MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 24, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Tuesday, January 24, 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: Sam P. McMullen, Lobbyist, Nevada Self-Insurers Association Gerry Meier, Workers' Compensation Administrator, City of Las Vegas Mark Habersack, Workers Compensation Safety Coordinator, Nevada Self-Insurers Association (NSIA) Barbara Scarborough, Workers' Compensation Manager, Mirage Resorts Bob Ostrovsky, Lobbyist, Nevada Resort Association Ron Swirczek, Administrator, Department of Business and Industry, Division of Industrial Relations (DIR) Jan Myers, Northern District Manager, Division of Industrial Relations, Industrial Insurance Regulation Section Arthur L. Busby, Jr. , Benefits Administrator, Horseshoe Hotel and Casino, Las Vegas Richard Tetreault, Assistant General Counsel/ Risk Mangement, Southwest Gas Corporation John S. Rogers, Director, Risk Management, MGM Grand Hotel Joanne Rennie, Risk Manager, City of Reno Stan Smith, Industrial Insurance Manager, Boyd Gaming Monica Campbell, R.N., Occupational Health Nurse, R.R. Donnelley and Sons, Inc. Larry Zimmerman, President, CDS of Nevada The meeting was called to order by Senator Townsend at 8:00 a.m. Samuel P. McMullen, Lobbyist, Nevada Self-Insurers Association, introduced Gerry Meier, Workers' Compensation Administrator, City of Las Vegas, who discussed the changes made to workers' compensations laws in the 1993 session. She detailed the major effects of Senate Bill (S.B.) 316 of the Sixty-seventh Session. SENATE BILL 316 OF THE SIXTY-SEVENTH SESSION: Makes various changes to provisions governing industrial insurance. Ms. Meier stated the major effects of S.B. 316 of the Sixty-seventh Session in claims administration were in allowing insurers to contract with Managed Care Organizations (MCOs) for the health care of the industrial injured workers in the state of Nevada, enacting of legislation to hold down the cost of temporary total disabilities, and in the payments of permanent partial disability (PPD) benefits. There were major changes made in how insurers accept industrial claims, how they review reopening rights, in rehabilitation, and in determining fraud. The implementation of these changes has resulted a in reduction of workers' compensation costs. One-third of the self-insured claims come from government employees, which include employees from the cities of Las Vegas and Henderson, Clark County and the school districts. Exhibit C (Self-Insured Employers Worker's Compensation List) was not discussed. Mark Habersack, Workers' Compensation/Safety Coordinator, Occupational Safety and Health Administration (OSHA) Compliance Officer, Nevada Self Insurers Association (NSIA) presented Exhibit D ( S.B. 316 [of the Sixty-seventh Session] What is Working) and Exhibit E (S.B. 316 [of the Sixty-seventh Session] What is Not Working.) He stated one-third of the municipalities in Nevada belong to the Nevada Self-Insurer's Association (NSIA). By becoming self-insured, these municipalities have saved the taxpayers money. Mr. Habersack stated S.B. 316 of the Sixty-seventh Session was a positive move forward in fixing what was wrong with the system. He stated the "Plain Meaning Rule" is working well. This rule meant "...laws had to interpreted exactly to the meaning and not liberally construed." This was a step forward, but there are still some problems with the rule. He illustrated how the problems exist at the appeals hearing level and progress into the court system. The hearings officers and the courts are not applying the "Plain Meaning Rule." The use of Managed Care Organizations (MCOs) has been a very positive change. "Objective findings vs. Subjective findings" has been a positive step. The "Definition of Stress" has been a positive step in controlling stress issues and stress claims. "Vocational Rehabilitation Time Limits" has worked well. It prevents the duplication of rehabilitation. "Primary Cost Statute" concerning preexisting conditions is working well. The greatest step forward was the mandating of employers to produce written safety programs. Prevention is the major key to worker health. The Attorney General's Fraud Unit has done an outstanding job since it was enacted. Making fraud a felony instead of a misdemeanor has reduced the incidence of fraud. Senator O'Connell stated the Attorney General's Fraud Unit has asked for seven new employees. The Governor's Budget has allowed for 11 new employees. She asked if seven would be sufficient. Mr. Habersack stated the Nevada Self-Insurers Association (NSIA) feels very strongly about the fraud unit. He stated the NSIA feels whatever is going to work well for the state will work for NSIA. They are behind whichever decision is made. Senator Lowden asked if the assessment was increased to pay for the 11 new employees instead of seven new employees would that change his feelings. Mr. Habersack said he did not have any issues with the fraud unit. Barbara Scarborough, Workers' Compensation Manager, Mirage Resorts, stated the fraud units benefit the self insured. Fraud is not as common in the resort industry as it is in the construction industry. She stated the resort industry's biggest problem is getting the employee back to work. They do not want to work as long as they can stay home and be paid. She suggested that any look at further assessment would include an evaluation based on who is using the fraud unit. Senator Lowden emphasized if the unit is expanded then someone will have to pay for the expansion. She suggested if the self insurers do not wish to pay more, they should make their comments during the hearing. Bob Ostrovsky, Lobbyist, Nevada Resort Association, stated the self insurers now pay 30 percent of the cost of the operation of the fraud unit. It had been his understanding at some time in the future the fraud unit would become self sufficient through the implementation of fines. Senator Lowden stated the fraud unit collected an excess of $5 million and more than $200,000 of that money went into the General Fund. If the unit is built up, and the self insurers are assessed for the cost of the unit, then they need to look at where the money is spent. Mr. Habersack presented Exhibit E. He illustrated the problems in the appeals level in the hearing office, and stressed the problems need to be addressed. The "Plain Meaning Rule," and the "Timely Fashion of Setting Appeals" statutes are not working. Even though the statute states the request for an appeal has to be set on the calendar within 7 days to be heard within 30 days, there are many self insurers who have waited 7 months to have an appeal heard. Mr. Habersack stated he spoke with Brian Nix, Senior Appeals Officer, Department of Administration, Hearings Division, about this problem and Mr. Nix stated because the appeals officers are appointed by the Governor's Office, Mr. Nix has no authority to dictate to the appeals officers as to "how" and "when" they will do their job. Mr. Habersack stressed it seemed apparent the appeals officers are held accountable to no one and are able to do as they please. He stated the appeals officers are "...snuffing S.B. 316 of the Sixty-seventh Session, they are not following the "Plain Meaning Statutes." He indicated the officers are not granting stays for good cause. They seem to operate in any which way they feel and according to Mr. Nix, he claims he can go in and tell them they have to do these things, but if they say "no," he is absolutely powerless to be able to stop them. Senator Neal asked what problems occur due to the delays. Mr. Habersack stated the claim is in limbo. If there are lost time issues involved, the delays can cause a financial drain on the system. If benefits are delayed to the claimant or will eventually be denied to the claimant a problem arrives for all. The process has not become as streamlined as was hoped. Ms. Scarborough stated it is her opinion the appeals officers are "thumbing their noses at you [the committee] and the laws that you [the legislature] enacted last year. They have set themselves up to be medical authorities... they believe one physician as a "credible physician" over three other board certified specialist physicians." She indicated ..."they [appeals officers] feel they are there to, in anyway they can, find and give away money." She stated there was need for accountability in the appeals office. Exhibit F (letter from Washoe County School District) was not discussed. Mr. Habersack stated the NSIA is having a great deal of difficulty with the Industrial Insurance Regulation Section (IIRS) concerning audit issues. He indicated a problem exists in S.B. 316 of the Sixty-seventh Session with the wording where "may" was changed to "shall" impose a fine. If there is an overpayment to the claimant, even in the amount of 39 cents, IIRS is imposing fines for up to $125. NSIA asked for procedure requirements in November and did not receive them. Mr. Habersack stated whenever they ask for documents explaining procedure, they are always told it is being revised. A letter of inquiry was sent to Ron Swirczek, Administrator, Department of Business and Industry, Division of Industrial Relations. An internal document on policy was sent dated January 4, 1995. Mr. Habersack referred to Exhibit G, Policy Statement, Notices of Violation and Fine Procedures. The fines should be tailored to fit the infraction. If a claimant is overpaid, the employer should not be fined. The claimant is not harmed by the overpayment, but the employer is punished anyway. Bob Ostrovsky, Lobbyist, Nevada Resort Association, Balleys Grand Inc., stated there are two forms for calculating a Permanent Partial Disability (PPD) award. They use each form, then take the highest amount so that the claimant is not harmed, then they are fined anyway for overpaying. He stated on a several thousand dollar claim, they calculated the figure twice, took the higher payment, paid an extra dollar to the claimant, then was fined $75 for overpayment. He stated Balley's Grand Inc. has spent thousands of dollars fighting the fine, because if they are fined too often, no matter the reason, they put their certificate at risk. There are no options left to them. Mr. Swirczek stated the language in the statute is not appropriate. He stated he had suggestions to resolve the issue. The mandatory language for fines should be retained in the areas of appeal rights. Senator Townsend asked Mr. Swirczek why this situation exists and how could it be fixed. If a claimant has not been injured, why are the fines imposed. He stated the legislature should not have to write everything into a statute and he does not feel the public wants them to. The agency should be able to reason some of the issues through without these problems. Mr. Swirczek stated they met with representatives of the self insured group and offered the policy statement (Exhibit G) to them and asked for their comments. He stated he did not receive any comments. He stressed they want to make the system work. Senator Townsend asked where there are two PPD schedules. Mr. Habersack stated Exhibit G is dated January 4, 1995. They have not had time to go through the document piece by piece. The NSIA is concerned because this document is an internal document. There have been no hearings on this document. He stated it looks a lot like a regulation. Mr. Swirczek stated Exhibit G is an internal guide. "...if you recall in the self insured, and everyone is aware that the language reads that we fine up to $250 for each initial violation. That is $0 to $250 or up to $1000 for intentional or repeated violations." He indicated the policy statement was just a guideline outlining what was a serious or non-serious offense. Senator Townsend stated Mr. Habersack made a good point. If it is a regulation it should be done through a hearing. Since the policy looks like a regulation to those who are being regulated, it puts Mr. Swirczek's office at risk because there were no hearings held on it. He commented if something like Exhibit G was aimed at claimants, there would be many protests. Samuel P. McMullen, Lobbyist, Nevada Self-Insurers Association, suggested Mr. Swirczek reevaluate the policy statement. He stated: ..that under the Administrative Procedures Act 233BO38, the definition of a regulation, and 233BO39, in terms of who is exempted from it, at least it is my read, and I think they ought to look at it, too, anything that has the kind of application, anything that has this kind of effect even if its guised as an internal rule, if effects the rights of people outside that agency it probably looks and smells like a regulation and ought to go through the process... Senator Shaffer commented Exhibit G stated very clearly what it was, "Policy, Procedures and Guidelines." Mr. Swirczek stated they were like any other agency with internal guidelines. Jan Myers, Northern District Manager, Division of Industrial Relations, Industrial Insurance Regulation Section, asked to see where there was a difference between the regulation and the form that is used. The form was developed to try to establish a guideline for anyone to use, which is a step by step method of calculating PPDs. She stated there was not a difference between the regulation and the form. Senator Townsend interjected Mr. Ostrovsky indicated they had been fined because there was a difference. Mr. Ostrovsky said that fine was under appeal. Gerry Meier, City of Las Vegas, stated she had received a fine for the same issue brought up by Mr. Ostrovsky. Senator Townsend stated he wanted to see this issue resolved this session. Ms. Myers stated she would like to see the issue resolved also. Senator Neal commented it sounded as if a department was not supposed to develop its own procedures. Mr. McMullen stated this was not the case, but a document which has such far reaching impact on others outside the department should be subject to hearings. Senator Neal asked if a procedure which has a reference to a statute is supposed to be adopted as a regulation. Mr. McMullen expressed his concern with Exhibit G. Senator Neal stated no one had said Exhibit G exceeds the statute. Mr. McMullen stated that was not the issue. Senator Neal disagreed. Mr. McMullen stated that the legislature established processes with respect to impacts and procedures. Those procedures should be followed. Exhibit G impacts outside of the agency and therefore should be subject to procedures for adoption. Mr. Habersack asked Senator Neal where the regulations stop. He asked: Does that mean that they can set up an internal policy to regulate what they are going to pay physicians and providers. Because that impacts us as well. Does it mean that they can set up statute and regulation for ... Senator Neal interrupted, telling Mr. Habersack: The point is if you cannot show that this exceeds the statute or exceeds some type of regulation then I will have to ask the question what is the beef? Mr. Habersack stated the issue was that the regulation affects employers outside the agency, which has an adverse effect on the insurance certificate. Senator Neal and Mr. Habersack continued their exchange without a solution being found. Mr. Habersack stated they were willing to sit down with Industrial Insurance Regulation Section (IIRS) and work on the problems and to get those problems resolved. He stated the subsequent injury fund was separated out of S.B. 316 of the Sixty-seventh Session. The subsequent injury fund is managed by the IIRS, the same body which audits, regulates and dictates how the NSIA conducts business. It is difficult to recover money from NSIA's subsequent injury fund which is assessed and they pay into, but cannot manage. An option would be to appoint a panel consisting of two or three members of NSIA and a representative from IIRS to manage that fund. PPD awards are an issue. Sometimes they work, sometimes they do not. Arthur L. Busby Jr., Benefits Administrator, Horseshoe Hotel and Casino, Las Vegas, discussed PPDs. He stated the true purpose of the PPD award was intended to offset future wage earnings as a result of an accident and to offset other incidental medical claims after the case was closed. He stated in the past few years there has been a severe erosion of this principle. It has become an opportunity for a cash windfall for an injured employee. Most recipients of the awards have not proven to be fiscally responsible with their money. Many use the awards to buy new homes, boats, and cars with their awards instead of saving it for the medical expenses for which the PPD was intended. Lump sum payments are generally used to pay attorney fees. Claimants, after closure and acceptance of the PPD award, often ask for a reopening, not because of a change in medical condition, but because of a need to pay future medical costs. It would be much better for the claimant to have the PPD stretched over the intended lifetime or to age 70. Trial lawyers and the unions have opposed any changes to the PPD awards. Loss of benefits were the unions' concern. Exhibit H is a copy of his testimony. Mr. Busby shared ways to increase the PPD and to decrease the cost to the employer. South Dakota, North Dakota and North Carolina have used the following methods to accomplish these goals. Nevada regulations require the PPD to be calculated in both installment payments and in a lump sum payment. The simplest solution would be to purchase a 20 year insurance annuity on behalf of the employee. Using the plan you can effectively reduce the PPD by a figure of 20 percent... issue the annuity on behalf of the injured employee and the employee would then see a 150 percent return on the original PPD award... on a $20,000 lump sum payment the PPD is calculated reduced by the 20 percent resulting in a $16,000 PPD annuity. The annuity is purchased, the employee would then receive $124 a month for the next 20 years. The net award would be over $30,000. The PPD award is increased by 50 percent and reduces the cost to the employer by 30 percent. Annuities are legal and have been approved by DIR. If a financial difficulty is proven by the claimant, then a lump sum payment may be made to cover late car, mortgage, and credit card payments. The balance of the award then would be issued in the form of an annuity. By purchasing a lump sum annuity the following benefits will be achieved: secure earlier resolution of claims, shift the administrative cost burden to an insurance company, reduce claim reserves, lessen the settlement cost, eliminate future liability, guarantee the employee future minor medical benefits, allow for full retention of social security and Medicare benefits, and eliminate the risk of dissipating funds within the system. Mr. Busby stated: Conceptionally, workers' compensation benefits are intended to be a partial replacement of income, covering present and future lost earnings. Experience shows the majority of those receiving lump sum payments dissipate the funds within 3 years. Mr. Habersack stated this approach has been tried at Harrah's with an employee who received a 32 percent PPD award. The employee elected to receive 25 percent in a lump sum. Harrah's purchased an annuity for $16,000 for the $42,000 liability balance. The employee will receive a total of $84,000 by the term of the annuity. The employer saves and the employee greatly benefits receiving monthly payments to pay for future costs incurred with the claim. Richard Tetreault, Assistant General Counsel/Risk Management, Southwest Gas Corporation, stated they administer claims in three states, California, Arizona, and Nevada. PPD awards are substantially higher in Nevada than in the other two states. He compared an Arizona award at $2,000 to the same award in Nevada at $13,000. Last year they had seven awards in Arizona for $17,000 to six awards in Nevada for $80,000. They use annuity awards in Arizona. He stated their attorney fees to defend disputes in PPD awards have escalated. In 1992, they spent $32,000. In 1993, they spent $46,000, and in 1994, they spent $119,000. This was all spent in Nevada and was all for PPDs. The medical costs decreased in Nevada, but the PPD awards skyrocketed. Senator Neal questioned Mr. Busby's statement that they would be relieved of future liability due to a PPD judgement. Mr. Busby stated that was true for that award only. Senator Neal asked if the investment was secure. Ms. Meier stated the insurance companies have insurance. Mr. Habersack said it is important to choose an insurance company carefully. He stressed the employers represented at the hearing value their employees and treat them well. They want the employee to benefit, to have a good relationship with he employer. They want the employee to receive all benefits due to them. Mr. Busby commented to Senator Neal that workers' compensation started in the United States around 1911. There are six underlying principles to workers' compensation which show up in every state's annual report except in the state of Nevada. They are as follows: Provide sure prompt and reasonable income and medical benefits to work related accident victims or income benefits to their dependants regardless of fault. Provide a single remedy and reduce court litigation. Relieve public and private charities of financial demands incident to the compensated injured work. Minimize payment of fees to lawyers and witnesses as well as time consuming trials and appeals. Encourage maximum employee interest in safety and rehabilitation through appropriate experience rating mechanisms. Promote frank study of causes of accidents to prevent them in the future. Senator Neal asked if reasonable benefits should be the sole province of the employer. Senator Townsend responded it was not. It was the responsibility of the legislature. Senator Neal questioned what was considered a reasonable benefit. John S. Rogers, Director, Risk Management, MGM Grand Hotel, shared his personal experience with annuity plans. He has invested his injured daughter's PPD award for severe burns she received. If he did not feel investment was the safest way to insure her future, he would not have used it. But he did, and he is confident it will benefit her. He made certain the investments were in insurance companies rated A+15 or better and that they were reinsured. He stressed he and the hotel he works for care deeply about their employees. They value them and would not shortchange them. He stated the structured settlement is an excellent vehicle. It saves the employer money, and it gives the employee money on a monthly basis and does not put the employee on welfare at the state, county, or city's expense, because the money has been dissipated. Senator Lowden asked if the family of an injured worker receives the benefit if the worker dies. Ms. Meier stated that would need to be fixed in the statute. Mr. McMullen commented the benefits could be fixed into the annuities. Monica Campbell, R.N., Occupational Health Nurse, R.R. Donnelley and Sons, Inc., expressed R.R. Donnelley's objection to the current of NRS 616.5651C. The statute precludes an employee from recovering workers' compensation benefits for industrial injuries which are a result of his intoxication. Intoxication is not defined the statute, (Exhibit I). Joanne Rennie, Risk Manager, City of Reno, stated the City of Reno finds being self insured is working well for them. It allows them to respond in a timely manner to their employees' concerns. Regulator oversight is a concern. They are concerned about any premium taxes or an additional assessment which would be passed on to the taxpayer. She stated there is more need for investigation in the fraud unit. She stressed confidentiality of the medical reports is essential. A false Human Immunodeficiency Virus (HIV) report was given on a firefighter because he had the same name as another individual, but a different birth date and social security number. The person did not find out the report was in error for 48 hours. Mr. Habersack stated there is a confusion over filing date for notice of injury as quoted in the statute. He felt better wording would be, "filing a notice of injury must be completed by the end of that employee's shift." There is also a problem in the Laughlin basin. The employers and employees in that area would like to see traveling hearing officers in the area. They feel they are not being properly represented. He thought there were probably the same problems in the northern part of the state. Senate Bill (S.B.) 7 of the Sixty-sixth Session mandated a state wide indexing system. This has not happened. SENATE BILL 7 OF THE SIXTY-SEVENTH SESSION: Makes various changes relating to industrial Insurance and other rights of employees. Great expense has been undertaken to upgrade computer systems to come on line with the state system. But the system is still not working. State Industrial Insurance System (SIIS) computers were changed and are now not compatible. If the self insured employer wants information on a claimant they have to get a notarized release from the claimant. Many claimants are unwilling to do this. Ms. Scarborough stated they need to know prior history of a claimant to be certain they are not paying for the same body part which has already received an award. SIIS will not accept the C-4 form release or any other release form. She stated, "SIIS also required a letter indicating they were complying with certain parts of the Americans With Disabilities Act (ADA) law which has nothing to do with anything, anyway..." There was a problem with exchanging information to clarify the claim. Mr. Ostrovsky commented prior claims are not subject to managed care. There is a problem with ratings physicians. There is a need to improve the way ratings physicians do the ratings and a need study other editions of the American Medical Association (AMA) guide. There needs to be more education of physicians on applying the ratings editions. There needs to be a way of controlling the continuing appeal to try to find the largest lump sum award. Lump sums are used to pay the attorney fees on these appeals. It is not the size of the award which is important. It is whether it is the right award for the injury. Ms. Scarborough clarified "soft tissue" injuries. She illustrated how aging affects us all. No one can do today what they could when they were young. Arthritis effects range of motion, but many ratings physicians will give awards based on loss of range of motion from natural causes. The ratings physicians apply the second edition of the guide and state, "...the guide allows us to do it." She discussed pinwheel testing. Pinwheel testing is an imprecise from of detection. The ratings physicians do not look at the reports of the specialists who have given extensive testing to an individual. They give the award anyway. Ms. Meier stated medical bill payments need to be simplified. Mr. Busby asked for an audit at SIIS and for a listing of the fines SIIS was levied. SIIS informed him their fines were closed to the public. He asked at the Governor's Office, was referred to Jim Kropid's office who told him the only information he could obtain was through the Governor's Office. He was told SIIS was showing a positive cash flow for the first time in years. He never received the information he was seeking. Mr. Habersack stated there were a lot of positive changes with S.B. 316 of the Sixty-seventh Session. Now the changes to make it better need to be addressed. Senator Lowden asked for the testifiers' opinion on the fourth edition of the AMA guidelines. Mr. Ostrovsky stated they would be meeting to evaluate the fourth edition and would be listening to public comment on its merits. He discussed coaching techniques used by lawyers to help claimants obtain a better rating. Senator Lowden commented on the lack of criteria for hiring hearings officers and appeals officers and understood the problems created by the lack of standards in choosing these officers. Mr. Habersack stated the problem is mainly at the appeals level. The appeals officers answer to no one. Mr. Busby pointed out other states have a board of review made up of insured parties. This helps to prevent the blatant disregard of the law by the appeals officer. As it is now, there is no review. They have no workers' compensation experience. Senator Lowden stated SIIS is overly reserved on many workers' compensation cases. She asked them to comment on how to change this, but Mr. Habersack stated they were not allowed access to any of SIIS's records. John Rogers commented the only answer was the privatization of SIIS. Insurance companies view claims from a completely different perspective than SIIS. He stated they would happy to make recommendations. Most states do not have a public system. SIIS should be an insurer of last resort, a guarantee fund, not an insurer of general business. Ms. Scarborough commented there are 5,300 pending cases before SIIS, and these have been pending for 2 years. The reserves would drop if they would close these cases. She stated SIIS was computer reserving now. Senator Neal commented he thought the claimants were losing more than they were gaining. He asked what they were paying their MCOs. Mr. Busby stated he was not at liberty to disclose the contracts with the organizations, but there was an error in S.B. 316 of the Sixty-seventh Session regarding the method of payment. MCOs have the opinion that all employees are eligible for workers' compensation. He disagrees because only injured workers are eligible for compensation. MCOs want the employer to pay for access for each worker, injured or not. This is a monthly fee. Mr. Habersack stated he pays monthly also, but he feels it is worth it. Senator Shaffer asked if there is a way to delete any portion of the fourth edition, or is it necessary to adopt it in total. Mr. Swirczek stated they may delete portions, but there may be problems because then, according to the AMA, the total guide is not in use. Senator O'Connell asked Mr. Tetreault to compare Nevada and Arizona laws on the issue. Mr. Tetreault stated the formula for awards is different even though the percentages are approximately the same. The amount of the award is higher in Nevada based on the way the award is calculated. Senator Lowden asked Mr. Tetreault to provide charts for comparison. Mr. Busby added, he had a booklet showing how the rates are determined. He stated Nevada is one of four states which does not use a schedule for PPD awards. Nevada uses a percentage of a whole man rather than a schedule. Senator O'Connell stated people receive PPD awards and then return to their regular job. She asked for comment. Mr. Tetreault stated his employees do, indeed, return to work. In 1994 all claimants receiving PPD awards returned to work doing their same job. Mr. Habersack stated 99.8 percent of his employees returned to work doing the same job they were doing previously. Even though the employee may return to work, be able to do that work, they may still have some level of disability, such has cosmetic impairment or physical limitation, which does entitle them to a settlement. PPD awards need to be treated on a case-by-case basis. Ms. Scarborough stated it often depends on the position the person holds. Sometimes the person does not want to return to work in the same position and accommodations are made to return that worker to a different job. Senator O'Connell asked if there are different categories instead of PPD awards which may be used to settle a case. Mr. Tetrault stated the other states use exactly the same system, they just calculate differently. Senator Neal questioned pre-existing injuries. Mr. Busby stated it is almost impossible to receive information from SIIS. This makes it very difficult to check on pre-existing conditions due to their requirement of a notarized release. Claimants do not want to release information on themselves if they have a pre- existing condition, because they know it will affect their claim. Ms. Meier emphasized they do not mind paying what a claimant is due, but they do not want to pay more than a claimant is entitled to. Without the records proving a pre-existing condition, they cannot verify these records. Senator Lowden asked if any of the self insurers had been contacted by SIIS to see if any of their injured workers had previous injuries at any of their establishments. Stan Smith, Industrial Insurance Manager, Boyd Gaming, stated he had been contacted by SIIS, and there was general agreement from the audience. Harrah's and the City of Las Vegas have never been contacted. Larry Zimmerman, President, CDS of Nevada, stated time limits and reporting procedure changes made during the last session have proven beneficial. Other beneficial changes include; requiring each disability slip to include workers limitations and changes, allowing early return to work without rehabilitation regulations, and change in the reopening requirements. Early involvement and early return to work was over specified in the statutes specifically Section 21.2 of S.B. 316 of the Sixty-seventh Session. Section 13 of S.B. 316 of the Sixty-seventh Session requires limitations of the C-4. Section 21.2 is time consuming and redundant. Section 21.3 needs to be reconsidered. The language dealing the dispute resolution process for employers with MCOs is impossible to work with. He presented his ideas. He stated better communication with the injured worker would clarify things. Little communication is made to the injured worker letting the worker know how determinations on claims are made. Evaluation of benefits based on income are not addressed. He would like to see specific information provided by Division of Industrial Relations (DIR) to the injured worker. Many hearings are held just so the worker can be told about their benefits. He stated there needs to be consistency between the MCOs during the hearing and dispute resolution process. He would like to see the population and mile radius requirements looked into for change. There is confusion over who pays when a claim is first authorized, then treatment is denied. He commented since the Nevada Administrative Code prohibits billing the injured worker, who pays when a worker goes outside the panel. The statute dealing with controlled substances is a worthless statute and needs to be changed. Second opinions ordered by hearing officers are often ordered outside the MCO panels. The exclusive remedy law needs to be readdressed. He stressed PPD awards are for impairments, not disabilities. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 24, 1995 Page