MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session June 14, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Wednesday, June 14, 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 OTHERS PRESENT: Bob Feldman, President, Nevada General Insurance Company/Auto Insurance America Don Springmeyer, Lobbyist, Nevada Trial Lawyers Association Stephanie Tyler, Lobbyist, Nevada State Chiropractic Association John Vergiels, Lobbyist, Auto Insurance America John Sande, Lobbyist, Nevada Bankers Association Joe Guild, Lobbyist, State Farm Insurance Alice Molasky, Commissioner, Division of Insurance, Department of Business and Industry Dick Rottman, Chief Executive Officer, Bell United Insurance/Western Insurance Company Rose McKinney-James, Director, Department of Business and Industry Senator Townsend opened the meeting with the hearing on Senate Bill (S.B.) 555. SENATE BILL 555: Requires independent medical examinations under certain circumstances for insureds and claimants under policies of motor vehicle insurance. Bob Feldman, President, Nevada General Insurance Company/Auto Insurance America, gave background on the reason for this legislation, and noted the high rate of fraud as part of his reasoning. Mr. Feldman presented Exhibit C and continued with his testimony. Mr. Feldman asserted this legislation could very well reduce insurance rates. Next to testify, Don Springmeyer, Lobbyist, Nevada Trial Lawyers Association, noted his concerns pertaining to this legislation. Senator Regan and Mr. Springmeyer discussed Exhibit C, and the ramifications of an independent medical examination (IME). Mr. Springmeyer noted he feels an IME does nothing to help an injured person with treatment to get better, but will certainly increase the cost of settlement. Mr. Springmeyer also stated he feels an IME could be an invasion of privacy. Senator Regan declared his concerns deal, not only with treatment of the injured, but also include the control of fraud that might be associated with accidents/injury. Mr. Feldman offered more comments, noting he does not feel an IME is an invasion of privacy. At this time Senator Lowden and Mr. Feldman continued to review Exhibit C. Next to testify, Stephanie Tyler, Lobbyist, Nevada State Chiropractic Association, came forward, offering her comments. Ms. Tyler noted she feels the legislation should be balanced so the rights of the individual are protected by getting a fair medical evaluation. Senator Regan and Ms. Tyler continued with dialogue pertaining to the matter of choosing a physician/doctor/chiropractor for an evaluation. Senator Neal and Mr. Feldman continued their discussion on this proposed legislation. At Senator Townsend's suggestion that further work was needed on this legislation, Mr. Feldman and Mr. Springmeyer stated they will be happy to work together. Senator Townsend, continuing, commented, all involved, i.e., insurance agents, doctors, lawyers, need to be held responsible for inappropriate conduct. Senator Townsend went on to note if all professions and industries would police their own people, many problems would be solved. The hearing closed on S.B. 555 and opened on S.B. 561: SENATE BILL 561: Provides for interstate and international banking. First to testify, John Sande, Lobbyist, Nevada Bankers Association, referred to Exhibit D, an amendment to S.B. 561, noting he feels it is satisfactory. Senator Neal and Mr. Sande discussed any impact that might be created by this legislation as it concerns federal law. Mr. Sande answering questions posed by Senator Neal concerning whether or not this legislation is good for Nevada, asserted he feels this legislation should allow ease of operation. SENATOR NEAL MOVED TO AMEND AND DO PASS S.B. 561 WITH AMENDMENT NO. 970. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS O'CONNELL, LOWDEN AND TOWNSEND ABSTAINED FROM THE VOTE.) * * * * * The hearing was closed on S.B. 561 and opened on S.B. 505. SENATE BILL 505 : Makes various changes in regulation of insurance. Alice Molasky, Commissioner, Division of Insurance, Department of Business and Industry, testified, referring to Exhibit E, expressed her support for this legislation. SENATOR SHAFFER MOVED TO AMEND AND DO PASS S.B. 505 WITH AMENDMENT NO. 769. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION PASSED UNANIMOUSLY. * * * * * At this time, Dick Rottman, Chief Executive Officer, Bell United Insurance/Western Insurance Company, gave further testimony regarding S.B. 505. Mr. Rottman noted there were several sections of this legislation about which he has serious concerns, especially as it relates to smaller insurance companies. Ms. Molasky and Mr. Rottman continued with their comments, with Mr. Rottman reiterating his concerns. Mr. Rottman expressed the hope these concerns might be addressed in the 1997 legislative session. Joe Guild, Lobbyist, State Farm Insurance, concurred with concerns expressed by Mr. Rottman. Senator Townsend stated Mr. Rottman's concerns will be sent to the Assembly to, hopefully, be incorporated as amendments. The hearing was closed on S.B. 505. Senator Townsend then asked Rose McKinney-James, Director, Department of Business and Industry, for answers to various questions. Senator Townsend noted: We are dealing with a medical malpractice closed and open claim study ...based on the two parties affected the doctors and trial lawyers... I'm going to need your insight into - [what] the commission does internally; the commission does externally. The second item has to do with the proposal for $175,000 the Public Service Commission of Nevada (PSC) has set aside for a management audit and whether an audit should be done by the PSC internally, or whether it should be done externally. If performed externally, which group should do it. Should the Governor choose it; should it be an interim study; who should oversee that; or since you oversee that arena, should that be an independent management study directed by you... Thirdly, is the language and proposal in Assembly Bill (A.B.) 61 to accommodate the fines and benefit penalties with regard to persons who have aggrieved their process under their certificate of self- insurance. ASSEMBLY BILL 61: Revises administrative penalties for violations of provisions governing industrial injuries, occupational diseases and control of asbestos. At this time, Ms. McKinney-James made her first comments concerning the closed claims study. She stated, "I think the most important consideration is the study be conducted by someone, or some firm, with actuarial experience. I believe it should be conducted as a result of, at least an order from the commissioner, to the extent it is done externally. The cost for that provided outside the budget constraints of the Insurance Division. ...There is a desire to have the Insurance Division do it with a contractual arrangement with an actuary." Further discussion continued between Senator Townsend and Ms. McKinney-James pertaining to funding for such a study. Senator Townsend requested Ms. McKinney-James to speak to the Governor for guidance concerning the management audit for the PSC. Ms. McKinney-James replied in the affirmative. Ms. McKinney-James then commented on A.B. 61, noting additional amendments might, in fact, be forthcoming. She went on stating she feels, "I think it would be premature for me to indicate to you a firm position one way or the other... I feel that measure, along with other measures considered by this committee, will clearly present a significant challenge for the Insurance Division and the Division of Industrial Relations from a fiscal standpoint." Senator Townsend, Senator Regan and Ms. McKinney-James proceeded with various comments concerning A.B. 61; any fiscal ramifications and the effectiveness of this piece of legislation. There being no further business, the meeting was adjourned at 10:05 a.m. RESPECTFULLY SUBMITTED: Beverly Willis, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor June 14, 1995 Page