MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-Second Session
March 28, 2003
The Committee on Commerce and Laborwas called to order at 11:45 a.m., on Friday, March 28, 2003. Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Ms. Barbara Buckley, Vice Chairwoman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Mr. David Brown
Mrs. Dawn Gibbons
Ms. Chris Giunchigliani
Mr. Josh Griffin
Mr. Lynn Hettrick
Mr. Ron Knecht
Ms. Sheila Leslie
Mr. John Oceguera
Mr. David Parks
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Assemblyman Chad Christensen, District No. 13
Assemblyman Marcus Conklin, District No. 37
STAFF MEMBERS PRESENT:
Vance Hughey, Principal Research Analyst
Wil Keane, Committee Counsel
Diane Thornton, Senior Research Analyst
Sharee Gebhardt, Committee Secretary
OTHERS PRESENT:
Rusty McAllister, Vice President, Professional Fire Fighters of Nevada
Danny Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO
Barbara Gruenewald, Nevada Trial Lawyers Association
Jack Jeffrey, Legislative Advocate, Southern Nevada Building and Construction Trades Council
Ronald Dreher, President, Peace Officers Research Association of Nevada
Robert Ostrovsky, Legislative Advocate, Employers Insurance Company of Nevada
Don Jayne, Legislative Advocate, Nevada Self Insured Association
Leslie Bell, President, Nevada Self Insured Association; President, Nevada Comp First
Dotty Merrill, Legislative Advocate, Washoe County School District
Kevin Higgins, Chief Deputy Attorney General, State of Nevada
Chairman Goldwater called the meeting to order at 11:45 a.m. All members were present and there was a quorum present. He advised that they had a big agenda and opened the hearing on A.B. 438.
Assembly Bill 438: Requires certain periodic increases in amount of compensation to which claimant or dependent of claimant is entitled to receive for permanent total disability under industrial insurance. (BDR 53‑1162)
Assemblyman Chad Christensen, Clark County, District No. 13, introduced A.B. 438. He said he was a true believer in the philosophy, “when things start right, they go right.” He suggested that injured workers who had been completely and totally disabled on the job were essentially starting over with their lives. He said he wholeheartedly supported the bill because it would help those injured workers to get the right start, and to know they would at least receive a cost of living adjustment to help with their ongoing needs.
Rusty McAllister, Vice President, Professional Fire Fighters of Nevada, thanked Mr. Christensen for supporting the legislation and said it was greatly needed. He said he was testifying in support of A.B. 438, not just on behalf of firefighters and police officers, but also for all workers. Speaking from prepared testimony (Exhibit C), he recalled that similar legislation had been introduced in prior sessions. He said increases had been made in the past to the industrial insurance system. He referenced page 3 of Exhibit C, which included a copy of previous Nevada Revised Statutes (NRS), which increased the cost of living benefits for workers who were on “permanent total” disability. He stated the current statutes were a “patchwork,” there was no consistency, and the increases were not on an annual basis. Instead, he said, increases were lump sums computed in percentages.
Mr. McAllister advised that A.B. 438 sought to provide a consistent increase in the amount of disability payments made to those with permanent total disabilities. He said the bill as drafted allowed for only occasional one-time increases in benefits and suggested the bill should provide yearly increases. He recalled that the 2001 Legislative Session proposed a similar bill and drew opposition from insurance companies because of the retrospective nature of the benefits. He emphasized the intent of A.B. 438 was to be prospective. He averred the bill would not pay any benefits prior to implementation. He said he had received confirmation from representatives of the insurance industry that they would support the bill, providing it was prospective and they were given sufficient time prior to implementation to fund for the increases.
Mr. McAllister explained that currently an injured worker with a permanent total disability received 66.66 percent of the average state worker’s salary. He said the amount did not increase unless the Legislature granted an increase, and while the employee was restricted from working, the cost of living continued to increase annually. Consequently, he said, the disabled worker’s ability to survive eroded over time. He advised that even the federal government provided cost of living increases on an annual basis to disabled veterans.
Mr. McAllister referenced page 4 of Exhibit C, which provided comparisons of disabled workers’ incomes with those of their counterparts over a period of 15 years. It also contrasted how the legislation would improve the disabled worker’s financial solvency. Additionally, Mr. McAllister noted that disabled workers were thrust into retirement without the opportunity to plan for it.
Mr. McAllister said that page 5 of Exhibit C provided suggested amendments to A.B. 438. Additionally, he advised that the insurance industry representatives wanted the bill to clarify that the increases were only for those receiving benefits on a monthly or periodic basis, and not for those who elected to take a lump sum payment as their benefit.
Mr. McAllister informed the Committee that S.B. 388 was introduced to provide an increase to workers on permanent total disability. The increase would be based on the annual increase in the state worker’s salary. He advised that the insurance industry had some concerns about funding the increases when there was no fixed amount and the increases would fluctuate from year to year. He stated that A.B. 438, by providing fixed amounts of increases, would be a better alternative to solve the problem.
Assemblyman Knecht referenced the “lump sum” payment of disability in the proposed amendment. He asked whether the lump sum was computed as a “present worth” of a future stream that the employee could take as an alternative, or as a stream of income. He asked whether the “stream” would typically have that kind of escalation.
Mr. McAllister said he was not sure how it was figured. He said he did not believe that increases were figured into the lump sum, because the only way the increase could occur was if it were legislated.
Mr. Knecht asked Assemblyman Christensen the feasibility of an amendment that allowed the lump sum calculation to also factor in increases to people who chose lump sum in the same way that it factored increases for people who chose an annual payment. He said he would support that change and he would recommend it.
Assemblyman Christensen offered to consider anything the Committee suggested.
Mr. McAllister said he wanted to clarify the intent of the proposed amendment regarding Section 2. He said the intent was not to recalculate wages from the past; the intent was to begin at the current rate and calculate appropriately a disabled worker’s benefit from a previous injury based on the number of years he had been disabled.
Chairman Goldwater thanked Mr. McAllister for his testimony and advised the Committee they were going to recess the hearing on A.B. 438. He opened the Work Session (Exhibit D).
Assembly Bill 182: Authorizes employer to enter into fair share agreement with labor organization. (BDR 53-1076)
Vance Hughey, Principal Research Analyst, explained that A.B. 182 authorized an employer to enter into an agreement with a labor organization that required each employee who was not a member of the labor organization to pay a fee. He said the fee was limited to an amount that represented the employee’s proportional share of the cost relating to collective bargaining, the administration of contracts, and the adjustment of grievances. He advised that no amendments were proposed for the bill.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO DO PASS A.B. 182.
ASSEMBLYWOMAN BUCKLEY SECONDED THE MOTION.
THE MOTION CARRIED WITH MR. GRIFFIN, MR. BROWN, MR. BEERS, MR. KNECHT, AND MR. HETTRICK VOTING NO. (Mrs. Gibbons was absent for the vote.)
Assembly Bill 141: Makes various changes concerning enforcement of provisions requiring payment of prevailing rate of wages on public works. (BDR 28-464)
Mr. Hughey explained that A.B. 141 was brought forward by the Labor Commissioner and that the bill, along with A.B. 143, comprised the legislative package of the Office of the Labor Commissioner. He said that the bill made changes concerning enforcement provisions requiring payment of prevailing wages on public works projects. He said a subcommittee consisting of Assemblymen Oceguera, Beers, and Parks held two meetings to discuss concerns that were raised during the hearing on the bill. He advised that the report of the subcommittee was included under Tab A of Exhibit D, the Work Session Document prepared by the Legislative Council Bureau. He said of the four issues upon which the subcommittee reached consensus, only one would result in an amendment to the bill if the Committee agreed with the recommendations of the subcommittee. The subcommittee recommended that the wording on page 2, line 17, be returned to the current statutory wording of “support” instead of “substantiate.”
Mr. Hughey said that while the Labor Commissioner had requested the wording currently in the bill, he acceded to the wishes of the representatives of the labor organizations who objected to the wording. He advised that the subcommittee was unable to reach consensus on two issues. Those issues, he said, involved a proposal supported by representatives of labor organizations to remove the phrase, “in any matters officially noted,” on page 2, lines 33 and 34, of the bill. The other issue was a proposed amendment from the Laborer’s Union to add a provision requiring that evidence be liberally construed when the Labor Commissioner received an objection, in order to ensure that a disputed determination would be decided based on evidence presented at a hearing. He advised that the Labor Commissioner was opposed to those proposals.
Assemblyman Oceguera reported their two meetings were fairly contentious. He said the subcommittee had hoped to reach an agreement, and he noted they had agreed on a few items. However, he concluded, the subcommittee could not support A.B. 141. Mr. Oceguera mentioned that one section of the bill could be salvaged by way of another bill. He said it dealt with a recommendation by the Associated General Contractors, which would probably be added to another bill.
Chairman Goldwater advised that under those circumstances it was appropriate to let a bill die.
Assembly Bill 143: Makes various changes to labor laws and powers and duties of Labor Commissioner. (BDR 53-465)
Mr. Hughey explained A.B. 143 was the section measure that the Labor Commissioner indicated as part of his legislative package for the session. He said the bill made various changes to the labor laws and to the powers and duties of the Labor Commissioner. He said the subcommittee consisting of Assemblymen Oceguera, Beers, and Parks had held two meetings to discuss the concerns that were raised during the hearing. The report of the subcommittee was the same report under Tab A of Exhibit D. He said the subcommittee agreed to recommend to the full Committee the amendments that were offered by the Labor Commissioner, referencing Exhibit “C” under Tab A. He cautioned the legislators that he had used the word “exhibit” in the subcommittee report and then used it again in the Work Session Document. He summarized that the amendments were Exhibit “C” of Tab A (Exhibit D).
Mr. Hughey said the first proposed change by the Commissioner was to replace “may impose” with “can enforce” on page 2, line 41, of the bill. He said the Commissioner had explained that, before he could enforce an administrative penalty against a person who violated a labor law or regulation, he must provide the person with notice and an opportunity for a hearing as set forth in NRS 607.207. He advised the change would make the new wording of NRS 607.160 conform to the existing wording of NRS 607.207.
The second change, Mr. Hughey advised, proposed by the Commissioner, responded to concerns that wording on page 5, line 30, of the bill was too vague. This provision established the time frame within which an employer must provide written notice that the employee would be performing work at a reduced wage. The Commissioner proposed replacing the phrase, “Within a reasonable time,” with the phrase, “Not fewer than seven days.”
The Labor Commissioner’s third proposed change, Mr. Hughey advised, addressed the conditions on page 5, lines 26 through 37, that must be met by an employer before he could lawfully decrease the wages of an employee. As currently constructed, Mr. Hughey explained, an employer must comply with the requirements of both subparagraphs (a) and (b) of subsection 3 of Section 7. The Commissioner’s proposal was intended to clarify that before an employer could decrease the wage of an employee, he must comply with the provisions of either subparagraph (a) or subparagraph (b), but not both. He said this amendment was proposed and supported by representatives of the labor organizations in attendance at the meeting.
The final change proposed by the Commissioner, Mr. Hughey advised, replaced the words “any other” with the word “the” on page 5, line 34. This change was conforming language.
Assemblyman Oceguera said the subcommittee had come to a consensus and recommended a motion to amend and do pass referencing the amendments included in Exhibit “C” of the Work Session Document.
ASSEMBLYMAN OCEGUERA MOVED TO AMEND AND DO PASS A.B. 143.
ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED. (Mrs. Gibbons was absent for the vote.)
Chairman Goldwater thanked Assemblyman Oceguera and the members of the subcommittee for their hard work.
Assembly Bill 146: Revises requirements for licensure as professional engineer or land surveyor. (BDR 54-496)
Mr. Hughey explained the bill was requested by the Board of Professional Engineers and Land Surveyors to revise the active experience requirements for licensure. He said that during the hearing on A.B. 146, the Board requested that the bill be amended to clarify the provisions of substitution of educational course work for active experience. He said the proposed amendment by the Council for the Board was included under Tab B of the Work Session Document (Exhibit D).
ASSEMBLYMAN BROWN MOVED TO AMEND AND DO PASS A.B. 146.
ASSEMBLYMAN ARBERRY SECONDED THE MOTION.
THE MOTION CARRIED. (Ms. Gibbons was absent for the vote.)
Assemblyman Beers advised the Committee that he had a professional engineer licensee in his family. He added that the bill would not affect the family member any more than any other professional engineer, and therefore he did not abstain from the vote.
Assembly Bill 176: Makes various changes to provisions governing prevailing wages. (BDR 28-972)
Not discussed.
Assembly Bill 220: Makes various changes to provisions governing contractors. (BDR 54-502)
Mr. Hughey explained that A.B. 220 changed various provisions governing contractors. He said that Margi Grein, Executive Officer, State Contractors Board, proposed an amendment to Section 1 of the bill to address a concern raised by Assemblywoman Buckley regarding confidentiality of certain information obtained by the Board in connection with an investigation. He said the proposed amendment was included under Tab C of the Work Session Document (Exhibit D).
Chairman Goldwater noted that he rarely favored confidentiality.
Assemblyman Hettrick commented that the information was confidential until the investigation was completed. He added that upon completion, the information was part of the public record only if the disciplinary action was imposed. He assumed, if it were found someone had committed a wrongdoing, the record would be open, but if it were an allegation that was disproved, then the record would be sealed. He stated one would not want an open record just on allegations. He concluded the amendment was appropriate.
ASSEMBLYMAN HETTRICK MOVED TO AMEND AND DO PASS A.B. 220.
ASSEMBLYMAN BROWN SECONDED THE MOTION.
Chairman Goldwater asked Wil Keane, Legal Counsel, about the deleted section. He asked what was being removed and whether they were just rewriting the standard.
Wil Keane, Legal Counsel, clarified that subsection 2, which was deleted on the Proposed Amendment to A.B. 220, was being reintroduced as the new language in Section 3 with one minor change. He said the change was to omit the language, “investigative memoranda.”
THE MOTION CARRIED. (Mrs. Gibbons was absent for the vote.)
Assembly Bill 258: Revises provisions relating to cosmetology. (BDR 54-912)
Mr. Hughey explained that A.B. 258 required that a shampoo assistant be licensed by the Board of Cosmetology and authorized an operator of a cosmetological establishment to employ or lease space to persons other than cosmetologists. He said Assemblywoman Giunchigliani proposed three amendments to the bill to address concerns raised during the hearing. He explained one amendment was on page 1, Section 2, of the bill to add, “combs hair,” to the list of tasks that could be performed by a shampoo assistant. A second change was on page 7, Section 19, lines 14 through 18, to remove the changes to the subsection except to add, “shampoo assistant” to the list of licensed persons that a cosmetological establishment could lease space to or employ to provide cosmetological services. Also, Mr. Hughey advised, they would add a new sentence to clarify that cosmetologists could lease space to or employ barbers. He said the third change was on page 7, Section 21, to add a provision requiring that in addition to the 1,800-hour requirement listed, that a School of Cosmetology maintain a school term extending over a period not to exceed 36 months.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 258.
ASSEMBLYMAN PARKS SECONDED THE MOTION.
Assemblywoman Buckley inquired whether a person had to be licensed in order to be a shampoo assistant. She said the bill was similar to those for landscape architects. She compared persons who just wanted to cut grass with those who just wanted to shampoo. She wondered why legislation was needed.
Assemblywoman Giunchigliani explained that currently for a person to wash hair, he had to have a cosmetological license, which required twice the training, twice the length of education, and twice the expense. She said A.B. 258 would allow a person, who did not want to cut hair or do nails, to wash hair. She said it would actually be cheaper for the person and opened up another job market. She said she initially agreed with Ms. Buckley’s concern, but then she learned of the current requirements just to wash hair. She said for a person to be in a cosmetological establishment, there needed to be some form of standard.
Assemblywoman Buckley asked why they could not just say that a person did not need to be licensed as a cosmetologist to wash hair.
Assemblyman Knecht said that he agreed completely with Ms. Buckley on this issue.
THE MOTION CARRIED WITH MS. BUCKLEY, MR. BROWN, MR. PERKINS, AND MR. BEERS VOTING NO. (Mrs. Gibbons was absent for the vote.)
Assembly Bill 425: Revises provisions regarding public works. (BDR 28-405)
Mr. Hughey explained A.B. 425 was characterized during the hearing as a “clean-up bill” regarding Public Works. He said that Assemblyman Parks worked with representatives of the Nevada Public Purchasing Study Commission to resolve concerns that were presented during testimony on the bill. He said that a mock-up of the bill was attached under Tab D of Exhibit D. He said a significant change to the bill was reflected in Section 1 of the mock-up, which contained the protest provisions. He said the proposed amendment clarified that the protest of a bid must occur prior to awarding a contract. Also, he noted a $250,000 limit to the security requirement in Section 1, and a Section 13 change that exempted the Nevada Department of Transportation from the protest provisions of Section 1. Mr. Hughey said those changes and the remaining changes in the bill were conforming in nature.
Assemblyman Parks expressed his satisfaction with the bill.
ASSEMBLYMAN PARKS MOVED TO AMEND AND DO PASS A.B. 425.
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
Assemblyman Brown said he had reviewed the report and the purchasing committee’s document and advised that he was in favor of the bill. He added, however, because of the sheer volume of the documents, he planned to read the documents in their entirety before the Floor vote, and would reserve his vote on the Floor.
Chairman Goldwater advised that was reasonable and acknowledged that he had not had an opportunity to review the bill line by line. He asked Mr. Brown to communicate to the Committee anything he found. He said for the purpose of expediting the bill he would take a vote on it.
THE MOTION CARRIED. (Mrs. Gibbons was absent for the vote.)
Chairman Goldwater reopened the hearing on A.B. 438. He asked for testimony from other proponents of the bill.
Danny Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO, thanked the sponsors for introducing the bill. He noted there were many permanently impaired workers who were living on $200 a week. He said the bill provided needed help for those people in desperate situations.
Barbara Gruenewald, representing Nevada Trial Lawyers Association, said she also supported A.B. 438 for the same reasons that Danny Thompson had expressed.
Jack Jeffrey, Legislative Advocate, representing the Southern Nevada Building and Construction Trades Council, said he echoed the testimony already presented in favor of the legislation.
Ronald Dreher, President, Peace Officers Research Association of Nevada, advised the Committee of his support of A.B. 438.
Robert Ostrovsky, Legislative Advocate, representing Employers Insurance Company of Nevada, said he favored the bill in concept. He said he wanted to work with the sponsor of the bill regarding the annual percentage numbers included in the amendments. He said he understood that with SIIS (State Industrial Insurance System), it had been very easy because all employers paid into the same fund and the Legislature could raise the rates retroactively. He said the amendment resolved that problem. He said he wanted to look at Mr. Knecht’s proposal because he believed, in permanent total situations, one could not take a total lump sum, only a partial lump sum. He said he wanted to see how that figured into the numbers. He said he believed there was still some work to do and expressed his willingness to work with the parties.
Chairman Goldwater asked for clarification that it was just a math problem for the insurer, that the insurer would never take a position one way or the other.
Mr. Ostrovsky confirmed that for insurers it was just a mathematical actuarial equation of how much premium to charge. For the employer, however, it was an expense issue, particularly if one had a lot of “PTs.”
Chairman Goldwater called for opponents to A.B. 438 to come forward.
Don Jayne, Legislative Advocate, representing the Nevada Self Insured Association, advised that he was against the bill and said the President of the Self Insured Association was in Las Vegas to testify.
Leslie Bell, President, Nevada Self Insured Association, testified via teleconference from Las Vegas. She said the self-insured employers were not necessarily opposed to the bill because they recognized the cost of living increases. She said they were concerned that the bill extended ahead so many years. She questioned whether there would be consideration given to decreases in the CPI (Consumer Price Indexes), should the economy change significantly. She advised that, in rereading the bill, she recognized that those issues could be addressed in biennual legislative sessions.
Ms. Bell advised that increases were built into lump sums through actuarial tables that were based on date of birth. She said this was addressed by the industrial insurance regulation on a regular basis. She said it was paid in present value but was based on a factor that was developed from actuarial tables.
Assemblyman Knecht said that he understood the actuarial tables. He asked if the escalation were mandated, whether she would have any problem if it applied to lump sum as well as annual payments.
Ms. Bell asked whether he was considering PPD (Permanent Partial Disability) lump sums.
Mr. Knecht confirmed.
Ms. Bell responded that when a permanent impairment award was calculated, it was based on several factors. One was based on a percentage that was multiplied by a factor. During the insolvency period, that factor was actually reduced and frozen. She said the percentage was returned in 1997 to 0.06. She said the actuarial tables for present value settlement were based on a person’s date of birth and took into consideration the future acceleration of cost-of-living. She said the injured workers were also given a choice of taking installment payments, which did accelerate. She noted that a total of installment payments was significantly more than a lump sum. She said she did not know how one would adjust a lump sum payment going into the future because she believed that was considered in the factors. She said if one wanted to make an adjustment, one would have to review the factors and increase them.
Assemblyman Knecht responded that he understood the computation process. He said that since the acceleration was considered, A.B. 438 would merely put a floor on the acceleration rates that were factored. He said he understood how to do the calculation to make the adjustment.
Ms. Bell said she believed they were speaking of two different issues. She said one was a permanent partial disability settlement based on impairment, which was established at a certain date, and the other was a pension that was a wage replacement. She said permanent impairments were not considered wage replacements. She added that although she was not necessarily advocating it, she was concerned that A.B. 438 did not address adjusting widow’s benefits. She said if one were going to consider adjustments, one should look at widow’s benefits because widows were in the same situation as a pensioner. She concluded she was not convinced that the lump sum was the same issue.
Chairman Goldwater agreed Ms. Bell’s suggestion was a good idea.
Dotty Merrill, Legislative Advocate, representing the Washoe County School District, said the District’s risk manager had several concerns regarding the bill. She added, however, she believed his concerns would be addressed by the proposed amendment.
There were no further testimony or questions. Chairman Goldwater requested that Assemblyman Christensen and Mr. McAllister communicate to Mr. Hughey how they wished to proceed. He also encouraged them to work with the interested parties, including Mr. Ostrovsky. Chairman Goldwater then closed the hearing on A.B. 438.
Chairman Goldwater opened the hearing on A.B. 294.
Assembly Bill 294: Prohibits insurer from issuing check that includes restrictive endorsement or other declaration as condition for negotiation of check for payment of certain benefits for industrial insurance. (BDR 53-1122)
Assemblyman Marcus Conklin, Clark County, District No. 37, introduced A.B. 294. He reported he had grown up in rural California and had helped his father in his moving and storage business. He said his father had taught him many lessons about business and he recalled his father’s philosophy: “You can treat people like workers, and all you will ever have are workers; or you can treat people like employees, and then you will really have something upon which to build your business.” Mr. Conklin said that when Mr. McAllister from the Professional Firefighters’ Association first shared his concerns, he viewed the bill from his father’s perspective.
Assemblyman Conklin explained A.B. 294 accomplished two goals. It would stop insurance companies and employers from excessive rechecking of an employee who was permanently disabled. The employee, he noted, had already gone through a series of evaluations to prove his permanent and total disability. Second, the bill would clarify the language in restrictive endorsements used to identify fraudulence. Mr. Conklin said the language needed to be comparatively the same. He advised the Committee that the interested parties, including the Attorney General’s Office and the Professional Firefighters, had agreed upon the language and a copy of that language would be provided in amendment form.
Rusty McAllister, Vice President, Professional Fire Fighters of Nevada, spoke from prepared testimony (Exhibit E) in support of A.B. 294. He said the bill was introduced to prevent unnecessary harassment and embarrassment of people with permanent and total disabilities. He cited S.B. 95 of the Seventy-First Legislative Session, which would have placed an endorsement clause on the back of disability checks. He said that, fortunately, the bill had been defeated, but endorsement language continued to appear on the back of many disability checks. He explained that A.B. 294 should, once and for all, limit insurer and third party administrator’s use of endorsement requirements on the back of disability checks.
Mr. McAllister compared the permanently disabled worker with prison inmates who had been released from prison on parole or were on probation. Those individuals, he said, were required to sign a document every month attesting that they had not used drugs, alcohol, or broken any laws. Mr. McAllister said injured workers should not be treated like criminals. Disabled workers were just doing their job and were unlucky enough to get injured. He said they should not be made to constantly sign, under penalty of a Category D felony, that they were, in fact, disabled.
Mr. McAllister advised that investigators in the Attorney General’s office had initially had concerns regarding the language of A.B. 294. He thanked Mr. Higgins from the Attorney General’s office for his help on amending the language of the bill so that it was acceptable to both parties. He said the proponents of the bill never intended to impede the work of the Attorney General. He advised that Mr. Higgins had since finalized the language and asked that the Committee disregard the initial amended language included in Exhibit E.
Mr. McAllister said that the amendment would disallow an endorsement provision on a disability check for someone who had been determined by an insurer to be permanently and totally disabled. It would still allow for an insurer to place the endorsement on a check of someone who was either temporarily or partially disabled, noting that those people were expected to return to work. He said those permanently disabled people should be freed from the embarrassment of constantly having to attest to their disability. He concluded that passage of A.B. 294 would provide the permanently disabled workers with some semblance of normalcy when they conducted their business affairs.
Chairman Goldwater agreed. He asked Mr. Higgins whether checks were bearer instruments.
Kevin Higgins, Chief Deputy Attorney General, responded that he did not know the answer, that he was a criminal prosecutor and not a banking law expert. He added that, under the Uniform Commercial Code, drawers of checks were authorized to put restrictive endorsements on them. He said he knew that people frequently signed them in violation of the endorsements.
Mr. Higgins said he also was the Director of the Workers’ Compensation Fraud Unit (WCFU). He referenced Exhibit F, “Proposed Amendment to A.B. 294,” which he believed addressed the concerns of all the parties. He explained how the Attorney General used restrictive endorsements. He said there was a copy of NRS 616D.300 attached to the exhibit. He said this was the crime the Attorney General prosecuted for claimants, regarding injured workers who were violating the Injured Workers Compensation statute. He said most people assumed it was against the law, for instance, to have a second job while on TTD (temporary total disability) benefits, or to lie to a doctor or an insurance company about their return to work. Technically, to prosecute under the law, a person had to make a false statement or misrepresentation. He said most fraud statutes were written with the requirement that a person had to show intent to violate the law. He said to prosecute for fraud, the Attorney General had to catch a person in a lie. Common tools used for making that material misrepresentation were the “C-36” form and the restrictive endorsement.
Chairman Goldwater inquired why a restrictive endorsement had to be used on the back of a check.
Mr. Higgins responded that it was not necessary. He said that was just one tool. He said cases were difficult to prosecute because the Attorney General had to prove an intentional violation of the law. He said there were many ways to dodge the law; for example, offenders would turn in the C-36 form unsigned, or they would sign a restrictive endorsement with “For Deposit Only,” or they would have their spouse sign the check. He said sometimes the Attorney General relied on a handwriting expert to confirm the signature on an endorsement. He said the restrictive endorsement was not the only tool they used, but it showed a course of conduct over the scope of the benefit period to prove the intent to commit fraud.
Chairman Goldwater asked whether some other document would suffice.
Mr. Higgins said the C-36 form contained much of the language, and a person did not technically have to sign the C-36 before depositing a check. He said he believed the amendment proposed in Exhibit F effectively addressed all the concerns Mr. Conklin and Mr. McAllister had raised. A fireman or policeman who had retired on the Heart/Lung Bill with a partial disability from inhalation or other work-related injuries, he explained, was currently allowed designation as permanently and totally disabled because he could not return to his duties as a policeman or fireman. He said with that designation, a worker was allowed to work a second job or enter another career.
He noted the discrepancy that, although the worker was legally identified as totally disabled, he was actually only partially disabled if he could enter some other line of work. The fireman or policeman, under the Heart/Lung Bill, he explained, was legally entitled to receive permanent total disability benefits, but still violated the restrictive endorsement by having to sign that he had not returned to work. He said that, by excluding people on permanent total disability from the scope of the endorsements, that problem would be remedied. He said the Attorney General could not prosecute a lifetime pensioner solely on an endorsement. To prosecute someone to remove their lifetime pension, he said, they would need videotape, testimony from an employer, and surveillance from an investigator. He said prosecution would not be based solely on an endorsement.
Mr. Higgins suggested the endorsement was useful with temporary total disability. Because of the short time frame, he explained, the Attorney General would not have time to complete a total investigation; hence, the endorsement paperwork would be a primary tool. He concluded that the proposed amendment would limit the scope to only permanent total disability. He said the new proposed Section 2 required it to be an accurate statement of the worker’s compensation law. He said he had seen some endorsements that were greater ranging than the statute provided, so if the endorsement said one had not returned to work, that would have to be a criteria that was already in the statute. The third proposed section stated if an endorsement were used in violation of the statute, it would constitute an administrative violation. He noted this was similar to any violation of the Industrial Insurance Act. He concluded that he believed this was an acceptable compromise. He noted that it preserved for the Attorney General the tool to prove someone was lying about benefits for short-term temporary cases. In the long-term cases, they would not use endorsements as a practical tool anyway. He said he supported A.B. 294 with the proposed amendment.
Mr. McAllister said he wanted to clarify that the intent of the bill was never to advocate or provide a means for firefighters or policemen to seek second employment once they were permanently disabled. He said his association advised people not to seek secondary employment if they were permanently totally disabled.
Chairman Goldwater stated that, personally, he was not convinced that any type of restrictive endorsement was necessary on a check and that he disagreed with the practice. He added that he thought there were other methods to address the problem that would also avoid embarrassment to those signing the checks. He said he appreciated the compromise and would support the bill.
Danny Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO, recalled that the issue of fraud was debated in 1993 in both houses with no limitation. He recalled the Senate heard the worker’s compensation bill for six months. He said the AFL-CIO certainly did not support fraud, but by the time an injured worker received compensation, he had already endured thorough scrutiny of his injury. He said the evaluation was a very difficult process; there were many barriers. He said his organization believed the endorsements placed on checks were done to further intimidate those workers. He said he did not believe endorsements should be placed on the backs of checks, but said the AFL-CIO would support the compromise, but at some point in the future he would like to see all restrictive endorsements removed.
Chairman Goldwater agreed.
Leslie Bell, President, Nevada Self-Insured Association, and President, Nevada Comp First, testified from Las Vegas and said she was neither for nor against A.B. 294. She said she wanted to clarify some information. She said the Office of the Attorney General approached her organization because they were having difficulty prosecuting fraud. She advised the judicial system was very hesitant to prosecute someone who had not endorsed a check. Consequently, in the mid 1990s, she said, they were asked to insert the restrictive endorsement statement on the back of checks. She said they had continued to do that since 1995. She agreed that NRS should provide other methods to deal with fraud and that prosecution should be simpler. She said the bill came about because the judges were very hesitant to prosecute if the endorsement was not on the back of the checks. She concluded that she would be willing to work with others on an anti-fraud committee. She said they were trying to strengthen their laws to allow prosecution.
Chairman Goldwater asked whether Ms. Bell would be equally supportive of all the anti-fraud work that was being done, including employer fraud.
Ms. Bell agreed and said not only employers, but physicians as well. She said she was against fraud “across the board,” and she would support prosecution of employers, physicians, or injured workers. She concluded, “Fraud is fraud.”
Don Jayne, Legislative Advocate, representing Nevada Self Insured Association, said he did not believe that Ms. Bell, testifying in Las Vegas, had had the opportunity to review the amendment proposed by Mr. Higgins. He said he believed the amendment was a reasonable compromise.
There was no further testimony or questions. Chairman Goldwater asked Mr. Higgins, in his discussions with the parties on fraud, to also review the exclusion for bad faith. He opined that often the fraud part of it resulted in an injured worker having no check to sign. He said he believed they had a fairly good compromise drafted. He closed the hearing on A.B. 294.
ASSEMBLYMAN HETTRICK MOVED TO AMEND AND DO PASS A.B. 294.
ASSEMBLYMAN OCEGUERA SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Goldwater advised that A.B. 277 had been pulled from the agenda.
Assembly Bill 277: Prohibits self-insured employer, association of self-insured public or private employers or private carrier from entering into contract with organization for managed care to provide medical and health care services to injured employees under certain circumstances. (BDR 53-792)
Not discussed.
Chairman Goldwater announced the coming agendas were long, but that every bill had been posted on the agendas without holding a Saturday meeting. He said he anticipated a few more bills would be pulled, and he encouraged the Committee to not be intimidated by the length of the agendas.
Chairman Goldwater adjourned the meeting at 12:50 p.m.
Sharee Gebhardt
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: