MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 23, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 9:30 a.m., on Monday, January 23, 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 John B. (Jack) Regan Senator Joseph M. Neal, Jr. STAFF MEMBERS PRESENT: Beverly Willis, Committee Secretary Scott Young, Senior Research Analyst OTHERS PRESENT: Ron Krump, Northern Nevada Chairman, Nevada Unified Business Coalition Larry Harvey, Executive Director, Human Resources and Risk Management, John Ascuaga's Nugget Tom Czehowski, Association of General Contractors Eloise Koenig, Self-Insurance Coordinator, Division of Insurance, Department of Business & Industry Clark Knauss, Northern Nevada Association of General Contractors Dave Howard, Legislative Director, Reno Sparks Chamber of Commerce J. Michael McGroarty, Association of General Contractors Omer King, Vice President, Administration, The Clarkson Company Lynn Grandlund, Vice President, Employers of Nevada Scott W. Dickinson, Nevada Association of Independent Business Richard W. Lisle, Associations of Nevada, Las Vegas Glenda A. Lisle, Associations of Nevada, Las Vegas Daryl E. Capurro, Nevada Franchised Auto Dealers Association and Nevada Motor Transport Association, Inc. First to testify was Ron Krump, Northern Nevada Chairman, Nevada Unified Business Coalition. Mr. Krump noted that, although many reforms had been brought to play, the business community still had a number of concerns regarding the workers' compensation insurance program. He stated their organization had not been able to confirm significant savings from efforts of recent State Industrial Insurance System (SIIS) legislation. Mr. Krump felt there was much more to be accomplished, hopefully, in this session. At this time, Mr. Krump noted several items his organization felt was of prime importance. These items were presented in Exhibit C. Mr. Krump went on with an explanation of Exhibit C. Senator Townsend questioned Mr. Krump on the item of vocational rehabilitation, stating he wanted to be sure the rehabilitation was vocational and not physical therapy. The reply was "vocational." Senator Neal questioned one of the items in Exhibit C regarding lawsuit of a claims administrator. Larry Harvey, Executive Director, Human Resources and Risk Management, John Ascuaga's Nugget, answered Senator Neal's question. Mr. Harvey and Senator Neal had a detailed discussion regarding this matter. Senator Neal stated he felt, after studying Exhibit C, the document brought out the intention "to erode the protection of the claimant to be secure in their particular rights to be healed when they are injured and you want to set out and just say I don't have to worry about that." Senator Neal, Mr. Harvey and Mr. Krump had further discussion regarding Exhibit C. Senator Augustine inquired of Mr. Krump, whether, if an organization supports group self-insurance would the various groups support heterogeneous or homogeneous groupings. Senator Augustine then queried Dave Howard, Legislative Director, Reno Sparks Chamber of Commerce, on this same matter. Mr. Howard stated he needed to consult with the Las Vegas Chamber of Commerce. Shedding more light on this subject, J. Michael McGroarty, Association of General Contractors, spoke next. Mr. McGroarty stated his organization would support both, homogeneous and non-homogeneous groups. Tom Czehowski, Association of General Contractors, testified his organization was made up of may different types of employers and the position was the total group had organizational support in looking at group health insurance. Exhibit D was presented, at this time. Senator Townsend asked for some confirmation regarding companies who might be interested in self-insurance and the approximate amount of the premiums. Mr. Czehowski went on to state there were approximately 17 or 18 members who were interested in group self-insurance from his organization in southern Nevada. These groups have further pursued their interest to the point of putting together information to submit an application. This group of associates represents approximately $ 2.1 million in estimated premiums for 1995 for SIIS. Senator Townsend requested clarification from Eloise Koenig, Self-Insurance Coordinator, Division of Insurance, Department of Business & Industry, who stated the division had received one application. The division has also received letters of intent. Ms. Koenig went on to say most of the inquires give an approximate number of members in the initial phase. Once the groups are certified, they can add people daily. Senator Townsend suggested interested parties meet to come to agreement as to the potential range of premium loss if these groups prefer self- insurance. Senator O'Connell requested a figure on how much had been spent in making applications for self-insurance. Mr. Czehowski noted his association had used volunteers up to this point. Clark Knauss, Northern Nevada Association of General Contractors, stated his organization had an application pending with an output of about $40,000. Mr. Knauss went on to say there were about 11 members with around $3 million of premiums. If the statute could be changed, Senator Lowden wanted to know if this might encourage small groups to stay with SIIS. The general consensus was the system needs to be turned around. The feeling was if improvements were not made, more and more employers would opt for self-insurance causing SIIS serious financial problems. Dave Howard, Legislative Director, Reno Sparks Chamber of Commerce, noted the largest number of members in the Reno Sparks Chamber of Commerce were small employers who could not afford the application process for self insurance. Mr. Howard's concern was that those who might be left using SIIS would have to pay the tab for the entire system. Mr. Howard went on to state a number of other concerns. There was a detailed discussion between Senator Lowden, Mr. Krump and Mr. Czehowski regarding improvements implemented; i.e., case management, also savings in handling claims that might make SIIS more attractive. Senator Neal, Mr. Harvey and Mr. Krump then discussed some individual points on Exhibit C, specifically items 4 and 5, dealing with Permanent Partial Disabilities (PPD). On the same theme, Omer King, Vice President, Administration, The Clarkson Company came forward to testify, presenting Exhibit E, again dealing with PPDs. Mr. King gave several examples of these sorts of claims. Lynn Grandlund, Vice President, Employers of Nevada, testified, relating several more claims. Mr. Czehowski, referring to Exhibit D, stated there were several items his organization would like to see addressed. The first being when a claimant is given an award for an injury that will not permanently affect him in the future. Secondly, sometimes there will be multiple PPDs given to an employee who has an injury; they receive a rating evaluation, as well as a PPD lump sum. These same employees then return to their same position, with the same wage, with no effect on their future wage earning capacity. Mr. Czehowski stated it was not their intent to not take care of an injured employee. A main concern is to stop giving away cash awards. There was further discussion and explanations on this matter. Answering questions posed by Senator Regan regarding the "whole man concept," Mr. Czehowski again referred to Exhibit D. Mr. Czehowski referred specifically to page 8. Senator Townsend asked for and received an explanation of ratings when concerning PPDs. Next to testify was Scott W. Dickinson, Nevada Association of Independent Business. Mr Dickinson related other incidents regarding a PPDs. Mr. McGroarty gave further views as to why some employers would prefer to be self-insured. Mr. Czehowski gave further comments on salient points of Exhibit D. Next to testify were Richard Lisle, Associations of Nevada and Glenda A. Lisle, Associations of Nevada. Mr. Lisle stated there were a number of organizations working diligently to form groups for self-insurance who had spent about $30,000. Ms. Lisle commended the committee for their work. Answering a question from Senator Shaffer, Mr. Lisle stated his organization and associate groups had given a lot of thought to any move they might make. Clark Knauss, Northern Nevada Association of General Contractors, spoke regarding the benefits of group self-insurance to everyone involved. Mr. Knauss stated he felt with the loss of people from SIIS, the liabilities were leaving as well. Mr. Knauss went on to relate some experience with SIIS. Senator Lowden noted she felt many of the companies leaving SIIS were healthy companies and her concern was there would be only unhealthy companies left. Next to testify was Daryl E. Capurro, Nevada Franchised Auto Dealers Association and Nevada Motor Transport Association, Inc. Mr. Capurro stated small groups such as his, were exploring to see how self- insurance would improve the system for not just the employers, but delivery of health care and disability payments to employees. Mr. Capurro noted with all costs their group has spent approximately $100,000, including travel, staff time and hard costs. Quoting statistics, Mr. Capurro stated his feelings on the solvency of SIIS. Mr. Capurro went on to state he felt SIIS had not been overly cooperative with members of his organizations when these members had requested information regarding the possibility of self- insurance. The next order of business was the introduction of Bill Draft Request (BDR) 531305 by Senator Townsend. BDR 531305 Authorizes agreement that prohibits former employee from pursuing certain competitive activities. SENATOR SHAFFER MOVED TO DO PASS BDR 531305 . THE MOTION WAS SECONDED BY SENATOR REGAN. THE MOTION PASSED UNANIMOUSLY. * * * * * Exhibit F from E. J. "Tim" Timmreck, Regulatory Compliance Director, Lewis Homes, was presented to Senator Townsend, but was not discussed in the meeting. There being no further business, the meeting was adjourned at 10:55 a.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 23, 1995 Page