MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session February 9, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 9:45 a.m., on Thursday, February 9, 1995, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, 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 Kathy M. Augustine Senator Raymond C. Shaffer Senator John B. (Jack) Regan Senator Joseph M. Neal, Jr. COMMITTEE MEMBERS ABSENT: Senator Sue Lowden (excused) STAFF MEMBERS PRESENT: Scott Young, Senior Research Analyst Vance Hughey, Senior Research Analyst Molly Dondero, Committee Secretary OTHERS PRESENT: Lynn Grandlund, President, Grandlund, Watson, Clark, Lobbyist, Employers of Nevada Scott Stolberg, President, A and A Midwest Distributors Inc. Jim Manning, President, Interstate Plumbing and Air Claude Evans, Executive Secretary-Treasurer, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) Jack Jeffrey, Secretary-Treasurer, Southern Nevada Building and Construction Trades Council Danny Thompson, Political Director, Nevada American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) Frank Caine, President, Southern Nevada Building and Construction Trades Council Pat Vannozzi, Injured Worker John W. Taylor, Injured Worker Michael DeLeo, President, Plasterers and Cement Masons, Local Union 797 Carmela Eubanks, Injured Worker Malinda West, Injured Worker Barry Greenfield, Injured Worker Stella Marchand, Injured Worker, Dare To Dream Carol C. Jansson, Injured Worker, Dare To Dream Danny P. Williams, Injured Worker, Dare To Dream Barbara Costello, Dare To Dream Josephine Lynn, Injured Worker, Dare To Dream Vera Smith, Assistant General Manager, State Industrial Insurance System Kenneth Goldsmith, Injured Worker, Dare To Dream Arthur J. Busby Jr., Benefits Administrator, Horseshoe Club Lynn Grandlund, President, Grandlund, Watson, Clark, Lobbyist, Employers of Nevada, presented two testifiers who wished to speak about the problems they have faced under the current workmen's compensation laws. Scott Stolberg, President, A and A Midwest Distributing, Inc., presented Exhibit C. Jim Manning, President, Interstate Plumbing and Air, explained the work safety program for his business. He stated if a worker fails his drug test, it is company policy he pays for the claim. He told of an employee, however, who, when he failed his drug test, the company turned the claim down. The State Industrial Insurance System (SIIS) turned the claim down, and the worker went to appeals court and won. The company was forced to pay the claim even though the worker had been using drugs at the time of his injury. Mr. Manning explained his company has a counseling service available to all employees to be used for any problems the employee may be having. He stated his insurance premium has gone from $300,000 to $600,000 this year. He stated he has an employee who broke his hip. His medical bills totaled $29,000, but the SIIS reserve for the claim is $353,000. He stated the injured worker had a prior claim with SIIS for a broken ankle, had full vocational rehabilitation, was ordered never to work on an uneven surface, and was trained to do upholstery work. He applied to Interstate Plumbing for a job. Interstate could not ask about his medical history and the employee did not share it. The employee worked for Interstate Plumbing and while on an uneven surface, fell, broke his hip and filed a claim. The worker was released to work by two doctors, but a third said he had problems with hardware still in his hip. Another claimant has had five prior industrial injuries in Nevada. Two were for back injuries for $15,500. He stated if the company had prior knowledge of the claimant's injury history, he would not have been carrying a toilet tank. Mr. Manning stated if he has another year like 1993, there will be 190 people out of work, because the company cannot afford the costs any longer. Ms. Grandlund pointed out the workers in all the cases illustrated had vocational rehabilitation, but chose to go back to their original occupations without telling their new employers. She stated that SIIS has refused to allow Mr. Manning's two claims to qualify under subsequent injury because the workers were not supposed to be working in the plumbing profession. The changes made to subsequent injury in 1993 have hurt the employer. Senator Neal asked Mr. Stolberg when it was he found out an injured worker was an illegal alien. Mr. Stolberg stated his documents were reviewed prior to the issuance of his paycheck and at that time they discovered his illegal status. By that time he was already injured, but it was too late and they could not terminate him, nor could they put him to work when he was released to return to work. Senator Neal questioned Mr. Manning about the worker with the positive drug test. Mr. Manning stated the drug test was done at the hospital immediately after treatment. Claude Evans, Executive Secretary-Treasurer, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), testified on Exhibit D (the Workers' Compensation Reform Proposals). He commented he did not feel the proposals were helpful to the injured worker. He stated the regulation on preexisting conditions is frequently used to harm the injured worker further. He said originally the system was supposed to be no fault. Now it seems to be the workers' fault. Jack Jeffrey, Secretary-Treasurer, Southern Nevada Building and Construction Trades Council, Southern Nevada Central Labor Council, commented on Exhibit D stating reforms usually hurt the worker. He stated only the insurers and the employers compiled the proposals in Exhibit D. The workers were not consulted. He stated his dislike of several proposals including proposals 7 and 9. Proposal 9 does not address the worker who does not realize he is injured until a few days after the incident, or who thinks the injury will go away if he just ignores it and continues working. He stated proposal 11 funds group self- insurance at the expense of the worker. He disagreed strongly with proposals 12, 13, and 14. He was concerned with proposal 20, stating an agency should not benefit from its prosecutions and convictions. He disagreed with proposals 27, 30, 34. He felt number 34 was too broad, and impairment should be measured to determine if it affected the worker at the time of the injury. He commented the existing law has worked well and more definition of impairment is needed. He also pointed out an injury can occur without any fault to the worker, such as if a rock rolled down the mountain and hit a worker. If the worker had a beer at lunch, under proposal 34, he would be denied benefits. He addressed proposals 35, 36, 37, 38, 39, and suggested Managed Care Organizations (MCOs) are not for everyone because of the transient nature of some professions. Many people commute to work from rural areas. The worker should be able to go to the closest location for treatment. Senator Townsend asked Mr. Jeffrey if he was aware of previous testimony about the smaller MCOs and their start up costs which caused the capitated rate to be used in setting fees. Mr. Jeffrey responded he felt many of the small MCOs were doing a good job and would not want to see them legislated out of business. Some of the large MCOs operate as monopolies referring patients to their own facilities. Senator Neal discussed proposal 38 and 39 suggesting the regulations should stay as they are currently in the statutes. Senator Augustine commented on proposal 36. She pointed out that though emergency treatment should be sought close to where the accident occurred, she had concerns about state money being sent to doctors in other states. Mr. Jeffrey admitted he is not fond of sending money out of state, either, but when a worker lives in the border areas sometimes it just cannot be avoided. A 5-minute car ride across the border to Arizona is certainly better for the injured worker, than an hour's drive into Clark County for treatment. Mr. Jeffrey shared his feelings on proposal 52. He stressed usually by the time an injured worker gets to a Permanent Partial Disability (PPD) settlement, he is in great need of money. He stated a small award spread over a lifetime is not enough to make the allowance worthwhile. He did not feel annuities benefit the worker. Senator Townsend said an initial payment could be paid to alleviate the immediate financial burden to the worker. The balance could be put into an annuity and would benefit the worker by giving them more money in the long run and less cost to the system. He asserted annuities can benefit both. Danny Thompson, Political Director, Nevada American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), stated he understood the award would be less. Senator Townsend suggested the representatives view the documents offered in the February 6 meeting where annuities were discussed. Mr. Jeffrey disagreed with proposal 54. He suggested evaluating the "worst motion" would be fairer to the injured worker. He disagreed on proposal 58, 60, and 62, commenting 62 was already in effect. At this time the worker pays for the second rating, but is reimbursed if the rating is found in his favor. Proposal 62 would take away that reimbursement. He was not in favor of proposal 69 because it would add to the hearing load by extending the appeals time. He also indicated many operations occur after 5 years, prosthetic devices wear out within 5 years, and treatments take longer to complete than 5 years. He disagreed with proposal 70 because often it is management who encourages the worker to not use the safety device and safety is not as important to many contractors as productivity. Mr. Evans stated the proposal was getting away from the exclusive remedy clause no fault aspect of workers' compensation. This proposal would lead to more litigation. Employees do as they are told or they find new employment. If the employer tells a worker to use an unsafe method, the employer should be heavily penalized. He pointed out that, even though no one advocates drug use, drugs can stay in the system 6 weeks after use and show up in a drug test, but not be affecting the worker at the time of the accident. Senator Augustine asked if the contractor is fined, then should the worker be fined a flat fee instead of the percentage reduction penalty. Mr. Evans stated he felt benefits should not be reduced because of safety violations. Mr. Jeffrey disagreed with proposal 75 and 77 and shared his dislike of the rehabilitation system. Mr. Thompson shared his resentment of the implication that all injured workers are crooks. He stressed all employers are not bad, either. He stated the basic problem with the 80 proposals was that they were asking for legislation by incident. He stated to do so, would be to harm the majority of workers who were in the system trying to be whole again. He stressed his dislike of the last page of Exhibit D. He disagreed with the cap on attorney fees because it is important for the worker to have representation and the attorney is the one who controls the situation. Many take cases on a contingency basis and provide a service to the injured worker. Senator O'Connell pointed out the Nevada Attorney for Injured Workers is there to help the worker. She asked if the members of the construction trades were happy with the MCOs and stressed she would like more information from the employees about their feelings on managed care and the Nevada Attorney for Injured Workers. Mr. Thompson said they had mixed feelings about the MCOs. He stated the small MCOs were doing a good job for the worker. He stressed the need for a system of "checks and balances." He pointed out proposal 20 would allow an insurer to recover the cost of an investigation. This would allow an insurer to have a worker followed and then recover the cost. It allows an insurer to refuse to pay a worker. It allows an insurer to find any reason for not paying without having to fund the investigation itself. He stated the Office of the Attorney General's Workers' Compensation fraud unit is doing a good job and it is sufficient. Senator Townsend explained Exhibit D was requested by him from the various groups who had been in hearings and making suggestions during the past few weeks. He asked for a list of recommendations so they could be studied. He asked Mr. Thompson to submit proposals, also. The committee would welcome them. All recommendations would be considered. Senator Augustine stated the intent on proposal 31 was to get more of the money to the injured worker. She asked for Mr. Thompson's comments on 31 to help them achieve the goal intended. Mr. Thompson expressed his dislike of proposal 15 because it would drive up costs. Senator Townsend asked if the state should provide all the counsel for people who need legal counsel, or should the private sector be providing this counsel, instead of the state. The alternative is to leave the regulations as they are. Mr. Thompson shared his concern that the proposals dealing with payments were trying to legislate how people spent their money. He did not feel it is the state's business to tell people how they should live. Frank Caine, President, Southern Nevada Building and Construction Trades Council, related his displeasure with the workers' compensation system. He spoke of a case where a worker had knee surgery and was released for full duty work the next day, to work on his knees. He stated SIIS is not working, their regulations are not based on logic, and they do not really rehabilitate an injured worker. No one can be rehabilitated in a few months. Skills take years to learn. He resented the implication that all injured workers are trying to use the system and to get something for nothing. He stressed the rehabilitation program is failing the worker. It does not train the worker to earn a comparable living. Senator Townsend asked for Mr. Caine's suggestions as to how the state can find the job for the worker at the pay level he wants. Due to physical limitations, many jobs may not be available to the worker. Mr. Caine suggested checking the workers' educational background. He stated having a 1 year limit for rehabilitation does not allow for adequate retraining. Senator Townsend stated: [It is important] to spend time with the injured person to find out what their physical limitations are and what their educational capabilities are. Senator Townsend suggested success stories are important to understanding the process. Instead of always concentrating on the negative stories, it is important to ask how did the successes occur so they may be repeated for others in the system. He stressed the way to help people in the system is to find out what is right in the system and to expand on those successes to help others. Mr. Caine stressed the need for qualified counselors. He indicated the worker is not getting competent counseling. Pat Vannozzi, Injured Worker, shared his unhappiness with SIIS. He was injured and received a settlement. He paid the state back $85,000 with the understanding that the state would cover his medical expenses for his injured neck, shoulder, and back for the rest of his life. To date, they have denied every bill submitted. He has appealed the decisions and continues to appeal. The state gave its word to take care of his injuries and he expects the state to honor its word or he suggested they return his money and he will pay for his own bills. John W. Taylor, Injured Worker, read from Exhibit E and presented Exhibit F (a package describing SIIS pension reforms). Exhibit F is referenced to the library. Michael DeLeo, President, Plasterers and Cement Masons, Local Union 797, discussed exclusive remedy and any expansion which would cover bad faith judgements. He felt immunity would give complete control to the employer. He stated there would be unreasonable controls and unbalanced equality between the employer and all working, nonbusiness owning citizens of Nevada. Carmela Eubanks, Iinjured Worker, read from the American Medical Association second edition guide to the Evaluation of Permanent Impairment and presented Exhibit G (a discussion of her difficulties with the SIIS system). Ms. Eubanks shared a detailed report on her physical condition and the difficulties she has had with SIIS. Malinda West, Injured Worker, spoke of her difficulties with SIIS and her unhappiness with the system. She shared her feelings that the system has not helped her. Barry Greenfield, Injured Worker, presented Exhibit H (a detailed listing of his problems with SIIS since his injury). Stella Marchand, Injured Worker, Dare to Dream, read Exhibit I and presented Exhibit J and Exhibit K (detailed reports on her injury, correspondence, and legal papers relating to the injury). Exhibit J and Exhibit K are referenced to the library. Carol Jansson, Injured Worker, Dare To Dream, read her testimony from Exhibit L. Danny P. Williams, Injured Worker, Dare To Dream, read Exhibit M and presented Exhibit N. He related in detail his difficulties with the vocational rehabilitation program. He expressed his concerns about the system and how it does not help the injured worker to reenter the workplace. Barbara Costello, Dare To Dream, read from Exhibit O and gave an impassioned plea for the dreams of the injured worker. She expressed her feelings for the injured workers' need to lead a productive life. Vera Smith, Assistant General Manager, State Industrial Insurance Syster, (SIIS), commented on the qualifications of the vocational rehabilitation counselors. She stated their counselors are certified rehabilitation counselors and some have a master's degree in counseling. Senator Neal asked if the counselors are qualified to accurately analyze a submitted vocational plan for its feasibility. Ms. Smith stated when a counselor receives the physical release restrictions from the treating physician, it is the counselor's responsibility to meet with the injured worker, review the workers' limitations, contact the pre-accident employer, and make certain all educational screening tests are scheduled to determine the educational background of the worker and his interests. Josephine Lynn, Injured Worker, Dare To Dream, discussed her injuries. She stated she did not receive the proper care from her doctors and has been in continuous pain since her accident in 1990. Kenneth Goldsmith, Injured Worker, Dare To Dream, stated he is a carpenter and bruised his back in an accident on February 14, 1994. He is in a walker which he received on March 11, 1994 from SIIS. On March 29, 1994 he received a full duty release to return to work, but he is still in the walker. Arthur L. Busby Jr., Benefits Administrator, Horseshoe Club, told the committee the Office of Safety and Health Administration (OSHA) fine for removal of a safety device is $10,000. He stated Carpal Tunnel Syndrome is only recognized as an industrial injury in the United States and is often misdiagnosed. No other country in the world acknowledges it as work related. Senator Townsend closed the hearing at 3:00 p.m. with an announcement canceling the workshop scheduled for February 10. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor February 9, 1995 Page