MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session June 9, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Friday, June 9, 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 Molly Dondero, Committee Secretary OTHERS PRESENT: Jane Nichols, President, Board of Examiners for Social Workers May Shelton, Director, Department of Social Services, Washoe County Alicia Smalley, Lobbyist, National Association of Social Workers, Nevada Chapter Todd Russell, Lobbyist, Nevada State Board of Accountancy Ronda Clifton, Deputy Attorney General, Office of the Attorney General, State of Nevada Robert F. Martin, Lobbyist, Nevada Association of Homeopathic Physicians Fred Hillerby, Lobbyist, State Board of Pharmacy Bob Feldman, President, Nevada General Insurance Company Glen Shippey, Actuary I, Division of Insurance William P. Cashill, Lobbyist, Nevada Trial Lawyers Association Robert Crowell, Lobbyist, Farmers Insurance Frank Shallenberger, M.D., H.M.D. Michael Gerber, M.D., H.M.D. Marsha Berkbigler, Lobbyist, Nevada State Medical Association Mitch Keamy, M.D. Dorothy Colley, President, Nevada for Health Freedom Nancy Wolfe-Pare`, ISID, President, Interior Design Institute Jane Nichols, President, Board of Examiners for Social Workers, discussed Assembly Bill (A.B.) 477. ASSEMBLY BILL 477: Makes various changes relating to social workers. Ms. Nichols explained the bill brings the Board of Examiners for Social Workers into regulation with its timing of disciplinary hearings, into compliance with open meeting laws, and clarifies confidential records. She explained the bill reflects national changes in test costs and addresses portions of the law which deal with increasing numbers of social workers who are fleeing across state lines to avoid sanctions in other states. Ms. Nichols stated the bill makes a differentiation between an expired license and a revoked license. She pointed out the grandfathering period has existed since 1988 and the bill clarifies that the grandfathering period is closed and clarifies the definition of independent contractor. Senator Townsend asked for a copy of the budget. Ms. Nichols explained there are three types of fee changes requested in the bill. She stated there is a need for an increase to cover the costs of postage. They have been unable to notify consumers that the board exists to offer its assistance to the public. They have not been able to send regular mailings to their licensees. She stated they are requesting a $15 increase in application fees only. They are not raising other fees. She stated section 7 addresses penalties for late license renewal. Senator Townsend asked what preventative measures have been taken by the board to prevent abuses by social workers. Ms. Nichols replied they are requiring 2 days of training for supervisors of social workers so that they may increase understanding of ethical issues facing social workers. She stated they are working with schools to increase teaching of ethics and ethical issues. May Shelton, Director, Department of Social Services, Washoe County, expressed her support of the bill. She stated this will enable the social work examiners to do the work they are supposed to do. Alicia Smalley, Lobbyist, National Association of Social Workers, Nevada Chapter, expressed her support for A.B. 477. The hearing was closed on A.B. 477 and opened on A.B. 488. ASSEMBLY BILL 488: Revises provisions governing regulation of accountants. Todd Russell, Lobbyist, Nevada State Board of Accountancy, discussed A.B. 488. He explained the bill is a housekeeping measure. He stated there is an error in current regulation concerning the educational requirements for certified public accountants. He stated the change requests the allowing of either a bachelor's degree or equivalent degree. He stated many degrees have more credits than a standard bachelor's degree. He indicated the requested language in the bill corresponds with national law. Senator Townsend asked if the bill will lower the standards. Mr. Russell stated it will not. He said, often, a master's degree is the degree offered for a certified public accountant. The hearing was closed on A.B. 488 and opened on Senate Bill (S.B.) 361. SENATE BILL 361: Makes various changes relating to mobile home parks. No testimony was heard on S.B. 361. Scott Young, Senior Research Analyst, explained the amendments will be ready for the bill at a later date. No action was taken on the bill. The hearing was closed on S.B. 361 and opened on A.B. 192. ASSEMBLY BILL 192: Makes various changes to provisions relating to hearing aid specialists. Ronda Clifton, Deputy Attorney General, Office of the Attorney General, State of Nevada, discussed Exhibit C. Senator Augustine explained the changes listed in Exhibit C. SENATOR REGAN MOVED TO AMEND AND DO PASS A.B. 192 WITH AMENDMENT NO. 836. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** The hearing was closed on A.B. 192 and opened on S.B. 537. SENATE BILL 537: Makes various changes to provisions relating to physicians. Robert F. Martin, Lobbyist, Nevada Association of Homeopathic Physicians, discussed Exhibit D. Exhibit E, Exhibit F, and Exhibit G were distributed without testimony. Senator Lowden asked for a definition of controlled substances. Mr. Martin explained a controlled substance is anything which requires a prescription to be administered. He explained all doctors who prescribe controlled substances are registered with the Drug Enforcement Agency (DEA). He stated it is the decision of the attorney general that the use of controlled substances and dangerous drugs is limited to homeopathic dosage by the State Board of Pharmacy. He stated if a patient needs penicillin in an allopathic dosage, the homeopathic doctor is limited to a homeopathic dosage and may not prescribe the higher amount. Senator Lowden asked if the State Board of Pharmacy oversees the dosage requirement. Mr. Martin stated the dosage requirement is based on the statutes as interpreted by the attorney general. Fred Hillerby, Lobbyist, State Board of Pharmacy, discussed regulations listed in S.B. 537. Senator Lowden asked if the homeopath doctor has a DEA number, why does the attorney general feel "dangerous and controlled" needs to be added to statute. Mr. Hillerby stated he does not know the answer, but will get the information today. The hearing was closed on S.B. 537. A bill draft request was introduced. BILL DRAFT REQUEST 57-1969: Provides for independent medical examination of person claiming benefits under policy of motor vehicle insurance. Bob Feldman, President, Nevada General Insurance Company, discussed Exhibit H and presented Exhibit I as evidence for its need. He discussed the increase in "tap and sue" claims being felt by insurance companies. He stated minor accidents involving little, to no, damage now comprise nearly 85 percent of his company's soft-tissue injury claims. He explained there are fraud rings operating in Nevada which specialize in this type of claim. He stated there are 360 indictments with the United States Attorney and the Office of the Attorney General for organized fraud rings. Mr. Feldman illustrated several incidences where fraud is suspected in accident cases. He explained the difficulty in obtaining information on medical care of injured persons. He asked to be allowed to be given information prior to a claim being filed. He stated when the insurance company has no way of verifying the true extent of injury on a claimant, the insurance company has little with which to fight a claim. He stated chiropractic care can be in the thousands of dollars and there is no way for an insurance company to be certain the person was ever injured. He stated the only time the insurance company is allowed to examine records is after a lawsuit is filed, and the claimant is cured. He said the insurance company has a right to inspect a damaged vehicle before paying for repair costs, but the company has no right to inspect a "damaged" person before paying the claim. He asked for that right. He explained the insurance company has no defense in court without the right to examine a patient. Senator Lowden pointed out, not all doctors agree about extent of injury. One may not think there is anything wrong, another many disagree. She stated this law may be one more step to litigation. Mr. Feldman discussed Exhibit I. He pointed out the patient information of Exhibit I specifies an attorney may dictate the level of treatment a person may receive. He pointed the claims are being built up to a fraudulent level which adds to the insurance rate problems. Mr. Feldman commented the trial lawyers have all the advantages. He stated they may hide information from the insurance companies. Senator Neal asked if the doctor who conducts the second examination will be working for the insurer. Mr. Feldman stated the doctor will. Senator Neal asked how the doctor can be considered "independent." Mr. Feldman stated the claimant's doctor will be the lawyer's expert witness at a trial. He asked for the right to have the insurance company's expert witness have a chance to examine the claimant prior to treatment to determine the extent of original injury. He pointed out it can be beneficial to a legitimately injured person, to substantiate the claim prior to treatment. Senator Neal pointed out the bill states the insurance company will only pay for the examination if the claimant lives 50 miles from the doctor. Mr. Feldman stated the mileage is negotiable. He stated the insurance company pays all costs for the examination. Senator Neal questioned the requirement for prior treatment records of the claimant. He questioned the need for section 3. Mr. Feldman stated the records are necessary to conduct a proper medical exam. He stressed patient history is important in any diagnosis. Senator Neal commented he is totally against any law which creates a condition where a preexisting injury is used against a person for consideration of benefits. Mr. Feldman stressed the insurance companies are not denying any benefits, they are asking for corroboration of an injury. He stated if the insurance companies are expected to fight fraud which will help to reduce costs, then they must have the tools with which to do so. Senator Neal stressed he does want them to fight fraud, but he does not want to create a law which permits a totalitarian situation to fight the fraud. Mr. Feldman stated it will not create a totalitarian situation. Mr. Feldman stated there are some law firms which do give the insurance companies information. He stressed they are helpful with questionable claims and work ethically. He stressed it is unfortunate that all law firms are not ethical. Mr. Feldman stated the 90-day medical request listed in S.B. 300. SENATE BILL 300: Allows limitation or denial of insurance claim for medical condition if certain notice or information is not provided to insurer. Glen Shippey, Actuary I, Division of Insurance, stated the insurance division is not opposed to independent medical examination (IME) provisions. He stated they exist in many other states. He suggested the bill requests information which is not reasonably related to the claim. He commented page 3, subsection 8 causes a great deal of concern. He stated IME provisions should be only for information which is reasonably related to the claim. Mr. Feldman agreed and stated he did not request the language in subsection 8. He stated the language came from the bill drafters. He stated they wish to examine the physical body to determine if a person is really hurt. Mr. Feldman stated he was not certain if he is willing to give up subsection 9. William P. Cashill, Lobbyist, Nevada Trial Lawyers Association, stated the bill is a bad idea. He stated it is an idea which is meant to terrorize a person who has a legitimate claim. He stated S.B. 300 is a fair bill, BDR 57-1969 is not. He stated an IME is a drastic step which is normally taken in the context of litigation. He stated if Mr. Feldman thinks a claim is fraudulent, then he may deny the claim. Senator Lowden asked if an IME can be built into S.B. 300? Mr. Cashill stated in a first party agreement between an insured and the insurance company, there is a duty of cooperation which is inherent in the contract itself. He stated: If you are injured . . . you are submitting a claim. You have a duty to cooperate with your own company. Under the existing S.B. 300 plus the contract, you have a duty to produce to your own insurance carrier whatever medical information which is reasonably related to the claim. Senator Lowden suggested it is a good idea to have a second opinion no matter what the case. She stated she would be happy to have someone else pay for a second opinion to be certain treatment is really necessary. Mr. Cashill stated an IME is not always independent. Senator Lowden commented the lawyer's expert, or doctor, is not independent, either. She stated if the IME agrees with the original diagnosis, it is better for the claimant. Mr. Cashill stated if there is a form in which independence and protections can be assured, the idea of an IME is appropriate. He stated if the right to an IME rests solely in the hands of the opposing insurance company, then the system is fraught with a lack of protection of the claimant. He stated there is no restriction on disclosure in this bill. He stated when a case reaches litigation, there is protection of information. Senator Augustine pointed out the IME will be conducted by a physician and a physician is sworn by an oath to protect the privacy of the patient. She stated it is not appropriate to suggest the examination will be unscrupulous. Mr. Cashill stated there is a potential for abuse. Senator Augustine pointed out the system of insurance claims is out of control. She stated there are many bills on tort reform this session because the system has overreached itself. She stressed there are valid points in the bill and even if the bill is not kept in its entirety, there are parts which should be considered. Mr. Cashill stated he does not want any part of this bill which allows an insurance company to demand of clients that they open medical or psychiatric records to an IME. Senator Augustine suggested protection can be worked into the bill with an IME. Mr. Feldmen commented if a lawsuit is filed all the information is available to the insurance companies. What the insurance companies are asking, with this bill, is to be allowed to examine a person prior to treatment and to a claim. Otherwise the insurance company usually waits 2years before an examination may be conducted and, by then, the patient is cured and there is no proof the injury ever occurred. Senator Townsend commented the bill is too broad and needs to be focused on the goal, which is to have the right to request an IME prior to a lawsuit being filed. He summed up some of the problems with the bill. He stated the trial lawyers contend the bill can be used to intimidate a claimant with a legitimate claim. He commented the language in the bill has aspects of it with which no one can agree. He listed those as being the request for personal history relating to mental condition, acquired immunodeficiency syndrome, and other contagious diseases. He stated the bill goes beyond the scope of the actual injury. He pointed out S.B. 300 authorizes the release of information to both sides which is pertinent to the situation. Mr. Feldman stated there is room for negotiation on the bill. He stressed he saw the language from the bill drafter, for the first time, this morning. He pointed out, however, if nothing is done to help the insurance companies fight fraud during this legislative session, the situation is going to get substantially worse. He commented the language in S.B. 300 will only help in reserving claims better. A 90-day requirement for the exchange of information is not going to help fight fraud. He stressed without the opportunity to have an IME, the insurance companies have no way to fight the build up of claims for soft-tissue injuries. The claims are being inflated, which drives up the cost of insurance. The only way to fight them is through litigation, which drives up the cost of insurance. He stated that 90 days after a minor fender-bender accident, the people have already run up thousands of dollars worth of chiropractic bills, and there is no way to determine if the person was ever, really, injured. He stressed the insurance companies are trying to contain costs, but without help, it is very difficult to do. Senator Townsend stressed he has asked why insurance companies do not use managed care, and they cannot give him an answer. He stated the use of managed care would help to lower costs, but the companies refuse to use it. He pointed out that is why the medical portion of the insurance premium is out of control. He asked if a request of an IME is placed into S.B. 300, how will it help to reduce rates. Mr. Feldman stated if the bodily injury claims can be reduced by 10 percent it will help to either reduce the rates, or to keep them from increasing. He stated the ethical trial lawyers should support measures which will help reduce litigation. He stated if something is not done soon, he does not know what can be done to contain the escalating costs. Senator Shaffer stated he feels this bill needs to be introduced separate from S.B. 300, but commented, the bill needs a great deal of work. SENATOR SHAFFER MOVED TO INTRODUCE BDR 57-1969. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Senator Augustine stated it is very late in the session to introduce a bill which needs so much work and suggested adding some of the better points of the bill as amendments to S.B. 300. Senator Lowden stated she supports taking the IME requirement, without the broad aspects of the bill draft listed in section 3, and adding it to S.B. 300. Mr. Feldman stated he is willing to remove anything from the bill which involves privacy. He stressed the goal is not to intimidate anyone or to intrude into their privacy. He stated, "But just like we are allowed to examine a car before we pay for it we want to examine the person." The hearing was closed on BDR 57-1069 and opened on S.B. 300. Senator Townsend discussed Exhibit J. Mr. Shippey stated the language in Exhibit J was agreed to by Farmers Insurance representatives and the insurance division on the previous day. He expressed his support of the amendment as written in Exhibit J. SENATOR REGAN MOVED TO AMEND AND DO PASS S.B. 300 WITH AMENDMENT NO. 858. SENATOR SHAFFER SECONDED THE MOTION. Mr. Shippey commented he has another amendment to add to section 2 of the amendment. Exhibit K was submitted. Senator Townsend asked if Farmers Insurance agreed to the language. He asked why "pro rata premium for the expired portion of the new term" is being removed. Mr. Shippey stated the phrase is unnecessary, because the 30 days will not run into the new renewal period. Senator Regan stated this amendment request will be part of his motion. Robert Crowell, Lobbyist, Farmers Insurance, commented Nevada Revised Statutes 108.640 is a lien law statute which is where this language belongs. THE MOTION CARRIED UNANIMOUSLY. ***** The hearing was closed on S.B. 300 and opened a general discussion hearing of S.B. 537, S.B. 196, and S.B. 492. SENATE BILL 537: Makes various changes to provisions relating to physicians. SENATE BILL 196: Prohibits certain insurance coverages from excluding coverage for certain treatment provided by homeopathic physicians. SENATE BILL 492: Makes various changes relating to homeopathy. Mr. Hillerby presented Exhibit L. He explained S.B. 537 will change the attorney general's opinion and would allow those licensed by the State Board of Homeopathy to have limited prescribing authority to the extent the board limits it. Senator Neal asked if the people must have a certificate from the state before they have a DEA number. Mr. Hillerby stated those homeopathic doctors without a allopathic or osteopathic license have a certificate which limits what amounts they may prescribe of controlled substances. Senator Augustine discussed Exhibit L. Senator Lowden asked why the law was changed in 1985 to prevent homeopathic doctors from having unlimited use of controlled substances. She suggested that homeopathic doctors who are not licensed as allopathic and osteopathic doctors be given the DEA numbers of homeopathic doctors who are licensed as allopathic and osteopathic doctors so that the doctors without dual licenses be allowed to administer controlled substances. Frank Shallenberger, M.D., H.M.D., commented the idea would not work due to liability involved in allowing someone else access to a DEA number. Senator Lowden pointed out that doctors are allowing their physicians' assistants to use their number, why not another doctor. Dr. Shallenberger stated he does not want to assume the risk of someone else's practice. He explained the section was cut in 1985 at the last moment. Senator Augustine commented a law, now, allows physicians' assistants to prescribe controlled substances, why not allow other homeopathic doctors. Dr. Shallenberger pointed out that all homeopathic doctors, whether licensed as allopathic doctors or not, are very qualified to prescribed controlled substances. He stated he must maintain his allopathic license simply to prescribe penicillin when needed. Michael Gerber, M.D., H.M.D., commented a homeopathic physician must be a medical doctor (M.D.) or a doctor of osteopathy (D.O.) and have the same training as those who serve on the board and are dually licensed. Senator Townsend pointed out there is a difference between having an M.D. degree and being licensed to practice. He stated there are many singularly licensed doctors who also have an M.D. degree. Senator Lowden commented there are differences in qualifications for an M.D. homeopathic doctor and a homeopathic doctor. Dr. Shallenberger stated in order to have a homeopathic license, a doctor must have an M.D. license in any state. He emphasized there is no difference in qualifications. Senator O'Connell commented a doctor may not be licensed in Nevada unless he has graduated from a United States school of medicine. Marsha Berkbigler, Lobbyist, Nevada State Medical Association, stated a homeopathic doctor must have held an M.D. or D.O. license in some state in the United States. Senator Augustine pointed out they are unlicensed medical doctors, not licensed. Ms. Berkbigler stated the Nevada medical practice act is the strictest in the United States and it is possible a doctor may come to Nevada who is licensed in another state, but that state may have less rigorous standards to meet than must be met in Nevada. She stated if a homeopathic doctor wishes to prescribe controlled substances, all the doctor must do is activate their M.D. license in Nevada and be controlled by that board for those prescriptions. Senator O'Connell pointed out physicians' assistants may prescribe controlled substances. She asked why a homeopathic doctor, who has the same training as a medical doctor, regardless of whether the doctor has an active license or not, may not prescribe controlled substances without a separate license. Mitch Keamy, M.D., stated the physicians' assistants have a lesser standard or training. He stated the regulation which allows the assistant to prescribe controlled substances requires direct supervision of a physician who is the assistant's supervisor. He commented the homeopathic doctor without an M.D. license will be prescribing independently. He stated in order to be licensed as an M.D. in Nevada, a doctor must have a complete residency including 3 years of training. Ms. Berkbigler expressed her concerns about section 1 of the bill. Dorothy Colley, President, Nevada for Health Freedom, asked to speak in favor of the bill. She commented she will speak at a later date and presented Exhibit M in support of the bill. Nancy Wolfe-Pare`, ISID, President, Interior Design Institute, discussed her concerns about S.B. 506. SENATE BILL 506: Provides for registration and regulation of registered interior designers and registered residential interior designers. Ms. Wolfe-Pare` discussed the proposed amendment which was voted on by the committee during the hearing of June 1. She stated she owns the Interior Design Institute which is located in Las Vegas. She expressed her concern that the amended version of S.B. 506 will put her school out of business. She stated she was a part of the coalition which has worked on the drafting of this bill, and she has supported legislation which will license interior designers, but she is not in support of the amended version of the bill. She pointed out a 2-year program can train people for interior design. She stated interior designers from 2-year programs do not do structural work, but the language of the amendment will prevent them from working. She stated the degree offered by her school is an Associates Degree in Occupational Studies in Interior Design. She disagreed with the concept of changing everyone to an interior decorating degree. She stated she is training the students to be interior designers and they should be able to use the title they have earned. She stated she uses the guidelines of the National Council of Interior Designer Qualifications (NCIDQ) to train her students. She pointed out, if she had been informed by the coalition that they were going to change the licensing requirements by eliminating 2-year schools, she would never have supported this bill and would have negotiated with the architects to make the needed changes in the amendment. She commented she was appalled and upset by the elimination of the 2-year schools from qualification. She pointed out the regulation will greatly impact the economy of Nevada. It will lose jobs, not make them. Senator Townsend commented it was the committee's understanding that all the people involved in the coalition understood the concept of the amendment. Ms. Wolfe-Pare` stated what the committee voted on was not the agreed language in which people had participated. She stated up until the day prior to the hearing, 2-year schools were still in the bill. She stated the bill draft request and the printed version of the bill are not the same as the amendment which was voted on by the committee. She stated the language has been changed substantially and the bill is totally different from the bill to which people had consented. She explained she has contacted many people in the industry, many of whom graduated from her school, and they did not know about the changes and were very upset about the terms of the amendment. They know they will be out of a job if this legislation passes as it is. She commented the board members who are in favor of this bill have 4-year degrees. She stated the NCIDQ is a nationally recognized test. She pointed out it is a rigorous test and should be used as the qualifier for licensing. She commented the architects have not discussed the changes with her. She stated it is unfair that someone, who is NCIDQ-registered, has a 2-year degree in Interior Design, and has 4 years of experience will not be able to qualify to work in Nevada. She stated it is wrong. Ms. Wolf-Pare` pointed out there are many women who, like herself, were unable to afford a 4-year university education, but who were able to attend a 2-year community college or trade school. She commented without the opportunity to obtain her degree, she would have been on welfare with three children to care for. She commented that taking a 2-year degree away from people will be harmful to many women in the state. She asked for an explanation as to why she and her students should be eliminated from licensing under this amendment. Senator Augustine commented she has spoken to Brian Gresh about the concerns expressed by Ms. Wolfe-Pare`. She stated the bill is a practice act, not a title protection act. She stated people can work as interior decorators. Ms. Wolfe-Pare` stated people who are decorators may call themselves decorators, but people who are designers will not be able to be called designers because of this bill. She stated the exclusions are not fair to the 2-year graduates who have the same training as the 4-year students but without the humanity studies. She pointed out it will greatly impact the income of the designers with 2-year degrees who will not be able to use the term "designer" in their work. Senator Regan stated he is pulling the bill and will wait for an amendment to clarify the educational requirements. With no further discussion, the hearing on S.B. 506 was closed. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor June 9, 1995 Page