MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session April 4, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Tuesday, April 4, 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: Ron Swirczek, Administrator, Division of Industrial Relations Samuel P. McMullen, Lobbyist, Self Insurers and Las Vegas Chamber of Commerce Ana Aebi, Division Counsel, Division of Industrial Relations Bob Ostrovsky, Lobbyist, Nevada Resort Association Alice A. Molasky, Commissioner, Insurance Division, Department of Business and Industry Harvey Whittemore, Lobbyist, Nevada Resort Association Barbara Gruenwald, Attorney, Nevada Trial Lawyers Association Ray Badger, Attorney Marialice K. Galt, Attorney, David Allen and Associates Pat Cashill, Attorney, Nevada Trial Lawyers Association Cecilia Colling, General Manager, State Industrial Insurance System (SIIS) Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS) Ellie O'Toole, Owner, Personnel Plus Clark Knauss, Owner, Lucky Concrete, Inc. Richard J. Peters, President, AdvanStaff, Inc. Charles Harrall, Nations Personnel of Nevada, Inc Pat Coward, Lobbyist, Nevada Association of Realtors Patsy Redmond, Executive Vice President, Nevada Association of Realtors Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry Marsha Birkbigler, Lobbyist, Nevada State Medical Association Doug Dirks, General Manager, State Industrial Insurance System (SIIS) Jack Jeffrey, Secretary/Treasurer, Southern Nevada Building & Construction Trades Council Jorden Smith, Vice President, Segal Company The meeting opened with Senator Townsend stating there were several bill draft requests (BDRs) to be introduced. The first was BDR 58-1596. BILL DRAFT REQUEST 58-1596: Revises provisions governing examination of employment records and personnel files of employees of public utilities, motor carriers or brokers. SENATOR NEAL MOVED TO INTRODUCE BDR 58-1596. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 54-549: Makes various changes relating to practice of pharmacy. SENATOR NEAL MOVED TO INTRODUCE BDR 54-549. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 53-753: Revises definition of police officer for purposes relating to the eligibility for benefits of occupational diseases. SENATOR NEAL MOVED TO INTRODUCE BDR 53-753. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 54-1921: Revises provisions relating to licensing of chiropractors and chiropractors' assistants. SENATOR NEAL MOVED TO INTRODUCE BDR 54-1921. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 57-1801: Revise assessments paid by life and health insurance guaranty associations. SENATOR REGAN MOVED TO INTRODUCE BDR 57-1801. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) * * * * * Ron Swirczek, Administrator, Division of Industrial Relations, was first to testify. In conjunction with Exhibit C, Mr. Swirczek presented Exhibit D and Exhibit E. Mr. Swirczek noted Exhibit D covers language, which if adopted prior to July 1, 1995, will exclude the group self-insurers. Exhibit E is a proposed amendment to become effective beginning July 1, 1995, which will include the group of self-insured associations. Mr. Swirczek addressed Exhibit E, giving an explanation. Answering Senator Shaffer's question regarding "undue influence," Mr. Swirczek explained undue influence might mean making a claimant resort to accepting less money, or failing to report an injury. Mr. Swirczek went on with his explanation. Senator Neal noted to Mr. Swirczek, he feels the proposed amendment will make it more difficult to prove a violation, since intent will have to be proved. Mr. Swirczek and Senator Neal continued discussing difficulties in enforcing the proposed amendment. At this time, Samuel P. McMullen, Lobbyist, Self Insurers and Las Vegas Chamber of Commerce, spoke, noting a difference of opinion with Senator Neal's objection. Mr. McMullen, referring to Exhibit E, explained his position. Ana Aebi, Division Counsel, Division of Industrial Relations, entered the discussion with clarification as to the purpose of the proposed amendment (Exhibit E). Bob Ostrovsky, Lobbyist, Nevada Resort Association joined the discussion, with further explanation of Exhibits D and E. Senator Townsend, referring to Exhibit F, questioned Mr. Swirczek regarding matters in the Falline decision. Noting problems connected with the Falline case, Senator Townsend queried Mr. Swirczek regarding remedies. Alice A. Molasky, Commissioner, Insurance Division, Department of Business and Industry, stepped forward to add clarification regarding the process of removing certification of a self-insured employer or a managed care organization (MCO). Ms. Molasky gave a detailed explanation. Senator Neal then questioned Mr. Swirczek regarding what authority his department might be able to wield, in particular referring to Exhibit F. Mr. McMullen joined in the discussion, with his opinion on Exhibit F. Harvey Whittemore, Lobbyist, Nevada Resort Association, referring to Exhibit F, gave an opinion and clarification. Mr. Whittemore in stating aims his organization hopes to see, presented Exhibit G for committee review. Senator Neal and Mr. Whittemore had a detailed discussion regarding fines, again referring to Exhibit E. Senator Regan asked Mr. Swirczek what the possibility was to give fines imposed directly to the injured worker instead of to the General Fund. Mr. Swirczek replied any fines do not revert to the General Fund, but go to a fund for workers' compensation and safety and at the end of each year any balance is refunded back to the insurers. Mr. Swirczek continued, whether or not these fines should go to the injured worker is a policy decision up to the committee. Senator Lowden, referring to a possible motion on Exhibit D and Exhibit E, asked for extensive clarification. Mr. Swirczek presented this clarification. Senator Neal, Senator O'Connell and Mr. Whittemore joined, with possible considerations and solutions. SENATOR REGAN MOVED TO AMEND THE DRAFT DISCUSSION PURPOSES ONLY, OF MARCH 31, 1995, NUMBERS 1 AND 2 TO HAVE WHATEVER FINES ARE PROPOSED, UP TO $1,000/$10,000 GO TO THE AGGRIEVED EMPLOYEE. WHERE THE CLAIMANT IS AGGRIEVED BY THE ACTION OF THE INSURER, OR ADMINISTRATOR, THOSE FINES WOULD GO TO THE INJURED EMPLOYEE. THOSE OTHER FINES WHICH, THE SELF-INSURED EMPLOYER HAS TO PAY, OR A PROVIDER PAYS, OR ANYBODY ELSE THAT HAS TO DO WITH VIOLATIONS OF THE CHAPTER, BUT NOT WITHHOLDING OR REFUSING TO PROCESS A CLAIM WOULD STILL BE SUBJECTED TO THE EXISTING SYSTEM. SENATOR NEAL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Referring to page 2, line 3 in Exhibit D, Senator Neal presented a possible motion to change the verbiage. SENATOR NEAL MOVED FOR THE DRAFT FOR DISCUSSION PURPOSES ONLY, NO. 2 READ `FOR EACH INITIAL VIOLATION, $10,000 FOR A SECOND OR SUBSEQUENT VIOLATION.' Senator Neal later withdrew his motion. After Senator Townsend asked for discussion, Senator Augustine brought up a point of order, stating there was no second to the motion. Senator Townsend requested further clarification from Mr. Swirczek regarding verbiage in Exhibit E. Senator Townsend and Mr. Swirczek continued with a detailed discussion regarding the penalty/fine structure to be used. Ms. Molasky came forward to describe the process for withdrawal of insurance certificates. Senator Neal continued the discussion, expressing various concerns with an employees' right to sue for bad faith. Mr. Whittemore proceeded with clarification, suggesting if a good system is to be created, the employer could be informed if they (employers) do certain things wrong they cannot become a self- insured employer. Mr. Whittemore went on to state it is hoped a system will be developed that applies to all insurers. Senator Townsend again inquired from Ms. Molasky circumstances surrounding the withdrawal of a certificate. Ms. Molasky gave her explanation. Mr. Whittemore, referring to Exhibit F, gave further explanation. Barbara Gruenwald, Attorney, Nevada Trial Lawyers Association, requested time to make a presentation. Senator Townsend confirming Ms. Gruenwald's request, went on to state: I'm just trying to get to the bottom of what these guys are going to do. We have a bad actor (referring to Exhibit F). It went to the supreme court, it should have been short-stopped at the administration level. We have proposals on the table with regard to the kind of language. I want to find out what they are going to do with them. Are they going to use them or not use them. .......... We have to find people who are willing to solve the problems and not just say the statute won't let me do something, or it requires me to do something. That's what I am trying to get to. I'm curious if our insurance commissioner thinks she, in fact, can go and review the Falline decision and if there was an egregious behavior, by a third party administrator, where somebody did not get their benefits, if she thinks she has the authority to go back and take care of it. Ms. Gruenwald then came forward to testify. Ms. Gruenwald noted the reason for her groups' appearance is to ask the committee not to abolish the common law right of the claimant to sue for intentional bad faith. She indicated they (the claimants) feel the court is the only referee they have. Next to testify was Ray Badger, Attorney. Referring to Exhibit F, Mr. Badger expounded on his feelings. Senator Regan gave an explanation of proposed wording for upcoming legislation, stating: What we are saying now to anyone who is fooling around [with] an injured workers account; if you don't pay him/her, we are going to nail you. The fine we nail you with is going to go to the injured worker. If you do it the second time we are going to pull your license. Senator Regan asked if Mr. Badger thought this will provide some protection for the injured worker that did not exist before. There was further discussion between Mr. Badger and Senator Regan. Joining in was Marialice K. Galt, Attorney, David Allen and Associates, with her opinion regarding the ability of fines to compensate claimants appropriately. Ms. Galt went on to give several examples. Ms. Galt stated she feels fines cannot compensate claimants appropriately. Ms. Gruenwald reiterated her desire for the courts to be able to be an independent referee. After further discussion between Ms. Gruenwald and Senator Townsend, the senator stated, "The goal here is to get a remedy to the problem and take care of the claimant." Ms. Gruenwald again stated her desire for the independent referee - the court system. Once again, Mr. Whittemore came forward to testify, giving his opinion on changes that might be made, referring to Exhibit D and Exhibit E. Pat Cashill, Attorney, Nevada Trial Lawyers Association, came forward to give his opinion, stating he feels there are a number of objectives the committee is seeking. Among these is to provide a mechanism of compensation within the framework of self-insureds to a person who has been denied benefits. Mr. Cashill went on to elaborate. Senator Regan noted he concurred with a large portion of Mr. Cashill's statement and went on with further comments. Senator Regan noted the injured worker should come first. Senator Regan and Mr. Cashill continued their discussion, with Senator Regan reiterating his concerns over the injured worker and the fact their needs must be cared for without untimely delay. Senator Neal expressed grave concerns regarding the management of the Falline case. He went on to state he wished to withdraw his motion made previously. SENATOR O'CONNELL MOVED TO INCLUDE EXHIBIT D, EXHIBIT E, AND EXHIBIT G, TO THE BILL. SENATOR AUGUSTINE SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS NEAL AND SHAFFER VOTED NO.) * * * * * Senator Neal, Senator Shaffer and Senator Townsend had further discussion regarding ramifications of any new proposals. Senator Townsend asked Ms. Molasky for further explanation relating to fines and withdrawal of certification. Mr. Swirczek added his comments. Cecilia Colling, General Manager, State Industrial Insurance System (SIIS), came forward for testimony with considerations on employee leasing. Ms. Colling introduced Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS) who presented Exhibit H. Mr. Ormsby noted Exhibit H, is an attempt to streamline and plug some of the holes which may exist in legislation passed in the last session. Mr. Ormsby continued with his explanation, noting some changes proposed by Exhibit H: Any agreement, whether verbal or written can constitute an agreement for employment leasing. If a company goes to a client company and hires an employee, puts them under the employee leasing or temporary service ......... and leases them back to that original client company, if they do that with one employee, that's going to be an employee leasing company. The next provision, employee leasing company would be defined as any company which leases five or more part-time or full-time employees, or 10 percent, or more of the total of employees in any risk classification, as recognized by (SIIS), with any employer. Mr. Ormsby continued with his explanation. Senator Townsend requested from Mr. Ormsby the penalty for not covering an employee with workers' compensation insurance. Mr. Ormsby replied the penalty is three times the premium. Senator Townsend noted the committee's main concern is to make sure that anyone employed in the State of Nevada is covered with workers' compensation insurance, whether covered by SIIS or self-insured as long as they are covered. Another concern is how employees know they are an employee and they are covered, or that they are not an employee and have a responsibility for themselves. Senator Townsend, Mr. Ormsby and Ms. Colling continued with discussions and explanations. Next to testify, Ellie O'Toole, Owner, Personnel Plus, referred to Exhibit H, noted she has many concerns regarding the language in this exhibit. Ms. O'Toole went on with her explanation, giving several examples. Ms. O'Toole gave explanations about the difference between employee leasing and a temporary employee. Answering questions posed by Senator O'Connell, Ms. O'Toole noted her hope is to meet with other leasing and temporary agencies, SIIS and who ever might be concerned to form an agreement, then present all this to the committee; however, this has not taken place as yet. Senator O'Connell queried Ms. Colling as to the reason this has not taken place. Ms. Colling noted at one time, it was hoped this situation could be handled by regulation, however, upon a closer look, it is felt this will not be possible. Senator O'Connell voiced her concern this meeting has not taken place. Senator Shaffer voiced other concerns, noting he feels it is up to SIIS to set the regulatory process, not the leasing/temporary personnel agencies. Next to testify Clark Knauss, Owner, Lucky Concrete, Inc., came forward to voice his concerns. Richard J. Peters, President, AdvanStaff, Inc., stated he would like to see this situation again referred to the proper subcommittee, since there has not been a comprehensive meeting. Mr. Peters noted he does not feel the agencies are trying to run any programs, he simply wants to understand the rules and abide by them. He went on to state he feels his industry is the only industry not able to self-insure. Charles Harrall, Nations Personnel of Nevada, Inc, spoke next. Mr. Harrall stated his company has SIIS coverage for their employees, as do a number of other agencies. He went on to state he feels other companies, being new to the area, may not understand workers' compensation requirements, stating he is willing to meet at any time. Mr. Peters went on to give a definition of employee leasing and temporary service, stating: A temporary help arrangement, whereby an organization hires its own employees and assigns them to clients to support or supplement a client's work force in a special work situation, such as employee absences, temporary skill shortage, seasonal work loads, special assignments, or projects therefore. Mr. Peters noted he also has a definition of an employee leasing company, noting this language has not been presented and he has been waiting for a meeting for this opportunity. Next to testify, Pat Coward, Lobbyist, Nevada Association of Realtors, and Patsy Redmond, Executive Vice President, Nevada Association of Realtors, noted they are in support of language presented in Exhibit I. Next to testify, Joan Buchanan, Administrator, Real Estate Division, Department of Business and Industry, assured the committee every licensee will be notified of this regulation. Senator Neal reviewed the bill draft with Ms. Redmond. Ms. Redmond stated she hopes to inform licensees, through education, to consider optional coverage from SIIS. Marsha Birkbigler, Lobbyist, Nevada State Medical Association, introduced Jeffrey Whitehead, Attorney who, along with Ms. Birkbigler was testifying in relation to discrimination as it relates to de-listing of physicians or provider lists. Ms. Birkbigler stated the issues she would be commenting on were Proposals 69, 70 and 71, of Exhibit C. Ms. Birkbigler presented Exhibit J, stating her organization feels these issues need to be in legislation rather than regulation, especially Proposal 71. Ms. Birkbigler stated her organization is agreeable to have Proposal 69 covered by regulation instead of legislation if this is satisfactory to SIIS. Referring to Proposal 70, Senator Townsend noted "he feels anything above the usual and customary administrative fee, will be an extra fee that is not beneficial, particularly to the client." Ms. Birkbigler concurred. Doug Dirks, General Manager, State Industrial Insurance System (SIIS), stated he feels Proposal 70 can be handled by contract. Ms. Colling joined in with the testimony. Senator Townsend, Ms. Birkbigler, Mr. Dirks and Ms. Colling had further discussion regarding language dealing with discrimination. Mr. Dirks noted any reference to discrimination is part of a standard contract and he has no opposition to that language being included in the law. SENATOR NEAL MOVED TO ACCEPT THE PROPOSED LANGUAGE ON PROPOSAL 71, TO READ DOES NOT DISCRIMINATE AGAINST OR EXCLUDE FROM PARTICIPATION IN THE PROPOSED PLAN ANY CATEGORY OF PROVIDERS OF HEALTH CARE WHO ARE REQUIRED TO BE LICENSED OR CERTIFIED TO PRACTICE IN THIS STATE AND WILLING TO COMPLY WITH THE TERMS AND CONDITIONS REQUIRED BY THE ORGANIZATION TO PARTICIPATE IN THE PROPOSED PLAN. THE PROPOSED PLAN SHALL NOT BASE PROVIDER PARTICIPATION DECISIONS ON SEX, RACE, CREED, NATIONAL ORIGIN, AGE OR ANY OTHER FACTOR PROHIBITED BY LAW. SENATOR SHAFFER SECONDED THE MOTION . THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR O'CONNELL MOVED TO ACCEPT LANGUAGE FROM THE REAL ESTATE DIVISION. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Jack Jeffrey, Secretary/Treasurer, Southern Nevada Building & Construction Trades Council, introduced Jorden Smith, Vice President, Segal Company, noting Mr. Jorden was at the meeting to answer questions on how Taft-Hartley Trust Funds relate to workers' compensation. At this time, however, Mr. Knauss came forward to testify. Senator Townsend and Mr. Knauss held a discussion regarding a trust fund used by some employers in Mexico. Mr. Jeffrey stated it is his intention and he feels the intention of others involved, that all existing law will apply. He went on to note no changes would be asked for. Mr. Jeffrey stated no investigation has been made to see if a Taft-Hartley trust arrangement can be made without a change in the law. However, he thinks it might be best to ask for authorization to accomplish that. Mr. Jeffrey stated one thing attractive to the construction industry is premiums can be paid on an hourly work basis, rather than a total payroll. Another advantage he noted for the employer is interest on money held in reserve is tax exempt. Mr. Jeffrey then deferred to Mr. Jorden. Mr. Jorden stated the trust funds as currently set up provide health and welfare coverage. He went on to note benefits are collectively bargained and contribution rates are set by bargaining agreement. The funds are governed by a joint board of trustees with an equal number of labor and management representatives. Mr. Jorden went on with further clarification, especially addressing tax ramifications. Senator Neal and Mr. Jorden continued with further discussion regarding jurisdiction on how funds are controlled. Discussion also ensued regarding who might govern, the state or federal government. Senator Townsend, referred to material previously presented by Mr. Jeffrey asking if there was information on the trust now in use in Mexico. Mr. Knauss responded. There being no further business, the meeting was adjourned at 12:35 p.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor April 4, 1995 Page