MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
May 7, 2003
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:06 a.m., on Wednesday, May 7, 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
GUEST LEGISLATORS PRESENT:
Assemblyman Marcus L. Conklin, Assembly District No. 37
Assemblyman David R. Parks, Assembly District No. 41
Assemblywoman Christina R. Giunchigliani, Assembly District No. 9
Assemblywoman Barbara E. Buckley, Assembly District No. 8
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Kevin Powers, Committee Counsel
Gina Rasner, Committee Secretary
Laura Adler, Committee Secretary
OTHERS PRESENT:
David Otto, Senior Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General
Raymond C. McAllister, Lobbyist, Professional Fire Fighters of Nevada, and Las Vegas Fire Fighters Local 1285
Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada
Lori T. Ashton, Lobbyist, Southwest Regional Council of Carpenters
Margi A. Grein, Lobbyist, Executive Officer, Nevada State Contractors' Board
Joseph L. Maez
Leonard Pugh
Kathryn Pugh
John B. Douglas
Maria Naas
Bill Berrum
Walter Bruce Robb, Counsel, State Contractors’ Board
Curtis Potts, D.C., Nevada Chiropractic Association
Tom R. Skancke, Lobbyist, Nevada Chiropractors Association
Kamran Abdo, Vice President, Nevada Chiropractors Association
Aaron Fust, M.B.A., Southern Director, Nevada Chiropractors Association
Sheri Barainca, D.C., Nevada Chiropractors Association
Barbara J. Gruenewald, Lobbyist, Nevada Trial Lawyers Association
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry
Ruth Mills, President, Nevada Health Care Reform Project
Jack Kim, Lobbyist, Nevada Association of Health Plans
Kim Everett, Actuary, Life and Health, Division of Insurance, Department of Business and Industry
Don Jayne, Lobbyist, Nevada Self Insured Association
Scott J. Watson, Lobbyist, Nevada Alliance for Retired Americans
Phil Nowak, Chief, Social Welfare Program, Division of Health Care Financing and Policy, Department of Human Resources
Rose McKinney-James, Lobbyist, Clark County School District
Bonnie L. Parnell, Lobbyist, League of Women Voters Nevada
Sydney H. Wickliffe, CPA, Director, Department of Business and Industry
Chairman Townsend:
We will open with Assembly Bill (A.B.) 294.
ASSEMBLY BILL 294 (1st Reprint): Makes various changes related to issuance of checks by insurer for payment of industrial insurance benefits. (BDR 53-1122)
Assemblyman Marcus L. Conklin, Assembly District No. 37:
This bill results from actions taken by employers in Nevada to put restrictive endorsements on checks that do two things: First, does not match the legal language for people with permanent total disabilities, and in some cases with partial temporary disabilities; secondly, some constituents say they feel harassed by some of these endorsements as a result of their particular cases.
One example is a fireman who, according to the law, is out on total disability, which requires a rigorous set of annual medical examinations, and filling out lengthy forms to indicate exactly what he is doing, how he feels, what the doctor’s reports say, et cetera. The endorsements mean every week he has to reaffirm he is injured in order to receive his disability check. I find that disconcerting.
I have worked in human resources and consulting for over 10 years, and my philosophy has been to target the people believed to be fraudulent with these mechanisms. Those with legitimate claims need to be worked with to get them back to work as soon as possible.
Sometime before the hearing in the Assembly Committee on Commerce and Labor the Attorney General’s office contacted me about their concern with partial and limited disability because these are usually short recuperations of a week or so, and the next thing they are out for 2 months, and nobody knows why. From a prosecutory standpoint, the check endorsements become a powerful tool in fraud cases since once that person has committed a lie, it becomes easy to prosecute. We amended the bill to exclude partial and limited disability, and include a statement to make sure the restricted endorsement actually mirrors the language in our statutes.
With those changes A.B. 294 is now exclusive to permanent total disability. No endorsements are on the permanent total disability checks because of the annual medical review. For limited disability there is an endorsement so long as the endorsement is accurate to the law applied to that particular position.
Senator Neal:
How is restricted endorsement defined?
Assemblyman Conklin:
It is not specifically defined in the bill, but is defined in Nevada Revised Statutes (NRS).
David Otto, Senior Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General:
My research turned up no statutory language for a restricted endorsement. Over the years the former Fraud Unit chief did develop, with the insurance companies, some restricted endorsement language, it is not standard and does not define it.
Chairman Townsend:
I think the point is it needs to be specific restricted for the purpose.
Mr. Otto:
Usually the check endorsement says, “by signing this check you affirm that you have not worked in the past 2 weeks.” The concern is some people on total permanent disability, especially police and firefighters, are allowed to work. To standardize the process, the insurance industry stamps all the checks, even though particular checks should not be restricted in that manner.
From a prosecution standpoint, we have a 3-year statute of limitations on these cases, so if a false statement is made within a year, we have them under the statute of limitations.
Senator Hardy:
They are going to sign the check anyway. Are you after some standardized language? I think it makes sense to have them sign each time.
Chairman Townsend:
The issue of a restricted endorsement is for purposes of prosecuting those who fraudulently claim they should receive benefits; when, in fact, they should not. With regard to the bill that says the insurer may continue to issue a check for all of these, they are carving out permanent total disability because the individual is annually required to be determined to still be permanently totally disabled. This bill is saying the restrictive language should not be on a check when there is a mechanism already in place to determine the person’s continued eligibility.
Mr. Otto:
That is correct. The concern by people who sign the restrictive endorsement is, under penalty of perjury, they say they have not been doing things that, under law, they are allowed to do. We support the bill.
Senator Hardy:
I think we should clarify the language, then the standardization should take care of that. Maybe that is too complicated, and it is easier to carve it out.
Raymond C. McAllister, Lobbyist, Professional Fire Fighters of Nevada, and Las Vegas Fire Fighters Local1285:
One of the reasons we brought this bill to Assemblyman Conklin was when a person goes on permanent total disability, it is the insurer’s doctor that makes the determination. Our question is how many times does someone have to attest to that diagnosis. The check recipient must personally go to the bank and sign in front of a witness they are permanently totally disabled, and that is an embarrassment. This will alleviate that embarrassment.
Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada (EICON):
From the insurance industry perspective we were asked to do this some years ago in conjunction with the Fraud Unit of the Attorney General’s office that needed this as an offer of proof in front of a judge. We have no problem with the way the bill is drafted because the restricted endorsements can still be applied to temporary total, temporary partial, and other rehabilitation maintenance checks. There is no standard wording. Each insurance company has their own restrictive endorsement wording.
Senator Neal:
In other words, you made law.
Mr. Ostrovsky:
I think the restrictive endorsement on EICON checks says, “NRS 616 and 617 do not permit you to work and accept payment.” It continues on to spell out the law.
Chairman Townsend:
We will close the hearing on A.B. 294 and open the hearing on A.B. 190.
ASSEMBLY BILL 190 (1st Reprint): Makes various changes related to contractors. (BDR 54-406)
Assemblyman David R. Parks, Assembly District No. 41:
In the interest of time I will read my testimony (Exhibit C).
Lori T. Ashton, Lobbyist, Southwest Regional Council of Carpenters:
Section 2 deals with cease and desist work and conjunctive relief. The problem for the State Contractors’ Board is they do not have the authority to remove a contractor on a project who did not have proper licensing. This bill would help protect private and business people from unlicensed or improperly licensed contractors by giving the State Contractors’ Board the ability to stop the work and resolve the issues prior to litigation. Before this bill, a contractor licensed to work on a $100,000 job could work on a $1 million job, and the State Contractors’ Board had no authority to prevent such action.
Section 6, line 2, addresses only wage claims filed by the Labor Commissioner. Wage claims for overtime, minimum wage work, and work between the minimum wage and prevailing wage, are handled through the U.S. Department of Labor. There are no provisions in the bill to allow the U.S. Department of Labor at the federal side to notify the State Contractors’ Board. That was the reason to include, “or otherwise receives notification,” to allow a district or federal court or the U.S. Department of Labor to notify the State Contractors’ Board.
Section 6, subsection 2, was added because the State Contractors’ Board was not notified of violations when the Labor Commissioner would bar someone from public works. When the Labor Commissioner bars someone from public works, it is because of numerous egregious acts. Before this bill, a contractor barred from public works could go to private owners and still do work. This section would be a deterrent to contractors who have lost their license or who do not have the appropriate license.
Senator Hardy:
Mr. Powers, is section 4, subsection 4, a due process problem?
Kevin Powers, Committee Counsel:
I don’t believe it is, because section 4 is amending NRS 624.300. That established the disciplinary action that the board may take if a violation is found. There is still before any disciplinary action is taken pursuant to chapter 624 of NRS, there are provisions existing in the law that require the board to give the contractor the opportunity for notice of any hearing, and then only after that notice and hearing could they take this action.
Senator Hardy:
One could argue it is easier to be prohibited from conducting public work than it is to have your license suspended. It is a different set of standards. I think you are applying a set of standards for one to another disciplinary action. That is the reason for my question.
Mr. Powers:
I understand the nature of your question, Senator Hardy. Although, even if there is a finding under NRS 338.017 that the licensee is prohibited from being awarded a contract for a public work because of a violation of the public works law, even if that determination is made, the licensee still has an opportunity in the hearing to argue that under the circumstances their license should not be suspended when they are arguing that issue before the State Contractors’ Board.
In other words, the State Contractors’ Board has to make an independent finding under their own disciplinary action determining that this violation of NRS 338.017 constitutes a ground for discipline, and because the language is discretionary, “may suspend,” the contractors’ board is not required to do it.
Senator Hardy:
But they are still required to have an independent finding?
Mr. Powers:
That is correct.
Senator Hardy:
On page 5, line 2, “or otherwise receives notification.” You testified this is specifically to bring in the U.S. Department of Labor. Can we specifically spell that out, the Labor Commissioner or the U.S. Department of Labor?
Ms. Ashton:
I think it could be a long list because there could be wage and hour violations in Missouri or Michigan. There could be a lot of areas where the resources need to be opened and brought forward. It could be a former worker for the contractor in Texas that has the documentation and would like to say to watch out for this contractor. I think it needs to be left open so if there are violations, they need to be able to accept them.
Senator Hardy:
Section 1, line 25, “constructional fraud occurs if a person engaged in construction knowingly:” then it lists several things. If the new paragraph (f), “In any report relating to a contract for a public work, submit false information.” That “knowingly” standard as I read it applies to that. In other areas it does not appear there is a “knowingly” standard. I want to make sure, for example, in section 5, subsection 1, “including, without limitation, misrepresentation or the omission of a material fact.” that could be an unintentional admission. I would like to make sure we specify that they are “knowingly” admitting a material fact. Also subsection 10, of section 5, I think should be “knowingly” or “intentionally.”
Mr. Powers:
In this circumstance with this particular statute, the mental state of knowingly would need to be added to modify those specific subsections. Because, as you can see in subsection 3, knowingly is used to modify backgrounds for disciplinary action, but the fact that it’s omitted from the other subsections is an indication it’s not a required element for a violation in the other subsections.
Senator Hardy:
I think that is relatively important.
Margi A. Grein, Lobbyist, Executive Officer, Nevada State Contractors' Board:
I am here to support A.B. 190.
Joseph L. Maez:
I am a homeowner at Canterbury Place, a Solano Development Company Limited enterprise. I was designated as the spokesman for the Canterbury homeowners. I will read my testimony (Exhibit D) about the connection between developers and subcontractors that leaves the homeowners without recourse.
Leonard Pugh:
My wife and I are homeowners. In January 2001 I signed a contract to have a home built by Sierra Sage, Limited Liability Company (LLC), which is also one of the RWR Companies. Construction started in August 2001 with a $15,000 deposit and draws off my construction loan of $86,000. By late November, early December, it became obvious construction had slowed and work was not being done. The many reasons offered for the delay in construction of my home all turned out to be untrue. In January 2002, I met with Sierra Sage who admitted bills had not been paid, that was why the subcontractors were not working on my house. I started getting liens on the property up to $60,000, and I had already paid $103,000 for the subcontractors.
Last April was my first meeting with investigators from the State Contractors’ Board, and I have gone through a series of updates since then. Yesterday, there was a hearing before the board resulting in some disciplinary action against the builders. Our frustration as homeowners is when I signed my contract, they represented they were a licensed contractor when, in fact, they were not until several months later. In the meantime they were using another contractor’s license when they signed my contract. They failed to complete my home in 180 days as specified in the contract. One frustrating thing about the hearing was when the board discussed the type of action to take against Sierra Sage. One board member stated they were between a rock and a hard place, because if the license were suspended, some of the subcontractors would not get paid the money they were still owed. All the pressure was on Sierra Sage to pay the subcontractors. Unfortunately, they admitted there was not much they could do for a homeowner.
Something seems wrong with that reasoning when I am giving a licensed contractor money that is being diverted to some other purpose, and not forwarded to the subcontractors. Now I am suffering personal injury in terms of liens. They did end indemnification in December so I could get a loan to continue finishing construction of my home with a different builder, but that was a year after I started receiving liens against my property. They acted like that was doing me some great favor. It did help me move on, but I do not think they had a choice. In the meantime, my house is just sitting there sustaining damage with tarpaper blowing off, windows getting broken, even graffiti in the house. It was a nightmare to have to drive by the house and see it in its poor state, and have no avenue to go forward.
I talked to the police and, again, nothing could be done criminally because it was a business, not an individual. They suggested I work with the State Contractors’ Board, which I did, but they could not do anything for me. I do not understand why the power is not given to the State Contractors’ Board where they can tell the contractor to pay the homeowner the same way they have to pay the subcontractors. I think the law should enable the board so we can be remedied without having to hire attorneys, and start civil litigation in order to get what is rightly due us. That is all we have ever asked.
Chairman Townsend:
I will let the rest of the people relate their situations then give Ms. Grein time to figure out what can be done. This has little to do with this bill, but I want to hear the issues and figure out if there is something we can do this late in session, and the best way to deal with it.
Kathryn Pugh:
The only thing I would like to add is there ought to be a law. I am not sure what that law is, but I hope someone can come up with something.
John B. Douglas:
I will read my prepared testimony (Exhibit E).
Maria Naas:
I, too, entered into a contract with Solano Development Company in December, and to date nothing has been done. Even the builder who took over said according to the State Contractors’ Board, they could do nothing to hasten the building of our house. My handout (Exhibit F) has recommendations to change the laws that hold us hostage.
Bill Berrum:
My wife and I purchased in the Solano Canterbury Place in October 2002, and there has been no progress. What is heard here is the tip of the iceberg, and something needs to be done. There is the issue of a developer-investor and/or corporate entity being protected under the corporate veil and who moves assets around and fleeces people. Shoddy workmanship is becoming the standard of the residential construction industry, and that is unacceptable. I have a follow‑up recommendation that is a repeat. It needs to be made mandatory that all deposits made by a buyer in preclosing should be held in escrow even for upgrades, so when a developer does not perform, the buyer has an opportunity to get their money back. This is a huge problem.
Chairman Townsend:
Is this a developer and a builder?
Mr. Berrum:
Whichever he is operating under, R&R or RWR, Mr. Rheinschild has several subsidiaries, such as Canterbury Place, Bella Terra, and Sierra Sage. The pattern seems to be the same. I understand he is a developer who contracts the projects out to a variety of subcontractors. As was said earlier, the license is revoked and everyone suffers until the bankruptcy process, which is not in the buyer’s best interest, since it is not their fault.
Ms. Grein:
We had a hearing yesterday on the Sierra Sage matter. The board summarily suspended the license. Solano Development Company is scheduled for a hearing in June. I looked up some of the individual names to see if they filed complaints. If they did not, I brought forms so they could be included with the rest of the complaints.
Walter Bruce Robb, Counsel, State Contractors’ Board:
The issues raised today do not deal with A.B. 190, but if the committee is concerned with how to protect a homeowner, I think the suggestion made by Mr. Douglas of escrowing the funds has merit. Check them out with the State Contractors’ Board to make sure they are licensed and absent of complaints. We try to work with homeowners or anyone damaged by a contractor, to first direct the contractor to fix it. If the contractor does not fix the problem, the board will discipline the contractor. We try to work in cooperation with the damaged homeowner. We recognize it is not in the industry’s best interest to have bad contractors out there.
Senator Hardy:
Is this accurate, 46 complaints, 31 valid on this particular builder?
Mr. Robb:
I do not know, but Ms. Grein is nodding her head in the affirmative. That disciplinary action will be heard June 6, 2003.
Senator Hardy:
If there is a valid finding, this obviously has been going on for some time. I heard comments about watching out for the subcontractor, and that is why there was no prior action, but there is an obligation for a subcontractor to be careful about whom he participates with in business. At some point you have to allow the principles of free enterprise to prevail. Free enterprise says if you do business with someone you should not be doing business with, you deserve what you get. I understand and appreciate the desire of the board to protect the subcontractor, but let us not go too far with that. I am interested in the chronology. I do not think this is systemic in the industry, but when there are contractors like this, we need to be able to immediately respond. If the State Contractors’ Board does not have the tools to do that, then we need to make sure you do.
Mr. Robb:
The Solano license has been suspended. The disciplinary hearing will occur June 6, 2003. I do not know when the board received the first complaint, but I will provide that information.
Chairman Townsend:
What occurs with the required bond? What money is available?
Ms. Grein:
The bond on Solano has been suspended. In other words there were claims on it. If they reinstate or supply another bond, it would have to be backdated to the other one, which I believe was February. The other option is should the contractor not fulfill his obligation and there was a finding on this, we still have the recovery fund. That is another area we can address.
Chairman Townsend:
Let us go back to square one. The purpose of the bond is not only good faith, but for the purpose of people like these to get some kind of action. When you say there are liens against it, when is it collectable?
Ms. Grein:
It is possible the bond is still available, but I am not certain of the terms of the bond. The license was suspended for no bond in February, but that does not mean the bond has been paid out. The bonding company did not renew the bond.
Chairman Townsend:
As a result, the board subsequently suspended the license.
Ms. Grein:
That is correct, but the bond may still be available.
Mr. Pugh:
When we first started experiencing our problems in April 2002 and started our action with the State Contractors’ Board, I was told to go after their bond, and my attorney submitted a claim against the bond. The bond was for $50,000. I had more than that in liens, and I was the third or fourth in line against that bond, and others came after me. There are several claims against the $50,000. It is in the hands of the insurance companies and the attorneys, and went to an interpleading. My fear is once it is settled and split between all the claimants, there would only be a few thousand dollars; that is not going to remedy the situation. I do not understand how people are bonded for such a low amount.
Chairman Townsend:
Why did the contractor only have a $50,000 bond?
Ms. Grein:
That was the determination the board made when the license was issued.
Chairman Townsend:
Why would you give a home builder, who is coming to you for a license, a requirement for something that is one-third or one-quarter of one home?
Ms. Grein:
The bond is determined at the time of application for licensure based upon their financial wherewithal at that time, and the amount of the limit imposed on the license. That particular license had a $500,000 limit, and was issued with a $50,000 bond. The problem with the bond, as Mr. Pugh indicated, is claiming on a bond is a somewhat sophisticated matter. Subcontractors, suppliers who do this all the time are usually there, and the homeowner is the last in line. That is why the recovery fund can come into play on issues like this.
Chairman Townsend:
The concern expressed here is one where we are allowing home builders who are given a limit on their license of $500,000 to have a bond for only 10 percent of that. I have not looked at the market lately, but bonds usually operate from 3 percent to 10 percent. So this means that 10 percent of 10 percent is 1 percent that an individual has to put up in order to get a license of $500,000. There is a problem. The $500,000 license, is that for a development or for one house? How is that determined?
Ms. Grein:
It is not a performance bond or a payment bond; it is simply a surety bond for the license. It does not cover all projects. It is one amount for the limited amount of the contract. The board can raise that as they see fit, depending on the financial wherewithal. The license bond is different from a payment performance bond.
Chairman Townsend:
It is a license bond, now we understand that. What are the financial requirements that have a $500,000 limit?
Ms. Grein:
The board takes into consideration the working capital at the time of licensure with the financial statement, the working capital and net worth, to determine the limit amount.
Chairman Townsend:
If it is a corporate entity, then what difference does the net worth of an individual make, since you might not be able to get to it?
Ms. Grein:
In this particular situation the company was a limited liability company (LLC), and there were managing members. The financial statement showed two or three other parties, which were also LLCs, also indemnified the license. That means should something go wrong, those other companies have indemnified that particular license.
Chairman Townsend:
The other LLCs have assets and values of how much?
Ms. Grein:
I could not respond without looking at the documents.
Chairman Townsend:
We have people from different places all over the county, from Canterbury Place, Arrow Creek, Sierra Sage, and Wingfield Springs. It is our understanding that a $500,000 limit on a license allows this individual to build three separate developments. Is that right?
Ms. Grein:
It is per project or per home.
Chairman Townsend:
Where in Reno can you find a development that is worth only $500,000?
Ms. Grein:
We did raise that issue with the contractor during one of the hearings. I believe they put in for a raise of limit that has yet to be approved. That is another issue regarding their license.
Chairman Townsend:
How long would that take to resolve?
Mr. Douglas:
We were told Solano Development Company had this particular bond. There were 70 properties in the initial development. The home prices range from $500,000 upward.
Chairman Townsend:
I think the frustration comes directly from the absurdity of this. There is no financial relationship here.
Ms. Grein:
We have had an ongoing discussion.
Chairman Townsend:
How can you have an ongoing discussion? The professional negotiator sometimes runs into problems, but we let them do their own thing. The average homeowner does not do this for a living, they just want to buy a house. They depend on the State to help level the playing field. We want the free enterprise system to work, but at times there needs to be oversight. There is fraud here, and I hope the Attorney General or the District Attorney get involved.
Senator Schneider:
It is obvious these people have been talking to the developers and contractors. Someplace along the line a criminal act took place. I do not know why we cannot go after these people criminally. When you do get a hold of these people and prosecute them, they still seem able to find money. There are other ways to keep going with a civil action.
Mr. Pugh:
I feel I have bent over backwards to try and resolve this thing amicably without going through all that. The problem with a criminal complaint is at one time they had a managing partner, Charles Grimshaw, and someone else in the office. Those people have since been terminated from the corporation. There are five or six different people, so to whom is the criminal complaint filed against? There is no way I could prove who did what with the money and the books.
I take responsibility for putting my faith in the fact the results of the police investigation would go to the State Contractors’ Board. At one point in time I was told that once there was a finding of fact related to my complaint, a criminal investigator would be talking to me. There would be facts on the record at that point in time to be used against the developer people. All the people associated with the company are gone except the owner, and my understanding from the police is that it would be nearly impossible to prosecute him.
Chairman Townsend:
The point is whether an individual within a company is responsible for an act, there is also the employer who hired them; there is an agency relationship. There are two issues: what happens going forward is the responsibility of the Legislature, and what we can do for you based on what you are going through now.
Mr. Pugh:
I am here because my wife saw a news story saying the Legislature was interested in hearing complaints related to this contractor.
Mr. Maez:
Regarding the bond, I talked with the claims manager at Hartford Insurance who has the surety bond. They said the bond only protects against fraud, not in Nevada, but in California, because it is a California bond.
Chairman Townsend:
Let us go back to the issue of the history of this individual. There are three developments going. The limit on the license was $500,000.
Ms. Grein:
There are two licensed entities involved in this. One has a license limit that was on Mr. Pugh’s home of $500,000; the other one, which some of the other home owners are dealing with, had a license limit of $3 million, that is the one suspended for no bond. They are both LLCs and have the same individuals on the licenses with the exception of one party. It is very confusing even for us.
Chairman Townsend:
It is a shell game. The board needs to sort that out. It is not the homeowners’ job. That is why the State Contractors’ Board is there, and if you do not work it out, it will be done for you in a bill that is coming, and you had better read it, because if you do not and do not respond to it, you will be in the same position another board was in front of us.
Mr. Robb, you are a highly respected member of the legal fraternity for which we have a great deal of respect. We need your insight on all the suggestions made today, including the one by Mr. Douglas (Exhibit E). I think it is appropriate that the committee get an immediate update by next Tuesday. I am specifically looking at the trend-issue problem so we do not have this kind of problem in the future with regard to these people getting bonds using different LLCs, you cannot follow them, they get a higher license, and so on.
Senator O'Connell:
What is different with this problem and the problem we addressed last time with the pool man? I see a lot of parallels. Why would not the tools we gave you last session for the pools apply now?
Ms. Grein:
During prior sessions there were numerous hearings on pools. The legislation was specific to the purchase of an installation of pools. Whether they have been complying completely, we have noticed a change in the complaints. The biggest thing is the payment and performance bond, and whether that would work in the home-building industry, I cannot answer that.
Those particular provisions were put into law and the higher bonds affect everyone. The problem is, at the time of licensure, the company does meet the necessary requirements. We usually do not see that person again until an issue arises, which is after the fact. I would like to stop these things from happening, and we are open to discuss whatever solutions are presented. We will go back and look at what has worked and not worked in the past.
Senator O'Connell:
It would seem for as long as this person has had the problem that a flag would have gone up, and there would be some form of reaction and action to the problem identified. Is this contractor working in more than one area? Are there other complaints matching this license? It seems strange to us who have been addressing these issues for 20 years thinking we have covered every angle possible for consumer protection, yet we are back to square one.
Mr. Robb:
I do not think we are at square one. But we need to work with the committee to define the most effective remedies, and some have been discussed today. We need escrow funds so the contractor could not get his hands on it and misapply funds. Raise financial commitments for licensure. Get the word out that if you are going to enter into a lifetime contract with a contractor, check them out first with the State Contractors’ Board. I think the pool situation has vastly improved, and now we need to direct our attention to the home-building industry to remedy the damages these people have experienced.
Senator Hardy:
A big part of what helped the pool situation is the pool people got together. They know who the bad apples are, and the subcontractors would not work for them. We need to remove whatever protection there is for these subcontractors that are knowingly working for these people, and eventually those types will go away.
Senator Neal:
I want to thank the testifiers for coming before this committee. I have served in the Legislature going on 31 years. I noticed a relaxed atmosphere beginning to occur in the early ‘90s where we were beginning to feel that anything that came into this Legislature operated in this State under the guise of free enterprise and appealed to the people. We did not care as long it carried that label. Now I see you have run into a situation where it is a caveat emptor, “Let the buyer beware.” When I hear the State Contractors’ Board does not have the authority to deal with your situation, that gives me pause to wonder what we are doing here as legislators in terms of one of our greatest charges, and a charge since the existence of this country, that is to protect the general welfare of our people. This does not seem to be the case based on what I hear coming from you. The contractor can get a license, but there is nothing to protect the consumer from a lack of performance. That falls on this Legislature, and we have fallen down on our job, because we have allowed a relaxed atmosphere for these people in which to operate and virtually pillage the home-buying consumer. I think something can be done, should be done, and it starts right here with us in passing appropriate legislation to deal with these issues, and with the State Contractors’ Board carrying out that legislation.
Senator Hardy:
I do not want to be misunderstood about the conduct of my comments. I am not in any way suggesting we do not need regulation or oversight. What I am saying is when our regulation goes to the point it begins to protect bad actors, that is a problem. If we are saying to the subcontractor they do not have to consider whom they do business with because we are going to make sure the general contractor pays you; that is a problem. We must say to the subcontractor they need to be more careful about their associations. I look at 46 complaints, and I bet Robert Lewis of Lewis Homes in Las Vegas has not had 46 complaints in 46 years, and the subcontractors want to work for Robert Lewis. We need to make sure we include that element, and not regulate protecting subcontractors from making better business decisions.
Chairman Townsend:
One reason we are taken off guard is we have heard 10 years’ worth of testimony, and worked hard each session on the issue of construction defects, but have heard little until now on lack of completion. We have another work session coming up and will hold this bill until then. Senator Carlton heads the subcommittee on boards and the other subcommittee members. Our counsel and your counsel will work over the next 48 hours to develop appropriate language to deal with the issues presented today in a constructive manner.
Is this contractor currently building anywhere else?
Mr. Robb:
It is my understanding that other than the Arrow Creek development, that contractor is not building anywhere else in Nevada.
Mr. Pugh:
I want to clarify that Sierra Sage is still in operation. I understand they are still building homes at Meritage, and have a planned community in the Wingfield Springs area.
Ms. Naas:
Sierra Sage took over the Solano development, Bella Terra, and Arrow Creek. It is the same builder.
Mr. Pugh:
I do not think that is accurate. Sierra Sage is negotiating, but the takeover has not yet occurred to my understanding.
Chairman Townsend:
We will figure out all that. We will leave some of those details to the attorneys to work out.
Mr. Maez:
Solano is also working at Canterbury Place. We also heard Sierra Sage is actually doing the contracting work at Canterbury Place.
Chairman Townsend:
Mr. Robb, whatever this board is paying you it is not enough. I want that to be on the record. This has got to be the hardest client next to another that comes in front of us. We have a high regard for you.
I will close the hearing on A.B. 190 and open the hearing on A.B. 280.
ASSEMBLY BILL 280 (1st Reprint): Revises certain provisions governing policies of insurance for motor vehicles. (BDR 57-1090)
Assemblywoman Christina R. Giunchigliani, Assembly District No. 9:
We are trying to set a policy issue. We started off asking for $35,000 to be added onto the car insurance, and lowered it to $2000. Currently, $1000 is offered like most companies, I think that is the current standard. This would make it a mandatory $2000 for the purposes of insurance coverage. We have to recognize not every person has health insurance. We have quite a few underinsured and uninsured. If a person is injured, we want to make sure they could at least approach their health portion under their automobile insurance, and that is the intent of A.B. 280.
Curtis Potts, D.C., Nevada Chiropractic Association:
I have a statement (Exhibit G) on our position on the bill.
Senator O'Connell:
You keep talking about low cost. Do you know the cost?
Dr. Potts:
It has been established by some of the insurance companies at an annual increase for the average driver at $40.
Senator O'Connell:
Mr. Young, how many mandates are now required?
Scott Young, Committee Policy Analyst:
I am doing this from memory, but I believe Blue Cross-Blue Shield lists 42 or 43. Some of those are not true mandates; they are references to which providers get reimbursed.
Senator O'Connell:
Where are we across the country?
Mr. Young:
It changes from year to year. As I recall, in the past, Nevada has been in the top five or six.
Assemblywoman Giunchigliani:
I would remind everyone we made a policy decision in this State to tax our insurance premium, unfortunately. This is an aggressive tax that makes our insurance costs higher than most states. Hopefully, we will review that policy to see about lowering it, then our rates could go down and we could look at the true intent of A.B. 280. That is part of the problem, we tax it and it puts us in the second or third category nationwide as far as our costs.
Senator Neal:
I have been driving for 50 years with insurance all that time. Why is it now necessary, from your perspective, to add this additional coverage?
Assemblywoman Giunchigliani:
We wanted to be cautious because we did not want to get into subrogation issues, as it has been controversial in the past. We wanted to recognize we could assist individuals to make sure they were covered for their health care injury, and not have it dump on county hospitals.
Senator Neal:
We have mandatory coverage insurance. By adding this, it now becomes mandatory coverage. The figures I heard were more like $60 or $70 annually to the driving public.
Tom R. Skancke, Lobbyist, Nevada Chiropractors Association:
I worked with the Division of Insurance and did a couple of different analyses on the cost to the ratepayer. Each insurance company has different breakdowns for costs. They give you a type of credit for your driving record, student driving record, age, how many cars in the family, how many people are insured, so the cost would fluctuate. What we found in the analysis from our association where doctors have looked at the cost for their families and their patients, it is somewhere between $2 to $5 a month the individual insurer would pay.
I have an analysis (Exhibit H) from State Farm Insurance Company’s rates. The average ratepayer in Nevada would be between $30 and $40 a year. Some insurance companies might be higher. Clark County and Washoe County will probably pay more because of the region, and rural counties will pay less. People over the age of 55 in certain areas tend to pay less, and people under the age of 27 tend to pay more. If they are good students, have a good driving record, no driving under the influence (DUI) charges, then it probably would be less than the numbers we have. We also ran an analysis showing reckless driving, DUI, speeding tickets, and under age 27, and the rate increased an additional $65 a year.
Clearly this is a policy decision the Legislature needs to make. We believe it is the appropriate thing to do. The last time a mandatory act was placed on the people was in 1967. Currently, it is an option to include Medpay in your insurance. If the person does not have Medpay and they are in an automobile accident, then their health insurance kicks in. If they do not have health insurance, the hospital and care providers put a lien on their property, or garnish their wages. If that person does not pay and it is a county hospital, we all pay. It is a philosophical discussion. It is something we believe is important to the patient, the premium payer, and the health care provider. I have Medpay on three cars and all my employees, and it costs me $125 a year in Clark County.
Senator Carlton:
I want to make it clear this would be based on a person’s driving record, not on their health record.
Mr. Skancke:
That is also my understanding. I am sure the insurance industry could explain it better.
Senator Carlton:
In reading this bill, I realized the medical coverage in my automobile insurance was for other people, not for me. I now know this is something I want to have for my family.
Sheri Barainca, D.C., Nevada Chiropractors Association:
One more issue is the Medpay covers passengers in the vehicle.
Kamran Abdo, Vice President, Nevada Chiropractors Association:
Currently the taxpayer and the public in one way or another are paying for this health issue. We would like to shift the cost to the consumers who actually use the product. I have seen some of the collection agency letters from University Medical Center (UMC) in Las Vegas showing UMC writes off about $10 million a month. Out of that $10 million, 10 percent to 15 percent is for motor vehicle accident (MVA) injuries, and the taxpayer pays the bill.
Chairman Townsend:
What you are all saying is people get health care from somewhere, and someone pays one way or the other. Was the question asked on the Assembly side if someone has health care, could they opt out of this? Or is this a straight mandate so it can cover everyone else in the car as well?
Mr. Skancke:
That was not brought up in the Assembly hearing.
Chairman Townsend:
I was curious because many people do drop Medpay because they have extensive health plans and want to manage their costs.
Mr. Abdo:
Unfortunately, when people pay insurance, they are usually told they have full coverage, until they end up in an emergency room. People change jobs and may not have health insurance with the new job. When they change jobs or lose their job, it usually does not occur to them to notify their auto insurer that they no longer have health insurance coverage. That is the situation we encounter everyday with drivers who seek our services. What happens is they end up in collection or filing bankruptcy. We do not understand why 80 percent to 90 percent of drivers do not have the Medpay coverage.
Senator Shaffer:
You are asking 75 percent of the people to pay the other 25 percent of damages for no reason whatsoever. I do not care myself if the doctor does not get paid, because I am covered, so is my family, and everyone else who rides in my car. I think the doctor who does not get paid has to figure it out for herself or himself. Why should I supplement the doctor, if that is the reason you are bringing this forward? What kind of law do we want to put in place that mandates everybody in Nevada to pay another fee, when many do have health insurance, just because some doctor is not getting paid? I do not buy that.
Aaron Fust, M.B.A., Southern Director, Nevada Chiropractors Association:
The way it was described is that the health insurance is responsible for the payment, but in a tort situation it is the third party that is responsible. The person who is hit, it is their health insurer who has to collect from the third party. The insurer often has difficulties in collecting that increased costs to them, so they hold back in paying the doctors; therefore, a lot of doctors do not accept the injured person as a patient. If the MVA person has mandatory Medpay, it would increase access to a variety of health care providers. Even the insureds would benefit from others having the mandatory health care coverage.
Senator Shaffer:
I already have that coverage. Why should I have to buy it again, because someone else may not get paid or get proper treatment?
Mr. Skancke:
This is not about people getting paid. It is about protecting the ratepayer from them not being able to pay their health care costs. This is not just for chiropractors, it protects the patient, and it protects you. You may have this coverage, but for those people who cannot afford health care insurance, they have to have auto insurance mandated by law. We are asking they also have Medpay because if they get into an accident and cannot pay, who would cover that expense? If the patient cannot pay, they file bankruptcy, go on welfare, go without adequate treatment, and are put in an adverse situation. We are asking for protection of the patient and the consumer.
Senator Neal:
Could I get an explanation on page 2, subsection 3, as to importance of that language, and why it is there?
Mr. Skancke:
The automobile insurance company cannot act as a health maintenance organization (HMO) when it comes to making payments for treatment of the patient. Essentially, that language provides for up to $2000 worth of Medpay payments. For example, they cannot say the patient is only allowed three visits to a physical therapist, or five visits to a doctor.
Senator Neal:
Meaning a provider cannot enter into a contract with an HMO?
Mr. Skancke:
Correct.
Senator Neal:
If the patient already has a contract with an HMO, does that mean he could not receive the coverage?
Dr. Barainca:
An HMO usually requires prior authorization for a certain number of visits, or preapproval for certain tests. Medpay does not do that. The patient decides how they want to use the $2000 coverage.
Senator Neal:
It says nothing about the patient, only the doctor. I find that disturbing.
Dr. Barainca:
The way I understand the language is it authorizes the provider to give the appropriate treatment without preapproval.
Senator Neal:
Is that what it is supposed to be saying? The doctor cannot have a contract with an HMO if he is going to work under this plan?
Mr. Abdo:
We did correct that wording in the Assembly hearing, but it appears the correction did not make it here. The correct language is the insurance companies shall not enter into a contract with an HMO, not the provider.
Chairman Townsend:
This is also a Title 54 of NRS, and we will look at it in our work session. The original intent of the bill seems to have changed and there are a lot of questions. In particular, if you are going to mandate this, why not just mandate Medpay? And why did it go from $35,000 to $2000?
We will now hear A.B. 79.
ASSEMBLY BILL 79 (2nd Reprint): Provides for external review of final adverse determinations made by managed care organizations, health maintenance organizations and certain insurers. (BDR 57-955)
Assemblywoman Barbara E. Buckley, Assembly District No. 8:
This bill creates an external review for adverse decisions by insurance companies, managed care organizations, and HMOs. Many people worked long and hard on this bill, and I think it is in a finished form. I have talked to several physicians who are doing external review themselves for insurance companies from other states. It is an effective tool to avoid the conflict by getting someone in the beginning to say, “Yea” or “Nay.” It is working in other states and it makes sense for Nevada.
I provided a section-by-section summary (Exhibit I) as well as the floor statement (Exhibit J).
Chairman Townsend:
We just had this handed out (Exhibit K). Do you have a copy Assemblywoman Buckley?
Assemblywoman Buckley:
No, but I can tell you without reading it that I do not support it. I think this is the long-whispered amendment to include workers’ compensation. Here is why I oppose it: Hearing officers and workers’ compensation can already order external review. Labor strongly opposes it because they think it mucks up workers’ compensation. This is a compromise bill on which we spent 4 years, and to adopt an unfriendly amendment that might cause the bill to fail puts all of our work in jeopardy. If the amendment proponents want to do their own bill, that is the American way. I look forward to seeing his bill in hearing, but not on our bill.
Chairman Townsend:
I have two friends I have worked with for over 20 years and, unfortunately, Senator Titus was the only joint sponsor, because each one of them had a bill. I did not know if you were open to having their names put on this bill without changing the bill.
Assemblywoman Buckley:
I would be honored. Also if you want to amend this into a Senate bill, the number and names do not matter at all. I think the product is the important thing, and I would leave that to you.
Mr. Ostrovsky:
The bill would hurt S.B. 320.
SENATE BILL 320 (1st Reprint): Makes various changes to provisions governing industrial insurance. (BDR 53-600)
In S.B. 320 there were provisions that provided for the external review procedures to be used at the appeals office level on matters involving medical issues before the appeals officer. That bill proposed they would be referred to an external review organization licensed in the same manner as those required under A.B. 79. Those external review organizations would make final determinations on medical issues that would bind the appeals officer. Medical issues are not all the issues that go before appeals officers, but there are many. Of course, the claimant could appeal the district court if they were unsatisfied with that.
At the time we had the hearing on S.B. 320, this committee asked to have that section removed and brought forward again when the bill to process external review for health care organizations came forward. That is the reason for bringing the amendment (Exhibit K) forward today. I had a previous discussion with Assemblywoman Buckley who indicated her lack of desire to have this amendment attached to her bill. But given the committee’s direction, I brought it forward.
Without going through it again, it is the same amendment you already heard. It does not amend any chapters of A.B. 79; it adds sections to A.B. 79.
Barbara J. Gruenewald, Lobbyist, Nevada Trial Lawyers Association:
This is like comparing apples and oranges. I agree with Assemblywoman Buckley why an external review for an insurer’s health care decision is necessary, because there is not such a thing right now; that is the apple. The orange is workers’ compensation that already has a whole system in place. There are litigation procedures, appeals processes, and appeals officers with the ability should they need a special type of doctor to review a certain medical issue.
We did discuss all this under S.B. 320. At that time several concerns were raised. Senator Neal observed that if we adopt external review, we would go from the specific to the general with this procedure. Whereas, now we have a finely tuned procedure that if there is a specific medical issue, we get a competent doctor with that specialty to review. If we go to an external review, there is no guarantee at all.
The point is we are looking at apples and oranges. The apple should stay in A.B. 79, and the orange should go somewhere else, such as S.B. 320. There has been no testimony or evidence presented that what is in place now is not working.
Assemblywoman Buckley:
I do not think it is an apples and oranges issue, I think this is a lemon.
Mr. Ostrovsky:
I would be happy to debate this in front of the committee, but I do not know if this is the time and place for it.
Chairman Townsend:
Not today.
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry:
The amendment would add another layer that would mean more delay. We already have substantial delay in the current system following the private insurers, compared to the way we were originally set up.
Ruth Mills, President, Nevada Health Care Reform Project:
Assemblywoman Buckley said it had been 4 years. I think it has been 6 years, because when we passed the Patient Protection Act, this item was left off. Granted, 4 years ago we did start the actual writing of this bill. My group wholeheartedly supports A.B. 79 (Exhibit L).
Jack Kim, Lobbyist, Nevada Association of Health Plans:
I offer our support of the bill, and thanks to Senator Neal and Senator O'Connell for their work on this bill.
Kim Everett, Actuary, Life and Health, Division of Insurance, Department of Business and Industry:
The bill requires the Insurance Commissioner certify an external review organization prior to them conducting external review in Nevada. The Division is proposing adding language to A.B. 79 to amend NRS 679B.240 to those entities for the Commissioner to examine, and charge for the cost of the examination.
Chairman Townsend:
Did you offer these amendments (Exhibit M) during the Assembly hearings?
Ms. Everett:
I did not have an opportunity because we anticipated when the bills were combined that similar language proposed in S.B. 171 would have made its way into this bill.
SENATE BILL 171: Requires managed care organizations to establish system for independent review of final adverse determinations concerning allocations of health care resources and services. (BDR 57-243)
Chairman Townsend:
I think it is important you speak to Assemblywoman Buckley. We also have your legislation on your division still here, and may put it in there as we think it is an important jurisdictional issue for the Commissioner.
Don Jayne, Lobbyist, Nevada Self Insured Association:
This may not be the right vehicle for this discussion, but we would still like to have that discussion in the appropriate time with the appropriate bill. We have experienced difficulties with the appeals process and medical decisions. We would like to explore other alternatives.
Chairman Townsend:
I think the committee would be pleased to have the discussion to refresh our memories as to the original discussion, but this would not be the right one.
Scott J. Watson, Lobbyist, Nevada Alliance for Retired Americans:
I will dispense with reading my testimony (Exhibit N) since you have a copy. But I would like to read the last paragraph for the record.
I only ask one thing, whatever the process is for the insured to request this review ¼ it is extremely important to make sure that the process is very simple and understandable. Older patients must be able to understand the process and know how to access it. If possible, there should be a public information pamphlet or an educational part in connection with this bill that would ensure that all Nevadans have the information about this bill and know how to request the external review when they receive an adverse determination.
Chairman Townsend:
Assemblywoman Buckley, without amending the bill, can we figure out a way to address this gentleman’s concern, or is it in there?
Courtney Wise, Committee Policy Analyst:
There is a provision in the bill that if a final adverse determination is rendered, that insurance company rendering the decision has to inform the insured of the process. The reference is in section 33, subsection 2.
Assemblywoman Buckley:
I want to add, the Office for Consumer Health Assistance could include this in one of their existing flyers. The Nevada Health Care Reform Project has flyers, and the medical society all would be great resources to get the word out to the public.
Chairman Townsend:
Senator Neal made the point that if you do not have the tools, that is one thing, but if they are there, that is a whole separate question.
Mr. Kim:
The seniors covered by Medicare have their own processes, and do their own external review. That is governed by federal rules, by the Centers for Medicare and Medicaid Services.
Chairman Townsend:
Sometimes when there are multiple locations for information, the information is provided in a different way, and that becomes confusing, particularly to seniors. Everyone should have the same paragraph or wording; no matter where the information comes from, it is clear, concise, and reads the same.
Ms. Everett:
The proposed bill does require the Division of Insurance to review any notices distributed to consumers. Our regulations could propose the information comply with the existing language, and it be consumer friendly.
Chairman Townsend:
I think the most important thing is to check with Assemblywoman Buckley who has done a lot of work on this bill. My concern is no matter where it is printed, make it consistent. Even if the meaning is the same, I think it is important for consumers to have the same words no matter where it is.
Ms. Everett:
The Division agrees.
Phil Nowak, Chief, Social Welfare Program, Division of Health Care Financing and Policy, Department of Human Resources:
There are conflicts and definitions we wanted to point out. We do not want to be inconsistent between the Code of Federal Regulations (C.F.R.) that apply to Medicaid and the definitions referenced in the bill language. The definitions of concern are “medical necessity,” and “adverse determination.” This is to prevent the potential of confusion on the part of providers. There is exclusionary language referencing chapter 695C of NRS, but does not reference NRS 659G. It is all in the handout (Exhibit O).
Chairman Townsend:
Mr. Powers, when you get to transitory bill where we clean up everything at the end, is that where this would go? We do not have to amend this bill?
Mr. Powers:
My first response is that I believe the reference he is referring to is in the bill on page 19, beginning on line 16. “Such a managed care organization or health maintenance organization is not required to establish a system for conducting external reviews of final adverse determinations in accordance with chapter 695B, 695C or 695G of NRS.”
The term “such a managed care organization or health maintenance organization” refers to one “that provides health services to recipients of Medicaid under the State plan for Medicaid or the Children’s Health Insurance Program pursuant to a contract with the Division of Health Care Financing and Policy of the Department of Human Resources.”
So the language there is intended to exclude the programs that you are referencing from the external review provisions in all of those chapters.
Mr. Chairman, that specific matter I believe resolves the issue, and an amendment would not be necessary.
Rose McKinney-James, Lobbyist, Clark County School District:
I want to indicate the Clark County School District supports this bill.
Bonnie L. Parnell, Lobbyist, League of Women Voters Nevada:
The league has been very involved in the Nevada Health Care Reform Project, and this is one of their priority bills. I am here in support of A.B. 79 as written at this time, and we are in opposition to any suggested amendments.
Senator O'Connell:
I would now move that the committee do pass A.B. 79 with the provision to go into, and I am not sure how to do this.
Senator Neal:
Just leave it in this form and add our names to it.
Mr. Powers:
“I believe the motion for Senator O’Connell would be to amend and do pass. With the amendment simply being adding to the joint sponsorship the names of Senator O'Connell and Senator Neal.”
SENATOR O’CONNELL MOVED TO AMEND AND DO PASS A.B. 79.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Townsend:
We will open the hearing on A.B. 220.
ASSEMBLY BILL 220 (1st Reprint): Makes various changes to provisions governing contractors. (BDR 54-502)
Why do we have so many of these bills?
Ms. Grein:
There is only one bill this session from the State Contractors’ Board.
Mr. Robb:
This bill proposes six amendments to NRS 624. The first amendment is on page 2 that would allow the applicant’s financial information to remain confidential. It has always been true the licensee’s financial information is confidential, and this extends it to applicants.
Chairman Townsend:
I do not mind an applicant’s financial information being held private, but once they are licensed and you become responsible for issuing the license, then why should that become private? How are we going to know if they are financially viable to cover projects? I was just told there is a shell game of LLCs. They were given a $500,000 license, and then it went to $3 million. How do I know whether it is valid or not? I am taking your word for it, but this contractor is a problem.
Mr. Robb:
In the past it has been the judgment of the Legislature to allow confidentiality. Just because you have a license does not mean you publicly expose your financial background. That is clearly your decision to make that information available to the public. That is a legislative decision, not a board decision.
The next item is what records remain confidential and not open to public inspection concerning an investigation. It provides that the information generated during the course of the investigation is not public. However, once the board imposes disciplinary action, then everything is public. This language was taken from chapter 632 of NRS of the State Board of Nursing.
Chairman Townsend:
Mr. Powers, make a note to look at S.B. 250, and the work Senator O'Connell and Senator Carlton did with regard to the language used for disciplinary language and when information can become available.
SENATE BILL 250 (1st Reprint): Revises various provisions relating to regulated businesses and professions. (BDR 57-835)
Mr. Robb:
The third item is the criminal investigator’s duties are expanded to investigate applicants for employment with the board, and to also investigate any alleged occurrence of constructional fraud.
The fourth item is on page 3, line 19. It deletes certain language. It requires the board to handle matters over which we have jurisdiction. The only thing is if we would relay something to another board where we did not have jurisdiction.
The fifth item relates to the recovery fund. It changes the language so the assessment against contractors does not exceed these specified amounts. The reason is on page 4 of the bill, there is a cap saying we cannot continue to collect assessments once they have reached a certain amount of money. We are trying to ensure that every licensee pays that licensee’s share instead of someone in January who comes up for licensing pays, and then the person whose license comes up in November does not pay anything, because we have already hit the cap.
The final amendment is on page 5. When a licensee seeks judicial review of a disciplinary action taken by the board, sometimes that licensee mistakenly joins the homeowner in that action. That homeowner is not a party to that action. That is an action between the State Contractors’ Board and the licensee. We are giving the courts the ability to dismiss the homeowner.
The committee may want to use A.B. 200 as a vehicle for whatever amendments you want to insert into NRS 624, rather than the bill heard earlier.
ASSEMBLY BILL 200 (1st Reprint): Provides for sale of tax lien against parcels of real property. (BDR 32-204)
Chairman Townsend:
I have offered this for three or four sessions, and that is to stop issuing licenses to anybody for 18 months to 2 years, so you can go back, check these projects, check these people, and get caught up. We have been at this for many years and I am getting tired of it. I do not know what to do to help you. I am not mad at you; I am just running out of arrows in my quiver to give you. I do not want to put more burdens on the board, because then you have to hire more staff, train them, investigate them, and I understand that. I think maybe it is time to slow down in terms of the licensing process. Go back and review everyone’s performance bonds. Review the limits on the license to see if they should be at that level. What I am saying is the mechanism is wrong, and we have to figure out a way to do this better. I think you should give some consideration to suspending any new licenses that are not in the pipeline for a year or 2, until you can get caught up. Give that some thought over the next few days when we will meet again.
Senator Neal:
Would you give some circumstances where a cross-judicial review could be made?
Mr. Robb:
What occurs is the board disciplines a contractor. The contractor then files a petition for judicial review of the board’s decision. The petition will name the State Contractors’ Board and the people who made the complaint to the board, and those people should not be in that review process. It should be just between the licensee, the contractor, and the board that imposed the discipline.
Ms. Ashton:
Just so we are clear, A.B. 190 was a bill the Southwest Regional Council of Carpenters asked a legislator to bring forward. Whether or not it could move forward as is, and any amendments to address concerns brought up today, could be put in the actual bill brought forward by the State Contractors’ Board without belaboring both bills. I would like to add that we see once the board has taken disciplinary action, in a lot of those cases there is criminal action that could have been brought forward and undertaken by the Attorney General or a District Attorney’s office. It seems to be the State Contractors’ Board would not impose theirs, but the other governing agencies do not pursue the avenues they should with the criminal sides of the prosecution. I think that is something that should be mandated, and not leave it in limbo to one agency to do it.
Chairman Townsend:
Mr. Young, would you send a note to the Attorney General’s Fraud Unit to see if someone can come before the committee tomorrow?
Mr. Powers:
“Might I add, to frame the issue around, that there is a constitutional issue where the decision whether or not to prosecute is an Executive Branch function.”
Chairman Townsend:
Absolutely. We just need to have their insight so they know what has been brought forward.
Sydney H. Wickliffe, CPA, Director, Department of Business and Industry:
I just wanted to check in since I have been out ill for quite a while, and to let you know I am back to offer whatever services I can.
There being no further business, the meeting is adjourned at 10:00 a.m.
RESPECTFULLY SUBMITTED:
Laura Adler,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: