MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session January 27, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Friday, January 27, 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: Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA) Douglas Dirks, General Manager, State Industrial Insurance System (SIIS) Raymond Badger, Member, Nevada Trial Lawyers Association Dan Thompson, Political Action Director, American Federation of Labor and Congress of Industrial Organizations (AFL/CIO) Mark Balen, President, Clark County Fire Fighters Union Local 1908 Jack Jeffery, Secretary/Treasurer, Southern Nevada Building Trades Council Richard J. Ciesynski, Reno Business Representative, American Federation of Labor and Congress of Industrial Organizations (AFL/CIO), Local No. 118 Barbara Gruenewald, Attorney, Nevada Trial Lawyers Association Martin Gross, Attorney, Nevada Trial Lawyers Association Larry Larson, Claimant Bill Snyder, Claimant Betty Boomgarden, LDS Church, Claimant Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS) Jim Mace, Former Employer Member, Board of Directors, State Industrial Insurance System, (SIIS) Eloise Koenig, Self-Insurance Coordinator, Division of Insurance, Department of Business and Industry First to testify was Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA). Mr. Gagnier stated he wanted to testify regarding classified employees, stating he wanted the employees of the State Industrial Insurance System (SIIS) classified the way they are. He felt this would improve morale and protect these employees' positions. Mr. Gagnier went on to give several examples. Senator Lowden asked Mr. Gagnier if he had heard from SIIS employees if there was any duplication of work. Mr. Gagnier replied he had no knowledge of this. He did say, however, there were other complaints he intended to present to the committee in writing, at a later date. At this time Douglas Dirks, General Manager, State Industrial Insurance System (SIIS) testified regarding remarks made by Mr. Gagnier. In particular, Mr. Dirks testified regarding morale and the improvements he felt had been made. Raymond Badger, Member, Nevada Trial Lawyers Association, was next to testify, presenting Exhibit C. Mr. Badger went on to elaborate on Exhibit C. Next to testify was Dan Thompson, Political Action Director, American Federation of Labor and Congress of Industrial Organizations (AFL/CIO). Mr. Thomas stated he came to talk about trends and SIIS and how the system is working. Mr. Thomas went on to say the trend at SIIS was to have a high denial rate and pre-existing conditions are prevalent. Mr. Thomas, speaking for labor interests specifically, commented on Permanent Partial Disability (PPD) awards. Senator O'Connell asked Mr. Thomas to check with other states regarding annuities with respect to injured workers. Senator Townsend requested Mr. Thomas to try and determine what success his organization may have had with structuring monetary needs of injured workers. Mr. Thomas went on to comment regarding the fact that SIIS is recovering with a positive cash flow and could not understand the need for further benefit reductions. Senator Townsend commented regarding the committee's role in trying to see that SIIS did, in fact, work better. He went on to state the committee did need feedback from constituents. Mark Balen, President, Clark County Fire Fighters Union Local 1908, stated the problem his organization faced was not with SIIS, but with self-insureds. Mr. Balen and Senator Lowden discussed ways for his organization to obtain satisfaction from rejected insurance claims. Mr. Balen went on to give examples of frustration regarding claims. Mr. Balen stated there had been complaints registered with the Department of Industrial Relations (DIR). Next to testify, Jack Jeffery, Secretary/Treasurer, Southern Nevada Building Trades Council, stated he wanted to address issues concerning construction. Mr. Jeffery asserted he felt Managed Care Organizations (MCOs), in some cases, had added another layer of bureaucracy, noting, however, they do vary. Mr. Jeffery stated sometimes self-insureds did not have a very large list of providers and he felt the self-insureds should play by the same rules as SIIS. He went on to say he felt a big problem was the lack of knowledge by all concerned. He then related several examples of problems encountered. Mr. Jeffery described problems associated with construction employers putting employees back to work on light duty. He went on to state he felt standards should be set for MCOs with sanctions for those who did not operate within those standards. Senator Lowden stated this was a common complaint about MCOs and perhaps there should be a "report card" to grade MCOs. Senator Lowden and Mr. Jeffery discussed problems caused by the lack of choice of doctors/specialists provided by the MCOs. Mr. Jeffery reiterated his thoughts that many problems were caused by lack of communication and lack of information. Mr. Badger gave more views and examples of problems with MCOs. Senator Augustine asked for suggestions on how to sort out problems associated with lack of knowledge regarding coverage. Mr. Jeffery stated often in an emergency situation, claims are denied because the claimant does not go to an approved doctor, sometimes due to this very lack of knowledge. At this time, Senator Neal then related an incident pertaining to these same problems. Senator Neal then posed a question about employers trying to save money in one of several ways. First being in the area of a good safety program, another would be to have workers come back to work earlier. Still another would be to deny the claim. Mr. Thompson answered. Senator Neal, Mr. Thompson and Mr. Jeffrey had further discussion regarding these problems. Next to testify was Richard J. Ciesynski, Reno Business Representative, American Federation of Labor and Congress of Industrial Organizations (AFL/CIO), Local No. 118, with a series of photographs for the committee (Exhibit D. The originals are in the Research Library.) Mr. Ciesynski noted these photographs were of iron workers. He asked for claims not to be cut and gave testimony relating to his plea for no cuts in claims. He also asked for the ability for claimants to choose their own doctors. Next to testify was Barbara Gruenewald, Attorney, Nevada Trial Lawyers Association, who presented Exhibit E. Before presenting Exhibit E, however, Ms. Gruenewald commented on the possibility of simplifying the hearings and appeals process, as well as the MCO claim process. Ms. Gruenewald and Senator Lowden discussed ways of implementing this. Senator Lowden commented on ways and means of finding which MCOs were doing their jobs properly and which were not. At this time, Martin Gross, Attorney, Nevada Trial Lawyers Association, came forward to comment on Senator Lowden's query. Mr. Gross stated he represents both self-insureds and claimants. Mr. Gross went on to give examples of how decisions are made during the hearing process. Mr. Gross stated he felt simplification and uniformity of the hearing process would be helpful. Answering Senator Lowden's questions regarding how to accomplish the streamlining process, Mr. Gross gave a detailed explanation. Ms. Gruenewald continued with her explanation of Exhibit E, naming specific improvements she would like to see implemented. Senator Neal asked how much time was permitted in the law for an answer after a claim was made. Mr. Badger said his belief was the time limit was 30 days for a claim to be accepted or denied. Mr. Badger went on to state if the 30 day time limit was not kept, the answer he had received was "I do not have all the information I need." Ms. Gruenewald went on with her presentation of Exhibit E. Ms. Gruenewald referred to the basis of calculation for the wage base and how confusing it could be. At Senator Townsend's request asking how the wage base was calculated, Mr. Dirks stated the formula used was very complicated and SIIS was looking for a solution to simplify arriving at the wage base. There was further discussion regarding calculating the wage base between Senator O'Connell, Senator Augustine and Mr. Dirks. Mr. Gross went on with further explanation of time limits and wage calculation. Mr. Gross, referring to Exhibit E, continued with an explanation of various proposals. Mr. Badger continued with an explanation of Exhibit E. Scott Young, Senior Research Analyst, gave further clarification to Mr. Badger's dissertation, noting the proposal mentioned was, in fact, already in force. Mr. Jeffery joined in to give his views on this proposal. Next to testify was Larry Larson, Claimant, 1905 Molly Drive, Carson City. Mr. Larson stated his occupation was an assistant business representative for Carpenter's Local 971, however, he was on medical leave. Mr. Larson stated he thought it was an SIIS case, but has had problems. Mr. Larson especially pinpointed situations regarding light duty. He then noted a number of problems he has had getting his claim settled. Next to testify in his own behalf was Bill Snyder, Claimant, 172 East Applegate, Carson City. Mr. Snyder stated he was currently embroiled in a claim that has been going on for around 8 months. He went on to clarify his problems. Mr. Snyder stated he felt the doctor who handled his case and examined him for claim purposes, may not have lived up to his obligation when billing. Senator Lowden suggested Mr. Snyder might want to think about turning his records over the Fraud Unit of SIIS for further investigation. At this time, Betty Boomgarden, LDS Church, Claimant, 2340 Jessie Avenue, Sparks, came forward to testify. Ms. Boomgarden stated she was representing herself as well as two other employees who have had problems with the MCO contracted by their employer. Ms. Boomgarden elaborated on these problems. Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS), was next to testify. Ms. Colling informed Senator Lowden SIIS did have a report card of sorts. People are auditing each MCO, with certain information to be examined. After the audits, the MCOs are notified about areas to be improved, then reexamined. Senator O'Connell stated she felt if would be good policy to spot check with injured workers to find how well they had been served as well as to check billing. Senator O'Connell wanted to know if the audit initiated by SIIS did cover this particular situation. Ms. Colling replied there was a review of medical reports of MCOs and also the doctors. Senator Townsend suggested SIIS might want to consider a phone survey, checking with injured workers to see if they had good service, not only from SIIS, but the MCOs as well. Ms. Colling stated there was a survey in process with results expected in a few weeks. Jim Mace, Former Employer Member, Board of Directors, State Industrial Insurance System, (SIIS), came forward to compliment the committee for their work. Mr. Mace also complimented Ms. Colling, Mr. Dirks and Scott Young. Next to testify, Eloise Koenig, Self-Insurance Coordinator, Division of Insurance, Department of Business and Industry responded to a question from Senator Lowden regarding medical provider lists for self-insured employers. Referring to NRS 616.297, Ms. Koenig stated: The self-insureds may contract with MCOs. They can enter into a contract, or contracts with various providers. Then it goes on to say they can require their employees to take medical and health care services for their industrial injuries through these organizations and persons with whom he has contracted, or as he otherwise prescribes. Exhibit F was presented to the committee by Mr. Jeffery, but was not discussed. There being no further business the meeting was adjourned at 11:05 a.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor January 27, 1995 Page