MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
March 28, 2003
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Friday, March 28, 2003, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4412, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Warren B. Hardy II, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Joseph Neal
Senator Michael Schneider
Senator Maggie Carlton
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Kevin Powers, Committee Counsel
Lynn Hendricks, Committee Secretary
Maryann Elorreaga, Committee Secretary
OTHERS PRESENT:
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry
Cliff King, Division of Insurance, Department of Business and Industry
Keith L. Lee, Lobbyist, State Board of Medical Examiners
Matthew L. Sharp, Lobbyist, Nevada Trial Lawyers Association
Weldon E. Havins, M.D., Director, Clark County Medical Society
Scott M. Craigie, Lobbyist, Nevada State Medical Association
Rudy Manthei, D.O., Lobbyist, Keep Our Doctors in Nevada
Lynn S. Fulstone, Lobbyist, Physicians Insurance Company of Wisconsin
Robert A. Byrd, Chairman, Medical Liability Association of Nevada
Chairman Townsend opened the Work Session on Senate Bill (S.B.) 250.
SENATE BILL 250: Revises various provisions relating to regulated businesses and professions. (BDR 57-835)
Chairman Townsend referred to the work session documents folder (Exhibit C. Original is on file in the Research Library.) under tab B, and read the amendments proposed by the Division of Insurance. He asked if the changes would help carriers understand the purpose of the bill.
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry, said the goal was to help policyholders understand contract provisions regarding tail coverage.
Senator Carlton asked for clarification of section 5, paragraph (a), of the proposed amendment.
Cliff King, Division of Insurance, Department of Business and Industry, said physicians had complained carriers were offering limited tail coverage, which was problematic for physicians covered by those carriers. The intent of the amendment was to assure all carriers provided extended tail coverage.
Kevin Powers, Committee Counsel, asked, "Is it the intent of the Commissioner to replace section 9 with the proposed amendments?"
Chairman Townsend said they were additional subsections.
CHAIRMAN TOWNSEND MOVED TO AMEND S.B. 250.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend turned to tab C of the Work Session document (Exhibit C) and read a letter from Ronald R. Titus, Director and State Court Administrator, Administrative Office of the Courts, Nevada Supreme Court. In the letter, Mr. Titus cited objections to section 13 of the bill and asked that it be removed. Chairman Townsend asked for comments about Mr. Titus' concern sanctioning information would not be available to be reported to the Nevada Supreme Court.
Keith L. Lee, Lobbyist, State Board of Medical Examiners, said Rule 11 of the Nevada Rules of Civil Procedure provided for the imposition of sanctions against attorneys for failing to comply with the rules of procedure. Those sanctions could include monetary assessments. Additionally, an attorney found to be in contempt of court could be assessed a monetary fine. He said on the rare occasions Rule 11 sanctions were imposed, there would be an order entered into a trial court file, but the action would not be reported to the State Bar of Nevada or to the Nevada Supreme Court. He said obtaining and reporting the information would be difficult.
Chairman Townsend said the goal of the bill was to make equally available information about disciplinary actions taken against physicians, insurance companies, and attorneys. He read from sections 14, 15, 16, 17, and 21 and noted those sections referenced related statutes, and described behavior expected of physicians, insurers, and attorneys. He read from that part of Rule 11 of the Nevada Rules of Civil Procedure, which addressed causing unnecessary delay or needless increase in the cost of litigation. Chairman Townsend said common complaints from physicians, insurers, and attorneys, were of delays in court proceedings. He said it was important for all parties to have their cases handled expeditiously, but it did not appear the courts were utilizing the provisions in Rule 11 to reduce delays. He said it was not unreasonable to ask the courts who had been sanctioned, what the sanctions were, and why they were imposed. He asked Mr. Lee if it would be unfair to ask the courts to provide the information.
Mr. Lee said there was no simple answer to the question. He said he thought some members of the judiciary would consider the requirement an invasion of their branch of government. He described the process that took place once a complaint was filed and explained why delays occurred.
Matthew L. Sharp, Lobbyist, Nevada Trial Lawyers Association, said the concepts of Rule 11 and the other statutes cited by Chairman Townsend were directed at frivolous positions of a plaintiff or a defendant. Delay in getting cases to trial was a court system internal management problem. He said he agreed it was important to ascertain the statutes related to professional behavior were being enforced.
Chairman Townsend said the public needed access to the information when choosing an attorney. They should be able to readily obtain information about the behavior of an attorney just as they would a physician. Similar information about all professionals should be equally available to the public. He said the intent was to make sure the information was collected and was made available to the public. Mr. Sharp said attorneys should be held accountable for frivolous conduct and that information should be available to the public.
Mr. Lee suggested a member of the staff of the State Bar of Nevada, Clerks of the Court of Washoe and Clark Counties, and administrative officers of the Second and Eighth Judicial Districts could provide information to the committee. Mr. Sharp said judges were often willing to assist committees.
Senator Neal asked if attorney sanctions were reported to the State Bar of Nevada or the Nevada Trial Lawyers Association. Mr. Sharp said the Nevada Trial Lawyers Association did not receive a report. Mr. Lee said he was not sure if the State Bar of Nevada was advised when sanctions took place or how the information was recorded. That was why he had previously suggested a staff member of the State Bar of Nevada participate in discussions of the bill.
Senator Neal asked if sanctions were imposed because of breach of duty to a client. Mr. Lee said Rule 11 sanctions were imposed because of a breach of responsibility to the court, not to a client. Mr. Sharp said sanctions imposed for violations of Rule 11 of Nevada Rules of Civil Procedure involved frivolous conduct. If an attorney failed to adequately represent a client, a district court judge or an opposing attorney would be obligated to report the unethical behavior to the State Bar of Nevada.
Weldon E. Havins, M.D., Director, Clark County Medical Society, said in Clark County Rule 11 sanctions were rarely filed or granted. He said a better source of information regarding disciplinary action against attorneys was the Discipline Department of the State Bar of Nevada. Chairman Townsend thanked Dr. Havins for the information.
Chairman Townsend reiterated the importance of the public having easy access to information about disciplinary action against doctors, insurance companies, and attorneys. Discussion of the proposed amendment between Dr. Havins and Senator O'Connell established the language in S.B. 389, which referenced performance audits of the State Board of Medical Examiners had been incorporated into the proposed amendment of S.B. 250. Senator O'Connell said the language had been requested to make members of the board aware of the functions of the board and use of funds under their control
SENATE BILL 389: Makes various changes regarding certain physicians and other regulated professions. (BDR 54-709)
Mr. Lee said Nevada Revised Statutes (NRS)630.003 specifically states responsibilities of the State Board of Medical Examiners and the board appropriately discharged those duties. Although the board would have no objection to an audit, he did not understand why an outside auditor would be used instead of the Legislative Counsel Bureau.
Senator Carlton asked if the provisions in section 28 of the amendment would allow for disciplinary action to be imposed against a physician because the physician failed a written examination required for licensing.
Kevin Powers said:
I am going to focus on what the bill does. Section 28 contains some preliminary requirements, which must be met before the board is required to take any action. The board has to receive a report that a licensed physician has a judgment rendered against that licensed physician for a claim of malpractice or negligence. What happens under sections 28 and 32 of the bill is when the board receives a notice of a judgment of malpractice, the board then has to evaluate the competency of the physician. That evaluation of competency is considered at a disciplinary proceeding where the board would decide if it should take disciplinary action because of the judgment of malpractice being levied against the physician. If the doctor were to not achieve compliance with the competency testing, that would be a reason for the board, in addition to the malpractice judgment, to suspend or revoke the license or take other disciplinary action. This provision does not deal with applicants for a license, it only deals with licensed physicians who had a judgment of malpractice levied against them.
Mr. Lee said he wanted to make it clear the board had no jurisdiction to impose discipline before a physician was licensed. Licensure could be denied. Dr. Havins said it was relatively rare for a medical malpractice issue to go to trial. Sections 28 and 32 said "judgment." Most cases were settled so there would not be a judgment and the sections would not apply. Chairman Townsend asked Senator O'Connell if she proposed placing the changes into the draft amendment.
SENATOR O'CONNELL MOVED TO AMEND S.B. 250.
SENATOR HARDY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Townsend and Dr. Havins discussed the amendment proposed by Dr. Havins, under tab E of the Work Session document. Dr. Havins said he wanted section 27 changed to allow 30 days for a physician to report an action to the board and to change the language in section 27, subsection 2, from, " … the Board shall impose a fine of $5,000 … " to " the Board may impose a fine not to exceed $5,000."
Mr. Lee said he thought the provisions under section 28, subsection 3, were already in NRS 630.352. He also expressed concern over possible due process violations if section 28, subsection 1, were to be adopted. Chairman Townsend said NRS 630.352 said the board may order disciplinary actions, but section 28, subsection 3, of the amendment said the board shall order disciplinary action. He said the perception of the public was the board had not exercised its discretion of providing guidance to, or imposing sanctions on physicians who had acted inappropriately. That was why the amendment was drafted as it was. Mr. Lee said the amendment, as written, presupposed guilt. Chairman Townsend said a judgment would have already been rendered. The board would then conduct an investigation, a hearing, and impose sanctions if it were determined a violation had taken place. If there was no violation, no sanctions would be imposed.
SENATOR NEAL MOVED TO AMEND S.B. 250.
SENATOR HARDY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Mr. Lee commented on three other sections of the bill. He said the application for licensure required an applicant to submit information about any claims made against the applicant. Section 24, subsection 1, paragraph (b), limited that to the 5 years immediately preceding the filing of the application. He said the board needed information going back to the "beginning of time." He said the requirement under section 25, subsection 1, to obtain a letter of recommendation from a head of a residency program would be difficult. If a long period of time had passed since an applicant had participated in a residency program, the head of the program may no longer be available. He said the provision of immunity in section 25 was already in NRS 630.364. Finally, he said the board retained jurisdiction over a licensee for 2 years after the expiration or surrender of a license under NRS 630.267. Therefore, section 26 was unnecessary. Senator O'Connell agreed the 5-year limit should be removed from the bill.
Chairman Townsend referred to the written comments submitted by Physicians Insurance Company of Wisconsin (PIC Wisconsin) under tab F. Robert A. Byrd, Chairman, Medical Liability Association of Nevada, read from the document. Referencing section 10, he said it would be important for the commissioner to determine what an appropriate risk management program would be. Chairman Townsend asked if risk management products could be approved through the hearing process. Ms. Molasky-Arman said the approval could be accomplished through a hearing.
Lynn S. Fulstone, Lobbyist, Physicians Insurance Company of Wisconsin, said the wording in section 10 of the submitted document was not intended to become part of statute or regulations. They were only guidelines, thoughts, and suggestions. Senator Carlton asked if the wording was similar to that in the medical errors issues. Ms. Fulstone said the wording had been drawn from some of the medical reporting errors information.
Chairman Townsend said provisions for the commissioner to hold hearings and draft regulations for qualified risk management programs, and for the commissioner to approve risk management programs before premium reductions could be implemented, would be added to section 10 of the bill.
Mr. Byrd said sections 4 through 9 appeared to enter new definitions for items already defined in NRS 41A. Mr. Sharp said the definition of professional negligence that Mr. Byrd referred to in section 7 was also in section 17 of the bill. He said those sections should be deleted from the bill. Senator O'Connell asked Mr. Sharp if he recommended removing sections 7 and 17 from the bill because the current definition had case law. Mr. Sharp said that was correct.
Kevin Powers said:
Just as a matter of context, the definitions mentioned for professional negligence as well as the provisions in sections 17, 18, 19, 20, and 22 are all taken from the initiative petition Keep Our Doctors in Nevada, which S.B. 97 is based on as well. The only reason they are in this bill is to be consistent with those provisions. Certainly those provisions are being dealt with in another committee as well, in the judiciary committee. There may not be a need for those provisions in this bill at all. That is something for the committee to decide. We could obviously revert back to the existing definition or the existing concept of professional negligence that is in NRS 41A.
SENATE BILL 97: Makes various changes relating to certain actions against providers of health care. (BDR 1-248)
Chairman Townsend asked Mr. Powers to meet with the legal counsel for the Senate Committee on Judiciary, and see if the committee had passed definitions for professional negligence.
Mr. Sharp referred to section 22, subsection 2, and said the change in the statute of limitation from 2 years to 1 year would encourage litigation because of the amount of time needed to investigate a claim of malpractice. Attorneys would have to file suit to protect the rights of their clients. He said some patients were not aware they were victims of malpractice until some time later. He suggested the change be deleted.
Rudy Manthei, D.O., Lobbyist, Keep Our Doctors in Nevada, said he disagreed with Mr. Sharp's interpretation of the time limit for filing a malpractice action. He said the plaintiff had 1 year after discovery of the injury. Mr. Sharp said California had reverted back to the 2-year statute of limitation. The Doctor's Company had recently testified before the Senate Committee on Judiciary regarding California's Medical Injury Compensation Reform Act (MICRA), and said there had been an increase in the number of losses since the implementation of MICRA.
Senator Hardy asked if the definition of professional negligence was in NRS 41A, or if it was the same as medical malpractice. Mr. Sharp said the definition of professional negligence arose from S.B. 97, which was derived from MICRA. Professional negligence meant medical malpractice.
Chairman Townsend referred to the document submitted by PIC Wisconsin. He asked if they wanted section 11 deleted because bad faith was defined elsewhere. Mr. Byrd said historically insurance companies close, without payment, 75 percent of their cases. Additionally, 20 percent were settled without going to court. Of the approximately 5 percent of cases that went to court, the insurance companies won 80 percent. That would leave a small percentage resulting in a judgment against the defendant; in some of those cases, policy limits were exceeded. He said 98 percent of the time the insurance companies were doing a good job. He said the wording in section 11 was inappropriate and would diminish the Nevada market for malpractice insurance.
Chairman Townsend noted PIC Wisconsin suggested an insurer should have at least 45 days to report awards and settlements. Ms. Fulstone said PIC Wisconsin submitted the comments because they thought reporting would be easier if there were 45 or 60 days allowed. It would not compromise the recipient of the information. Chairman Townsend said if there was no objection of the committee, the 30 days would be changed to 45 days. Chairman Townsend addressed the recommendation for a new section to address market stability. He agreed the issue was important and should be included in the bill. He asked Ms. Molasky-Arman if she agreed with the suggestions by PIC Wisconsin, for the new section.
Ms. Molasky-Arman said she had reviewed the recommendations and thought they would be helpful in consideration of what had happened in the past regarding medical malpractice insurance in Nevada.
Chairman Townsend referred back to section 11 and asked the committee if that section should be removed. Scott M. Craigie, Lobbyist, Nevada State Medical Association, said the bad-faith language might drive a number of insurers to settle at policy limits, which would drive up the overall premium costs. He said the positive reforms before the Senate Committee on Judiciary were more likely to be effective. He recommended section 11 be deleted.
SENATOR O'CONNELL MOVED TO AMEND S.B. 250.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY
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There being no further business before the committee, Chairman Townsend adjourned the meeting at 9:43 a.m.
RESPECTFULLY SUBMITTED:
Maryann Elorreaga,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: