MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session March 8, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Wednesday, March 8, 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 Vance Hughey, Senior Research Analyst OTHERS PRESENT: Frank Downs, Owner, Coachcraft Autobody Bill King, Owner, King's Autobody Patty Smith, Executive Director, Nevada Auto Body Association, Inc. Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS) Samuel P. McMullen, Lobbyist, Nevada Self Insurers Association Douglas Dirks, General Manager, State Industrial Insurance System (SIIS) Bryan Nix, Senior Appeals Officer, Department of Administration Barbara Gruenwald, Attorney, Nevada Trial Lawyers Association Danny Thompson, Political Director, Nevada State American Federation of Labor/Congress of Industrial Organizations (AFL/CIO) Larry Harvey, President, Nevada Employers Workers' Compensation Coalition Mark Habersack, President, Nevada Self Insurers Association Senator Townsend stated today's meeting will deal with Exhibit C, the Workers' Compensation Reform Proposals, beginning with the section on the subsequent injury fund, Proposal 115. Senator Neal requested an explanation of the subsequent injury fund. Scott Young, Senior Research Analyst, stated: A subsequent injury fund is set up to encourage employers to either hire people who have disabilities or to take them back to work after they are injured. It is done through a series of incentives. If you hired someone who has a disability, and you knew at the time you hired them they had the disability, and they suffered an injury at work, the employer could have some or all of the costs of that injury removed from their workers' compensation premiums. In the same respect, if you had a worker that was injured and you kept him on the job you also were entitled to certain incentives. Essentially the subsequent workers' fund is designed to relieve the employers of the cost of certain workers' compensation injuries. Following Mr. Young's explanation, Frank Downs, Owner, Coachcraft Autobody, opened the testimony. Mr. Downs presented Exhibit D and gave an explanation of his concerns. Mr. Downs has particular concerns over the price on various permits that are constantly being raised and businesses have no recourse. Senator Neal, Senator Augustine and Mr. Downs had further discussion on problems and concerns faced, especially, by small businesses. Next to testify, Bill King, Owner, King's Autobody, presented Exhibit E. Mr. King expressed concerns similar to Mr. Downs, stating ".....business people are like a bottomless pit for money and everybody just keeps dipping into it and its just got to stop." Patty Smith, Executive Director, Nevada Auto Body Association, Inc., presented Exhibit F, requesting it be placed in the record. Ms. Smith noted that although, employers may have a safety plan, and an employee has an accident and has not been following the safety plan, thus causing accidents, the employee not the employer should be required to pay the $100 deductible. Ms. Smith stated perhaps this would give the employee a greater sense of responsibility. Senator Augustine asked Ms. Smith if her organization has plans to withdraw from the State Industrial Insurance System (SIIS). Ms. Smith replied there are so many expenses connected with the process of withdrawing from SIIS, her organization has no plans to withdraw. She went on to state it is very likely some of the autobody shops will have to close because of rates going up that they (autobody shops) have no control over. Ms. Smith noted a major concern is fraud and related an account of an incident of which she has personal knowledge. Senator Townsend commented: The entire issue of group self (insurance) is one small portion of debate this session. Whether groups are allowed to leave or not is not going to change the big picture. The big picture must be fixed in other arenas. That's critical. Referring to Exhibit C, Senator Townsend opened the hearing on Proposal 115. Cecilia Colling, Assistant General Manager, State Industrial Insurance System (SIIS), gave testimony. Senator Neal and Ms. Colling discussed and clarified proposal 115. Samuel P. McMullen, Lobbyist, Nevada Self Insurers Association, testified, stating: The self-insurers want a group to supervise the subsequent injury fund for self-insureds as opposed to the system, that is constructed appropriately. There would be representatives of self-insureds and other appropriate representatives so they are basically managing their own fund in the sense they are using the money; it's their own separate fund. It works under certain rules. They want to make sure they have the ability to implement those rules, get the subsequent injury funds back and paid as quickly as possible. Consequently, if that is possible to add in here, so we can draft something up and look at it for purposes of discussion, we would like to at least have you consider that, please. Senator Neal and Mr. McMullen discussed sources of revenue for the subsequent injury fund. Mr. McMullen noted these funds are separate from other funds at SIIS. Answering questions on the disposition, of these funds, Douglas Dirks, General Manager, State Industrial Insurance System (SIIS), noted these funds are not segregated funds, but part of the overall investment assets. SENATOR O'CONNELL MOVED TO INCLUDE PROPOSAL NO. 115, INCORPORATING MR. MCMULLEN'S SUGGESTIONS. SENATOR LOWDEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Townsend, referring to Exhibit C, asked for testimony on Proposal 38. Bryan Nix, Senior Appeals Officer, Department of Administration, came forward to testify on Proposal 38, stating he concurred with this proposal. Mr. McMullen noted his group supports this proposal. Testifying next, Barbara Gruenwald, Attorney, Nevada Trial Lawyers Association, stated her organization objects to the word "automatically" in Proposal 38. Ms. Gruenwald went on to give her reasons. Mr. McMullen responded stating for the record: If someone wanted a break as an employer, they would not be asking for a certain time period in which to comply; they would be asking for it to be open ended so they could stiff people as long as possible. Mr. McMullen gave further views on this proposal. Senator Neal, Mr. Nix and Mr. McMullen had further detailed discussion. Danny Thompson, Political Director, Nevada State American Federation of Labor/Congress of Industrial Organizations (AFL/CIO), gave examples and supported Ms. Gruenwald's position. Ms. Gruenwald reiterated her objections. Senator Neal noted he feels it is important that a hearing officer will have to make a ruling on whether or not there should be a stay. Senator Shaffer asked Ms. Gruenwald if she was suggesting by removing the word "automatic" it would expedite claims and bring them to an end faster than leaving the word "automatic" in. Ms. Gruenwald replied in the affirmative, stating she would like to see the whole last sentence removed and gave her reasons. Senator Shaffer went on to state: It seems to me that every time someone is injured; the employer has paid in a substantial amount of money, the employee needs some help immediately, and everyone wants to string it out, and prolong it, build up the costs, make work for a lot of people.... it's about time we get to the bottom of this thing and move the employee through the process and get him back to work. SENATOR O'CONNELL MOVED TO INCLUDE PROPOSAL 38. SENATOR AUGUSTINE SECONDED THE MOTION. THE MOTION PASSED. (SENATORS NEAL AND SHAFFER VOTED NO.) * * * * * Senator Townsend addressed the next item, Proposal 42 of Exhibit C. SENATOR O'CONNELL MOVED TO INCLUDE PROPOSAL NO. 42 At Senator Townsend's request for discussion, Mr. Nix stated he believes this portion is already in practice, giving a few comments. Senator Neal stated he would like to know Senator O'Connell's rationale regarding her support of Proposal 42. Senator O'Connell stated she feels it will prove to be good for both employers and employees. Larry Harvey, President, Nevada Employers Workers' Compensation Coalition, stated his group wants this proposal. Mr. Harvey noted this proposal would help claimants understand why a decision has been made and how that decision was reached. A discussion ensued between Senator Neal, Senator Townsend and Mr. Nix. Senator Townsend reiterated Senator Shaffer's views, noting cases need to be resolved in order to get people back to work, on with their lives, or both. Senator Neal asked for information on how decisions are made. Mr. Nix gave a detailed explanation including his concerns. Senator Neal asked if there is a time limit on the hearing process, to which Mr. Nix answered he believes the time limit is 14 days, however, most decisions are reached in less time. Mr. Harvey commented his group simply wants a simple explanation of why decisions are reached. Senator Townsend and Mr. Nix discussed the possibilities of administering this particular proposal administratively, as opposed to having an actual law. At this time, Mark Habersack, President, Nevada Self Insurers Association, noted his organization appreciates efforts put forth by hearing officers. However, Mr. Habersack did say the self-insurers still have concerns and feel the need for a clear explanation. Senator Townsend stated: ............. We have a legitimate concern by a number of individuals. I do not want to put anything into statute that could affect what Senator Shaffer and Senator Neal are referring to, that is, lengthening this process in any way, shape or form. Senator Townsend went on to note progress in the hearing process, stating, however, occasionally more explanation might be necessary. Senator O'Connell requested of Mr. Nix, that if she withdrew her motion, this process will take place immediately. Mr. Nix replied "tomorrow." Senator O'Connell stated, "I will withdraw the motion." Senator Townsend then opened the hearing on Proposal 43. Mr. Nix stated his personal opinion is this proposal can be addressed in regulations or administratively. No action was taken on Proposal 43. The next item addressed was Proposal 48. Senator Townsend requested background, to which Mr. Nix replied. At this time Ms. Gruenwald came forward to testify, noting Proposal 48 is from her group. She went on to state the proposal was brought forth in order to have the same rules apply to hearing and appeals officers, i.e. they both have a term. Mr. Nix testified noting his objections, stating this proposal might remove a certain amount of supervisory authority. A 2 year term means someone is appointed and not subject to removal for that period of time. Ms. Gruenwald stated the main purpose behind this proposal is to assure hearing officers are not removed if their decisions make supervisors angry. SENATOR O'CONNELL MOVED TO INCLUDE PROPOSAL NO. 48. SENATOR NEAL SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS LOWDEN AND AUGUSTINE VOTED NO.) Senator Townsend announced items to be considered at the next three committee meetings. Senator Townsend went on to state: So there is a clear understanding, the general concepts will be as follows. The first general concept we will deal with, which will include a majority of these will be what does it take make SIIS as independent an organization and insurance trust as possible. .....The other thing is how they deal with Managed Care Organizations [MCOs]. .....We will also deal with vocational rehabilitation and its total cost, and is it meeting the original goal its intended [to meet] or any subsequent goals. There will be a discussion with regard to Permanent Partial Disability [PPD] and how they are paid and whether, in fact, injured workers can be made whole from the devastation they have suffered and our ability to help them with that problem. There will be a discussion on safety and safety committees with regard to those who have currently a mod [modification] factor of one, or less, and safety programs. Those will be discussed at length. The other thing that will be discussed if the SIIS becomes more of an insurance company, does that require that more of the responsibilities for regulating it are shifted from [the] Department of Industrial Relations [DIR] to the insurance commissioner. Exhibit G was presented to the committee, but there was no testimony. There being no further business, the meeting was adjourned at 10:40 a.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor March 8, 1995 Page