MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session April 20, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Thursday, April 20, 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: Scott Young, Senior Research Analyst Vance Hughey, Senior Research Analyst Molly Dondero, Committee Secretary OTHERS PRESENT: Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS) Nancyanne Leeder, Attorney, Nevada Attorney for Injured Workers, Department of Business and Industry Danny Thompson, Political Action Director, Nevada State American Federation of Labor/Congress of Industrial Organizations (AFL- CIO) Harvey Whittemore, Lobbyist, Nevada Resort Association Thomas R. Sheets, Assistant General Counsel, Southwest Gas Corporation Galen Denio, Commissioner, Public Service Commission of Nevada Scott Cragie, Lobbyist, Sprint/Central Telephone-Nevada, Nevada Bell Fred Schmidt, Consumer Advocate, Office of Advocate for Customers of Public Utilities, Office of the Attorney General Ande Engleman, Concerned Citizen Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS), presented Exhibit C and Exhibit D. He explained the amendment (Exhibit C) will eliminate a great deal of litigation. Senator Neal asks what happens if the Legislature changes the substantive rights in the statutes. Mr. Ormsby stated a specific statute will take precedence over a general statute. He commented it does limit the Legislature's ability to either increase or decrease the specific provisions of Nevada Revised Statutes (NRS) 616.025 and 616.045. Senator Neal asked what will the legislation do to the substantive right of the individual to reopen his claim. Senator Townsend pointed out the committee has recommended an increase in Permanent Partial Disability (PPD) awards. He stated, " [according to Exhibit C and Exhibit D] regardless of the date of injury were that person to be stable and rateable after the passage and the signing of this bill, he would then qualify for the new standard." Mr. Ormsby agreed. Mr. Ormsby stated: Unless the statutory provision affects the amount of compensation which is in preparatory language, if you were going to increase PPD awards, that would affect the amount of compensation. Senator Townsend said, "Based on the time he applies for it. If he applies for it after this date." Mr. Ormsby agreed. Nancyanne Leeder, Attorney, Nevada Attorney for Injured Workers, Department of Business and Industry, stated the language in the amendments is a further erosion of employee rights. She stated it is applying retroactivity on a blanket basis. She commented she does not believe the language will do away with litigation because "the normal rule in statutory construction, is that retroactivity does not apply unless the Legislature states that it does through a particular enactment." She expressed her feelings that if the language is in the statutes it will apply retroactivity to "all sorts of things at all sorts of times." She pointed out it will be confusing. She presented Exhibit E. Senator Townsend asked if a person will be harmed by the legislation even if his PPD award is increased after the signing of the legislation. She stated there is no problem with the increase in benefits, the problem is when reductions are asked for after the legislation. She explained it is her feeling that there are several different concepts being discussed. She stated substantial differences in benefits will create legal challenges. She said: If reopening is going to be considered a new benefit from a new time as opposed to a normal benefit which arises because we have a total system in workers' compensation and the Legislature were to reduce lifetime reopening to some shorter period of time, then we would have a big controversy as to whether a person whose injury dated from the time that the legislative change had been made, even though his injury predated that time, would be able to have the benefit of lifetime reopening. Senator Neal commented the statutes use the broad term for compensation. He pointed out the language is tied to NRS 616.025. He stated: This would not [only] affect the retroactivity of the compensation, but also, would lead them to determine the procedure as to how they arrived at that. Ms. Leeder stated: The Legislature deals with overall policy, the courts deal with specific instances to determine whether are not any specific incidents should be covered [by] its construction of the overall policy. I see this policy to be overbroad because it handles so much. ...There are two different concepts. The concept of entitlement and the concept of eligibility. Senator Neal asked for her interpretation of the language in Exhibit D, after the second line in the new language in section 2. Ms. Leeder stated: While given the example I just gave, I would say that eligibility includes not only the satisfaction of the conditions, but, also, entitlement to the benefit and, therefore, all benefits and all entitlements from reopening would begin from the time that a person actually applies for reopening. Senator Neal asked if she sees the modification of that by utilizing the word "unless." Ms. Leeder stated she feels it is an attempt to get total retroactivity unless specifically prohibited by the legislation. Senator Neal asked how is that being done. He stated Exhibits C and D have eliminated those benefits found in those two statutes. He commented "eligibility" is outside those two statutes. He pointed out the new statutes and new regulation will guide decisions. Ms. Leeder stated: If the committee and the Legislature wants to make a blanket retroactivity, that is up to you as a policy. I am saying, that in normal law, the way to do that is piece by piece, as you decide that some particular benefit or some particular description or procedure change should be retroactive. Senator Neal asked if Ms. Leeder will agree that NRS 6161.025 and NRS 616.045 are the statutes which set out benefits. Ms. Leeder stated there is a list in each statute to define benefits and accident benefits and to define compensation. Senator Neal asked if Ms. Leeder will agree that in terms of her litigation without any changes, she will use those two statutes to determine the retroactivity of benefits for a claimant. Ms. Leeder said yes, but she reminded him there are other concepts. Ms. Leeder explained: Since courts deal with individual situations, frequently when there is a situation discussed in a bill as being the intent of the Legislature to cover a particular situation, a given situation, brought to the court, is not specifically covered by the bill. The court's job is to see whether it fits within the intent of the bill. Senator Neal asked how that will be affected by this language. He stressed he interpreted the language as still being available to her. Ms. Leeder pointed she did not participate in the drafting of the language. She stated it is a further erosion of injured workers' benefits. She disagrees with Mr. Ormsby's theory that the new language will reduce litigation. She stated there had been discussion before the committee about the situation where someone is exposed to hepatitis, Tuberculosis (TB), human immunodeficiency virus (HIV), and the disease appears after 6 months with no treatment and after $500 has not been expended. She stated it has been suggested to remove the current language which limits coverage for those situations. She pointed out the coverage is limited to those people in the medical professions. Ms. Leeder submitted Exhibit E which clarifies those who are eligible. She explained the bracket needs to be moved to include "including emergency medical care." Senator Townsend said he was under the impression SIIS takes each case on a case-by-case basis to determine if it is a disease caused by exposure on the job. He stated he thought the illness is independent of the 6 months and $500 regulation. Ms. Leeder stated it does not include non-SIIS claimants. She explained it is only for SIIS claimants who are medical workers. Mr. Ormsby stated Exhibit E eliminates the restriction in the statute that the only persons entitled to the treatment and benefits are the medical care professionals. He indicated he has no difficulty with the new language. He stated the intent is to include HIV, TB, Hepatitis B, Hepatitis C, and other contagious diseases which are transferable in the workplace as recognized by the Center for Disease Control. Senator Townsend explained Exhibit E broadens who will be eligible for medical benefits. He asked if during the past 2 years there has been any cases affected by this language. Ms. Leeder stated there are three cases. Senator Townsend explained that under the new language, SIIS will be able to go back and pick up people who have been infected by the listed contagious diseases, who are not in the medical community, and help them, where under the old language, SIIS would not have been able to offer that help. He stressed this is the point...to help the injured worker. Senator O'Connell asked how the court will interpret the new language in section 2 of Exhibit D. Ms. Leeder stated the new language raises questions during a reopening. She stated: I think that is what I am focusing on. When I say that I think there is still question in the reopening situation, because of Mr. Ormsby's view that reopening stems from the time the application is made, and our view that reopening is one of the workers' compensation rights, and therefore you have an entitlement to reopening from the time that you are injured, you may, or may not, actually be able to fulfill the conditions. Mr. Ormsby stated he will rely on the Supreme Court's language and that is how the court will interpret it. He discussed the SIIS vs Surman case which was in 1987. In that case, the court was faced with an individual who was eligible under the 1979 law to receive a lump sum award, but the 1983 Legislative Session changed the criteria for receipt of a lump sum award changing his eligibility. The court stated that despite the fact the injury predated the 1979 law, the 1983 law was the criteria used in the case. He said that the person was entitled to the award, but the manner in which he could receive it was determined by the current law. Danny Thompson, Political Action Director, Nevada State American Federation of Labor/Congress of Industrial Organizations (AFL- CIO), commented he sees the language as being broader than Mr. Ormsby suggests. He expressed his concern that the committee can lower the amount of an award as well as raise it. Harvey Whittemore, Lobbyist, Nevada Resort Association, commented that the award is not a vested right, it is procedural right. He said a procedural right can be handled retroactively. Ms. Leeder expressed her feelings that the problem is that what appears to be just a procedural right, may end up affecting compensation. Senator Neal disagreed. He said: As I understand the language, that if you take out the compensation, as being effective for reopening of claims, and you, then, establish a procedure to affect the compensation, that procedure becomes illegal under this language. Because the language, very clearly, says unless the statutory provision affects the amount of compensation of benefits. It goes on to say eligibility therefore is determined by the statute and regulations. If you produce the statute and the regulations, then to affect the compensation and benefits those rates become illegal according to this. Ms. Leeder stated: So the insurer would then deny whatever benefit was being sought on the basis that it was a mere procedural change not affecting compensation and that, in fact, the statute had been passed and the date of the benefit would be in accordance with the new benefit. Senator Neal commented: The compensation and benefit are computable. You can determine those outright. So you know where you are going, so you have a standard by which you know whether or not that compensation and benefits will be affected...whether or not is it going to be decreased. This is what we are talking about. Ms. Leeder agreed. She stated there is the initial denial which leaves it up to the claimant to prove there should not have been the denial. SENATOR O'CONNELL MOVED TO INCLUDE EXHIBIT D, SECTION 2. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** SENATOR REGAN MOVED TO INCLUDE EXHIBIT E. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Senator Neal asked why the legislation needs Exhibit C. Mr. Ormsby stated the language is standard contractual language. It is an attempt to protect the omnibus bill so that if one particular section is challenged, then the entire bill is not in jeopardy of being thrown out, only that provision which is challenged. SENATOR O'CONNELL MOVED TO INCLUDE EXHIBIT C. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Senator Townsend discussed Exhibit F and reviewed the information in the exhibit. Senator Townsend opened the discussion on Senate Bill (S.B.) 343. SENATE BILL 343: Revises provisions governing examination of employment records and personnel files of employees of public utilities, motor carriers or brokers. Thomas R. Sheets, Assistant General Counsel, Southwest Gas Corporation, presented Exhibit G, a proposed amendment for S.B. 343. He explained the concerns Southwest Gas has for the publication of personnel records and private employment files. He stated an employee has a right to expect privacy in respect to personnel files. He stated a broader aspect of the bill is the confidentiality of public utility information made available in rate cases or other proceedings. He stated: S.B. 343 has turned into a bill which addresses not only Southwest Gas Corporation personnel records, but a bill which addresses the broader issue of confidentiality in terms of how the Public Service Commission [of Nevada] will handle information that has competitive value from a commercially sensitive information standpoint, or with respect to trade secrets. Mr. Sheets discussed each section of Exhibit G. Galen Denio, Commissioner, Public Service Commission of Nevada, discussed section 2 of Exhibit G. He stated the bill drafter added this language to the amendment request. Scott Craigie, Lobbyist, Sprint/Central Telephone Company- Nevada, Nevada Bell, stated all the companies agree with the language and support the bill. He stated there will be a new regulatory environment for telecommunications. He said the commission is about to adopt a major new rule. He expressed his opinion that the public utilities will yield their monopoly rights to certain retail services. He stated there will be new competitors in those markets. He stated the companies are asking that those companies who are reselling regulated companies' services, do not have a regulatory way to obtain trade secret, confidential research, and market information of that regulated company. Mr. Cragie explained section 3. He explained that the staff and the consumer advocate will sign a confidentiality agreement to make certain proprietary information is not leaked to competitors. He explained they want to be certain there is statutory authority for that procedure. He stated that is why section 3 is needed. Mr. Sheets explained section 4 is designed to explain the process the Public Service Commission of Nevada (PSC) will go through in exercising the discretion to protect information during a hearing. Mr. Cragie commented the bill is designed to prevent hearings from becoming "fishing exhibitions" for companies who want to get into a specific business and want all the trade secrets they can during those hearings. Senator Regan asked what penalties are involved if a company violates the restrictions. Mr. Cragie responded the staff and the consumer advocate have been very professional and very disciplined in their exercise of the confidentiality agreements listed. He stated: Just having the ability for the commission to make that order to those entities that practice regularly before them, we are confident that, by itself, is sufficient. Mr. Denio explained there are civil penalties available through the judicial process. Senator Neal commented that in determining whether or not certain information will be disclosed, the commission has provided for protective orders, in camera hearings, keeping records and transcripts confidential, and ordering participants in the hearings not to disclose facts of the hearing. He questioned if the consumer advocate will be a part of these procedures. Mr. Denio responded they will. He stated there will be a requirement for a confidentiality agreement to be signed by the parties in the in camera proceeding. Mr. Denio stated the Public Service Commission of Nevada has reviewed the language presented and endorses the language. Fred Schmidt, Consumer Advocate, Office of Advocate for Customers of Public Utilities, Office of the Attorney General, stated he will not be involved in any "in camera" proceeding conducted by the Public Service Commission of Nevada. He stated there is certain material the commission will look at by itself in determining whether that material should be examined by the Consumer Advocate. He discussed section 1, subsection 2 of Exhibit G. He stated the last page of Exhibit G can allow a record hearing to be held, where only certain parties will participate. He stated the way the bill is written, it does not define the procedure and how it works. He stated he opposed the original version of S.B. 343 because it is too broad and too sweeping. He stated there are personnel records he does need access to that directly relate to the work that he does. He understands the needs for privacy rights. He stated subsection 2 of Exhibit G adds a limitation to the broad access to books and records. He expressed his concern about the limitation, but since the limitation is narrow, he explained he does not object to the proposed amendment. He stated: I think the intent of subsection 2, is clearly that the commission will still be allowed to examine and look at that material. Probably `in camera', if it is a personnel record, but it will probably have to examine that material in order to make that determination if the issue is raised. That does not mean we can, at that point, and the best example is in the Southwest Gas case, recently, where personnel was involved. Our office never saw the material. Senator O'Connell asked for the definition of what protects the public interest from Mr. Sheets and Mr. Schmidt. Mr. Schmidt stated the broad definition is at the heart of the entire regulation of monopolies. He stated the standard of public interest is the standard which is contained throughout chapter 703 of NRS and chapter 704 of NRS under which the commission operates. He related that safety incidents can create a need to know the circumstances of the incident. He said if there is impact on the rates, that is the function of the consumer advocate's office. Senator O'Connell asked for another example other than a safety incident. Senator Townsend asked how the protection listed in chapter 703 of NRS and chapter 704 of NRS are defined. Mr. Schmidt stated that the standard of public interest is listed throughout the statutes, but not under the definition of "public interest." Mr. Schmidt commented if an executive of a utility engaged in an activity not to the best interest of the utility and its rate payers, and proof of the activity was contained in his personnel file, there may be a need to see that information to prove the actions of the person. He explained there may be a time when information needs to be explored in a very sensitive manner and the information will be protected. A confidentiality agreement is used when information in a personnel file is needed. He explained only pertinent information will be asked for. Mr. Sheets explained public interest is a broad term and difficult to define. He stated it is what the commission thinks it is in the context of the rules given to them by the Legislature which they may use to conduct their regulatory activities. He stated that in Nevada, the commission is not a constitutional entity. It is a legislatively created entity, and it draws its authority from what the Legislature gives to it. He commented there comes a time when the judgement of the commission must be trusted. He stated they will not use the request for information as a "fishing expedition" to obtain information which is not needed. He stressed: The section is designed to try and balance the interest and expectation of privacy and an obligation of privacy with the obligation that the regulators have which has been given to them by the Legislature to do their job and to regulate as surrogate for a competition that does not exist. Mr. Denio stated the Legislature has given the policy direction which is found in NRS 704.040. He referred to Exhibit G and stated that the commission voted in favor of section 2, subsection 3. He stated he reviewed all the changes with the commissioners and they are in favor of the changes. Senator Neal asked about the language in section 3, subsection 2 of Exhibit G. He commented he feels the language allows the consumer advocate to be left out of "in camera" hearings. He asked if this is the intent of that section. He stated there are two ways by which the records may be seen, through a safety issue, or a public interest issue. Mr. Denio stated the commission does not have the ability to conduct the investigation. The commission relies on staff, the Office of the Consumer Advocate, and on other agencies to do the investigation. Senator Neal said if something is going to impact the consumer, the consumer needs to be represented in all stages and should only be controlled by the confidentiality of what is being discussed. He stated the consumer cannot be kept out of a hearing. Mr. Denio stressed section 1, subsection 2 of Exhibit G only applies to personnel records. Mr. Schmidt commented on the phrase "may be examined" in section 1, subsection 2, of Exhibit G. He stated a confidentiality agreement is signed allowing them to examine personnel records. He stressed, though he or his staff may see a confidential record, they are prohibited from disclosing it. He illustrated there is a difference between "disclosed" and "examined" information. He stated section 1, subsection 3 of Exhibit G illustrates the information which might be needed by the consumer advocate. Senator Regan pointed out that salaries have been published in the newspaper despite confidentiality rules. He stressed there are many things in an employee's records which are none of the public's business. Mr. Schmidt agreed. Mr. Schmidt stated section 3 changes public records law. Exhibit H was presented. Ande Engleman, Concerned Citizen, discussed Exhibit G. She stated she disagreed with section 3, subsections 2, 3, and 4. She stated nondisclosure statements are very strict and the information is used with discretion. She explained the PSC is having a difficulty understanding the open meeting law. She expressed her concern that the commission is going to receive an exemption for the open meeting law under this legislation. She stated there is no explanation of process in the legislation as to what business may be conducted behind closed doors, how it should be conducted, and what the notice is to the public. She stated the language in the bill gives the commission powers which the Nevada Supreme Court has with no checks and balances. She commented there needs to be some means to look at the information and to protect trade secrets. Senator Townsend asked if a person in the action who is not the consumer advocate has the same rights and responsibilities under the new language. Ms. Engleman replied it is not clearly explained that they will have the same access as the consumer advocate. She stated she does not believe the language prohibits anything that is not present practice. She stressed if she signs a nondisclosure statement she will not disclose anything and will not ask to be released from the statement for any reason. She said the bill allows secret hearings. She stressed her main concern is accountability of the commission concerning section 3, subsections 2, 3, and 4. In response to a question by Senator Neal about the time period deleted from section 3, subsection 1 of Exhibit G, Ms. Engleman stated the time period may be challenged by the consumer advocate and may vary for each case. Mr. Schmidt explained that is why the bill is necessary. He stated that currently, the 90-day period is in the law and it does not work for certain confidential material. He explained some information, even after 90 days, is very valuable to a competitor. Mr. Cragie commented there is agreement within the agencies involved as to the proposed language for S.B. 343. He explained they have tried to offer the committee: A process that [is] established in law, and has experience in law. The first subsection of section 3 is the general rule. The second subsection brings in to play in this area rules of law that have worked in the past. Subsection 3 is so important the existing system that is used now, that is this protective agreement that Mr. Schmidt circulated [Exhibit H] needs to have some authority in the statutes. We are going into this new environment and we are concerned that the existing systems in a litigious environment may not stand up. Subsection 4 is our effort to offer procedures which are in play, in use, and have an established record for how the commission can deal with that. Senator Shaffer stated the consumer advocate is the remedy for the public. He commented any member of the public may go to the consumer advocate. Ms. Engleman stated with the current funding, the consumer advocate's office is not able to address all the issues brought before it. She stressed there has not been anyone who has disclosed information after signing one of the agreements as illustrated by Exhibit H. She expressed her concern that there is a rush to correct a problem that has not existed. Senator Shaffer stated if the potential for a problem is not addressed during this session, in 26 years it may be too late. Mr. Sheets explained it is not the intent of the bill to inhibit the regulator in any respect with respect to exercising their obligation as a regulator. It is not intended to inhibit the office of the consumer advocate from protecting the customer's interest. It is designed to put the commission in a position where they do not have to generally disclose without some guidelines from someone. He explained the gas industry is nonregulated and there is a great deal of competition in the market at this time. He stated section 3, subsection 4 does not give anything more to the PSC than what is being used by other judicial officials. Ms. Engleman explained making the PSC a more quasi judicial body should not be a goal. She stated the commission should become less quasi judicial. She expressed the need for more safeguards. Senator Townsend asked for suggestions for changes in the language. Ms. Engleman stated she has not had the time since receiving Exhibit G to develop her own language. She stated she would like to see a requirement for notice placed into the bill and for minutes to be taken. Mr. Cragie explained competition and how it is affected by the lack of language to protect confidentiality. Senator Neal asked why there should be protection for any company when the object is to get the best rates for the consumer. Mr. Denio stated a new or existing company has the right to compete for the consumer. The hearing was closed at 10:55 a.m. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor April 20, 1995 Page