MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session April 27, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Thursday, April 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 Vance Hughey, Senior Research Analyst OTHERS PRESENT: Stephanie Tyler, Lobbyist, Nevada Nurses Association Jan Needham, Principal Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau Douglas Dirks, General Manager, State Industrial Insurance System (SIIS) Randy Stephenson, Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau Robert Ostrovsky, Lobbyist, Nevada Resort Association Ron Swirczek, Administrator, Division of Industrial Relations (DIR) Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS) Scott Craigie, Lobbyist, Nevada Resort Association Sam McMullen, Lobbyist, Self-Insurers Association Eloise Koenig, Self-Insurance Coordinator, Division of Insurance Pat Coward, Lobbyist, Nevada Association of Realtors Kevin Higgins, Director, Fraud Unit for Industrial Insurance, Office of the Attorney General Senator Townsend opened today's meeting with the proposed introduction of Bill Draft Request (BDR) 54-1101. BILL DRAFT REQUEST 54-1101: Revises provisions regarding recognition of person as advanced practitioner of nursing. Stephanie Tyler, Lobbyist, Nevada Nurses Association, gave information regarding this BDR. SENATOR REGAN MOVED TO INTRODUCE BILL DRAFT REQUEST 54- 1101. SENATOR AUGUSTINE SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS LOWDEN, SHAFFER AND O'CONNELL WERE ABSENT FOR THE VOTE.) * * * * * At this time, Senator Townsend opened the hearing on BDR 53- 1292. BILL DRAFT REQUEST 53-1292: Makes various changes to provisions relating to industrial insurance. Senator Townsend voiced concerns to Jan Needham, Principal Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau, concerning language in section 118 and sections 121 and 122 of BDR 53-1292 (Exhibit C. Original is on file in the Research Library.). Ms. Needham confirmed to Senator Townsend the affected language could be removed easily. Senator Townsend then discussed the disposition of section 109. Next, a discussion was held by Ms. Needham, Senator Townsend and Randy Stephenson, Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau, regarding sections 27 through 29 and the meaning of "service company." Next to give his opinions and testimony pertaining to service companies, Robert Ostrovsky, Lobbyist, Nevada Resort Association, came forward. Senator Neal, Senator Townsend, Mr. Ostrovsky and Ron Swirczek, Administrator, Division of Industrial Relations (DIR), discussed fines and what options might be open as far as pulling certification of these companies. Mr. Swirczek noted, at this time however, "service companies" do not need certification. Senator Townsend stated Mr. Swirczek and the commissioner of insurance need to address this problem. Douglas Dirks, General Manager, State Industrial Insurance System (SIIS), Senator Townsend and Senator Neal then discussed retroactivity and proper language. Senator Townsend stated: I believe the goal is if changes occur in someone's condition and there is a request.........the law can be applied as it is on the date of the request. Senator Townsend asserted he does not feel the present language meets requirements requested by the Governor. To help clarify, Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS), came forward to testify. Mr. Ormsby noted he does not have a problem with the present language. Mr. Stephenson then gave further explanation. Senator Neal, Mr. Stephenson and Senator Townsend continued with their discussion. Clarifying for Senator Townsend, Mr. Stephenson stated, "......The amount of compensation is fixed at the date of injury." Senator Townsend went on regarding section 105, subsection 3: Everything else is as a result of the effective date coming in at the date of request as opposed to injury. The whole section now has to be read together in order to accomplish what we are talking about. Mr. Stephenson replied, "Yes, subsection 1 carves out the amount of compensation and that amount is determined now as of the date of injury." Senator Townsend said: A person is injured on one day; that is the date he/she qualifies for permanent partial disability [PPD], temporary total disability [TTD], Permanent Total [PT] as to the amount. Then if he reopens the claim, or something happens later on, it can't affect that amount. Mr. Stephenson replied "No it will not." Senator Townsend then referred to sub-section 3, section 105, noting this section pertains to procedural material. In further conversation Senator Neal stated he will accept this as the intent of the statute. Senator Townsend clarified for the record on section 105 and its effect on retroactivity: Subsection 1, does, in fact, carve out the amount of compensation and benefits as voted on [by the committee] and presented by the system [SIIS] [noting Exhibit C]. The language of subsection 3 of section 105 is the one that says, after you carve those out all the procedures and everything else will apply, in fact, when the person makes application. Mr. Ormsby provided further language and clarification. Senator Neal voiced concerns pertaining to an injured worker's right to benefits on the date of an injury. Mr. Ormsby replied, "The amount of compensation and benefits are set at the date of injury. Whether the person is eligible for those would be determined at the date the insurer determines the person's eligibility." Senator Townsend and Mr. Dirks discussed the reduction of vocational rehabilitation and connected financial problems. Mr. Dirks noted vocational rehabilitation is declining. The discussion turned to Permanent Partial Disability (PPD) awards. Mr. Dirks, Mr. Ormsby, Senator Townsend, Senator Neal and Senator Regan held a detailed discussion. Senator Lowden observed from an economic development point of view, one of the first items investigated by potential industries are PPD awards, in order to decide if Nevada has a good climate for business. She went on to state she feels PPD awards are so high it could have a detrimental effect to economic development. The next item to be addressed deals with an injured worker who may have received compensation for a PPD award and subsequently may be eligible for a PD award. Senator Townsend noted, how PD against PPD calculations are ascertained is what needs to be determined. Senator Townsend, referring to Exhibit C proceeded to address effective dates noted. Mr. Stephenson and Ms. Needham clarified. Scott Cragie, Lobbyist, Nevada Resort Association, elaborated on some changes he feels need to be made regarding effective dates. Mr. Stephenson presented further explanation and clarification. Next to testify Sam McMullen, Lobbyist, Self-Insurers Association, stated there may be an issue that needs to be addressed concerning the administration of funds for out-of- system insurers. Mr. McMullen continued stating he needs to question those from his organization. Referring to Exhibit C, Mr. Dirks suggested language concerning classified and unclassified employees of SIIS. He stated these employees would be in the unclassified service of the state and salaries would be fixed by the general manager. Senator Townsend, Mr. Dirks, Senator Neal, Senator Augustine and Senator Lowden deliberated the pros and cons between classified and unclassified employees. SENATOR NEAL MOVED TO EXCLUDE SECTION 45, SUBSECTION 3. SENATOR AUGUST SECONDED THE MOTION. Senator Townsend stated he feels there will be a time when SIIS employees will need to be unclassified. Mr. Dirks noted he is supportive of unclassifying SIIS employees, however, he continued, stating he wants to be sure this situation Is handled properly and the interests of valued employees are considered. Senator Townsend wanted to know if Mr. Dirks has discussed a date this unclassification might take place with the Governor. Mr. Dirks said he will take this matter to the Governor. At this time, Senator Neal withdrew his motion. It was decided to omit section 53 in its entirety. Referring to section 55 of Exhibit C Mr. Dirks described the wording he would like deleted from this section. Senator O'Connell requested the committee's perusal to section 54 of Exhibit C stating: We are repealing the sections now that read that the manager is required to go out to bid or even out to have a request for quote (RFQ) is that what the intent of the committee is and we don't even put there must be two ...... Senator Townsend replied: We are giving him the flexibility to have a Request for Proposal (RFP) to pick whom he wants to let all the bid procedures take place under this provision he has the right to choose 1 or 51. He can choose one Health Maintenance Organization (HMO) two Preferred Provider Organizations (PPOs) ........ it removed all the requirements we had placed originally in the bill. Senator O'Connell proceeded, "I think we ought to have at least two, so we know there is some competition there." Mr. Dirks replied: If you want the system to operate like a private company and a private company were to go out for these services, I don't think you would ever contract with one. You have to insure a competitive environment when you go out the first time, but you have to make sure there are competitors the second and third time when you go out there to bid. If you establish a private monopoly, the next time around, the price, very well may go up, because you are going to have no competition. Senator O'Connell again expressed her concerns. Senator Townsend then addressed section 57 dealing with employee leasing. Mr. Ormsby stated this language has been approved. Section 60 was then reviewed. Discussion on sections 62 and 63 followed. Senator Neal, Mr. Stephenson and Mr. Dirks continued with a detailed review of section 63, with Mr. Dirks presenting language modifications. Section 65 was the next item to be addressed. Mr. Dirks stated SIIS questions the use of the word "certificate" in subsection 2a and wants to replace it with the word "policy." Mr. Stephenson maintains there is a difference between having an (insurance) policy lapse and having the certificate pulled. Mr. Dirks stated he believes the certificate, in this instance, is the policy issued by a private (insurance) carrier. Mr. Stephenson reiterated his belief. At this time Eloise Koenig, Self-Insurance Coordinator, Division of Insurance, attempted clarification stating, "The insurance company could still maintain a certificate, but the employer could allow their individual policy to lapse." Discussion followed between Ms. Koenig and Mr. Dirks. Ms. Needham offered language stating, "Maintain a policy of insurance issued by a private carrier who has been granted a certificate of insurance that is in force." Mr. Dirks disagreed giving his reasons. Scott Young, Senior Research Analyst, offered clarification on subsection 3 of section 69. Senator Townsend noted this section has been offered to try to better manage cases as individual claimants move from town to town, jurisdiction to jurisdiction. Kevin Higgins, Director, Fraud Unit for Industrial Insurance, Office of the Attorney General, stated he did not sponsor section 70 of Exhibit C. Mr. Ormsby noted although SIIS did not sponsor this section, they are supportive. Exhibit D and Exhibit E were presented to the committee, however, there was no testimony. There being no further business, the meeting was adjourned at 10:20 a.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor April 27, 1995 Page