Affirmed section of the chart on page 8 (Exhibit C). Mr. Nix stated some of the affirmations were of issues which agreed with the employer and some with the claimant. He did not have the breakdown. Senator Townsend asked for the length of time it takes to receive a ruling from the appeal level and the hearing level. Mr. Nix stated most of the time a ruling from the hearing level is within a few days. The appeal officer has 30 days, by statute to render a decision. Senator Regan asked if the committee would be doing work on the qualification requirements of the appeals officers. Senator Townsend responded they would be. Mr. Nix stated he has a list of those requirements. Nancyann Leeder, Nevada Attorney for Injured Workers (NAIW), presented Exhibit E, two pamphlets and an explanation of the legal procedures for the injured worker. She explained her office has gone through reorganization and is now part of the Consumer Services Cluster, the Department of Business and Industry. The enabling legislation is Nevada Revised Statutes (NRS) 616.253 - 616.2539. Her office is appointed by an appeals officer to represent a claimant. The reason for her office is to keep the claimant from being intimidated by the process. The office assures the evidence compiled is targeted to the injury and is relevant. Her office is there to diffuse the emotional overlay of the hearing because the claimants are not there attempting to argue the case by themselves . The office is there to be certain all legal issues are properly stated and are fleshed out. Legal research is done when necessary. Ms. Leeder stated they have developed a statistical program and have begun to input data. It is ..."an imperfect tool." Ms. Leeder referred to Exhibit E, pages 3 and 4. Ms. Leeder stated her office has had a tremendous problem with continuances. An attorney must prepare for each hearing. Continuances increase the paperwork and increase staff delays. Often it is the doctor who has not responded to repeated requests for data who slows the process. Senator Shaffer asked if the doctors in question were all SIIS doctors. Ms. Leeder stated they were not all SIIS doctors. They were from all over the state. Senator Lowden asked if these cases were older cases. Ms. Leeder stated they were. They were not the MCO doctors. Ms. Leeder also asked for the time restriction to be removed. This would decrease the number of continuances. Cases would come to hearing when they were ready and not before. Senator Lowden asked what would separate one appeal from another when going to the district court level. Ms. Leeder responded the office does not appeal many cases at district court. They take cases to district court when the appeal hearing has been challenged. Senator Neal questioned what was meant by the term "appointed cases." Ms. Leeder stated the appeals officer must appoint NAIW to represent a client. Occasionally a client will be represented before a case reaches a district court, but those instances are rare. NAIW also gives advice on vocational rehabilitation buy outs. Sometimes this advice is given on a one-on-one basis. There is a waiver involved in this negotiation which prevents a client from collecting a vocational rehabilitation buy out in the future if they accept a buy out at the time of the claim. Senator Townsend instructed Ms. Leeder to remain involved in monitoring the process to be certain nothing obstructs efficiency. Ms. Leeder stated one problem NAIW has, is with the lack of uniformity in the numbering system by the MCOs. There is no way to input their cases into NAIW's computer. Ron Swirczek, Administrator, Division of Industrial Relations, presented Exhibit F, an Overview of the Division of Industrial Relations (DIR), Exhibit G, a pamphlet, Guide to Developing Written Workplace Safety Programs, Exhibit H, a pamphlet, Workplace Safety in Nevada, Exhibit I, Compliance Assistance Program Overview. He stated he planned to cover three points, workplace safety programs and their impact on the workers' compensation system, the workers' compensation area with information regarding the MCO program, and to address questions from the December 5 pre-session hearing. He introduced his new staff and then referred to Exhibit F. Workplace safety has impacted the workers' compensation system. There has been a media program to educate the employer in safety programs. As a result, DIR has trained 7,000 employers in the past 18 months. In the past 18 months DIR has targeted the most hazardous industry, construction. There is a new regulation in the public hearing process regarding pre-construction conferences for new projects. There are 40 major construction projects about to begin in northern Nevada and 79 in southern Nevada. Contractors and subcontractors are brought into the hearings to review the rules and to make comments. They look for ways of making the job safer. Contract construction inspectors are brought into the projects to check on job safety. These measures have improved the working conditions. There have been less lost time claims filed despite the increase in projects. The workplace safety efforts and the multimedia efforts have helped. Senator Shaffer asked if the workforce has increased in the gaming industry or the construction industry. Mr. Swirczek stated both have increased. Mr. Swirczek referred to NRS 606012 stating it was DIR's intent "...to regulate those insurers to the interpretation of 616 and 617 of the NRS to insure quick and efficient payment of compensation to injured and to disabled employees at a reasonable cost to employers were subject to provision of these chapters." DIR is currently in the process of a compliance audit. They hope to bring recommendations to make the program better to the committee by March 1. Surveys have been sent to MCOs, to claimants, employers, and SIIS. It is hoped the surveys will help if any new decisions need to be made legislatively. DIR has contacted an authority on ratings to evaluate and compare the fourth edition of the ratings manual with the troublesome second edition currently in use. Senator Shaffer asked who adopts the editions. Mr. Swirczek stated DIR does and they have been very cautious because of financial concerns. Senator Lowden asked where the ratings authority lived. Mr. Swirczek stated he was from the east but was known nationwide as an authority on ratings. He commented there has been a lot of confusion as to the interpretation of the fourth edition. Senator Lowden stated there is confusion. Mr. Swirczek stated DIR has received a preliminary report and the report has been forwarded to three medical doctors. They reviewed the report and have asked DIR to move forward on adoption of the fourth edition. DIR will act on the fourth edition after a series of public hearings. They will weed out any "fatal flaws." Senator Neal asked what was meant by "second edition" and "fourth edition" and "rating." Mr. Swirczek clarified "rating" as when a person sustains an accident and there is limited use of a limb from that accident. A rating of loss is applied from the American Medical Association (AMA ) guides determining the percentage of impairment. Senator Neal asked how Exhibit G will help a worker. Mr. Swirczek responded through education and understanding of the problems inherent in the workplace. Communication is a key method to prevent accidents. Danny Evans, Assistant Administrator, Administrative Unit, Division of Industrial Relation (DIR), stated: Since July of 1994, out of 625 inspections that we conducted at multiple work sites, we found 46 of the employers had no written workplace safety program at all, we found that 33 other employers had written programs with deficiencies. The percentage is about 8 percent showing that they did not have a written [program] as of the time we did the inspections. Senator Neal asked if the contractor at Laughlin was included in those figures. Mr. Evans stated they had a written program. Mr. Swirczek commented on a question posed earlier about protective equipment and the number of employers who provide safety devices. Mr. Evans stated in 1994 there were 1373 workplace inspections. Hearing protection was sighted 23 times, eye protection was sighted 16 times, respiratory protection was sighted 61 times, head protection 10 times, and belts and lanyards were sighted three times. Some citations were based on them not having a written program to address the proper cleaning, storage, and issuance of the safety equipment. It was not because the employer did not have the equipment, but because they may have been short and not issued everyone the equipment. Richard R. Romero, Independant Safety Inspector, southern Nevada projects, spoke concerning safety on construction projects. He stated he has 22 years experience in the safety and health field on construction and general industry. He worked on the Luxor Hotel, the MGM Hotel, the Henderson 515 Freeway, two water control projects, the McCarren 2000 project, and the Tunnel project. Senator Townsend asked Mr. Romero how often he visited the sites during construction. Mr. Romero responded he was assigned to the Luxor project in the last 9 weeks before completion. He was there 8 hours a day. On the McCarren 2000 project and the Beltway, he was there at various hours to assure safety at different times during the 24 hour construction cycle. Senator Townsend asked what requires Mr. Romero to be on a job on an 8 hour-a- day basis. Was it dollars spent or the number of people on the job. Mr. Romero responded it was dollars spent. Mr. Swirczek stated both determine what is designated a major construction project. There are guidelines to make that determination depending on if the project is over $10 million and if the type of exposure and hazard presented by the project to the worker warrants the 8 hour inspection format. Mr. Romero stated he does not have the capacity to issue citations. He presented Exhibit J, a sample safety compliance report, which is issued daily. Some of the hazards he looks for are: falls, being struck by flying objects, mechanical equipment, being caught in between pinch points such as trenching, electrical shock ( which makes up 90 percent of injuries and fatalities on construction sites), and chemical exposure. Senator Townsend asked about the two deaths on the construction of the Luxor. Mr. Romero explained they were prior to his being on site. Mr. Swirczek stated the program did not come into effect until after last session. It was not until later in the year that the program was implemented. Mr. Romero stated in the McCarren 2000 project phase three which began October 1992, there were 28 contractors, including surveyors. Twenty-three had no injury claims. In 1993 there were 11 lost time injuries on site. In 1994 there were 9 lost time injuries on site. A total of 1.9 million hours were worked on that project. There were a number of falls, electrical hazards, and poor equipment used. Mr. Romero had to require safety compliance. His supervisors were required to force the compliance. Senator Neal asked if 29CFI1926 had an application other than the project listed in Exhibit G. Mr. Romero stated 29CFI1926 is part of the standards for the construction industry. 1926 is the construction industry standard. 1910 is the general industry standard. Dennis Hoffma, Contract Safety Inspector, northern Nevada, was asked to return at a later date due to the lack of time. Senator Townsend invited him to the Las Vegas hearings. Senator Regan asked if he had authority to "red tag" a job. Mr. Romero stated he could get a county inspector to "red tag" a job if needed. Senator Townsend closed the hearing at 11:00 a.m. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 20, 1995 Page