MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
May 13, 2003
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Tuesday, May 13, 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 Maggie Carlton
COMMITTEE MEMBERS ABSENT:
Senator Michael Schneider (Excused)
GUEST LEGISLATORS PRESENT:
Assemblyman John C. Carpenter, Assembly District No. 33
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Kevin Powers, Committee Counsel
Makita Schichtel, Committee Secretary
Johanna Downey, Committee Secretary
Lynn Hendricks, Committee Secretary
OTHERS PRESENT:
John Ellerton, M.D.
Harvey Whittemore, Lobbyist
Anita Patton
Robert Miller
Gerald R. Crum
Buffy Gail Martin, Lobbyist, American Cancer Society/Reno
Jack Kim, Lobbyist, Nevada Association of Health Plans, and Sierra Health Services, Incorporated
Fred L. Hillerby, Lobbyist, Hometown Health Plan of Nevada, and Nevada Association of Health Plans
Robert A. Ostrovsky, Lobbyist, Nevadans for Affordable Health Care, Employers Insurance Company of Nevada, and Nevada Resort Association
Christina Dugan, Lobbyist, Las Vegas Chamber of Commerce
Bonnie L. Parnell, Lobbyist, Nevada Alzheimer's Advisory Council
Ray Badger, Nevada Trial Lawyers Association
Danny Thompson, Lobbyist, American Federation of Labor and Congress of Industrial Organizations
John E. Jeffrey, Lobbyist, Southern Nevada Builders and Construction Trades Council
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry
Don Jayne, Lobbyist, Nevada Self Insured Association
Rose E. McKinney-James, Lobbyist, Clark County School District
Robert Moore
Ivan R. “Renny” Ashleman, Lobbyist, Southern Nevada Homebuilders Association
Jan-Marie Brown, President, Organization for Professional Travel Agents
Patricia Jarman-Manning, Commissioner, Consumer Affairs Division, Department of Business and Industry
Kathleen Delaney, Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General
Lisa A. Foster, Lobbyist, California State Automobile Association (dba AAA Nevada)
Gail Kosach, Destinations Incorporated
Bonnie McDaniel, A Quick Trip Incorporated
Tony Sanchez, Attorney
John Sande III, Lobbyist, Nevada Bankers Association
Alice A. Molasky-Arman, Commissioner of Insurance, Division of Insurance, Department of Business and Industry
James L. Wadhams, Lobbyist, American Home Shield
Chairman Townsend:
We will open the hearing on Assembly Bill (A.B.) 502.
ASSEMBLY BILL 502 (1st Reprint): Requires certain policies of health insurance and health care plans to include coverage for certain medical treatment provided in clinical trial or study. (BDR 57-1196)
John Ellerton, M.D.:
I am a cancer specialist in Las Vegas. I lead a clinical trial program called the Southern Nevada Cancer Research Foundation funded by the National Cancer Institute to provide clinical trials to patients. Clinical trials are a way to provide success in the care of cancer patients. Physicians who participate in clinical trials have better outcomes in all their patients. This bill ensures that patients on clinical trials for cancer will have appropriate coverage from their health insurance.
The bill covers Phase II, Phase III, and Phase IV studies for the treatment of cancer. Phase II studies test a drug against a cancer to see if it works. Phase III studies compare one treatment against another treatment to see which is better. Phase IV studies look for ways to improve a new treatment. The bill spells out how trials qualify to be covered. No trial gets to the patient before it is reviewed multiple times at multiple levels, in and out of the government, to ensure scientific validity and safety.
Costs to be covered under the bill are those having to do with the care of the patient, not the cost of conducting the trial. Any costs the trial pays for are excluded. I have put together a summary paper in the packet I provided that suggests some trials decrease costs for patients and others increase costs slightly (Exhibit C). Many major health systems participate vigorously in clinical trials and do not feel they increase the cost of care. For many cancers there is no standard of care; there is just a guess about what might work. Many cancer specialists feel the ethical way to treat cancer patients is to put them on clinical trials because we do not have the final answers. We want to guarantee if patients are put on clinical trials, their insurance companies will not refuse to cover them.
I have discussed this bill at length with some of the major health plans. We made some changes based on these discussions. Mr. Jack Kim has given me technical amendments (Exhibit D). They do not change the sense of the bill but do clarify it.
Harvey Whittemore, Lobbyist:
I am representing myself today. I am in support of this bill. We are proposing an amendment to include an immune dysfunction disease called chronic fatigue syndrome (CFS).
Anita Patton:
I have written testimony (Exhibit E). I have had CFS since 1986. It is an extremely debilitating disease, and for 11 years I had no medicine available to help my muscles get stronger or help my body fight infection. At the age of 24, I was forced to use an electric cart to move around my house. In 1997, I began a Phase III clinical trial of a medication called Ampligen which has improved my condition to the point where I can walk, ride a bike, and care for my three children. The drug is infused intravenously twice a week and costs $30,000 per year. I need this medication, but I am having trouble paying for it. So far my insurance has not paid for the treatment. There is no other treatment for CFS. My written testimony includes a chart showing how my functioning drops when I try to stop the drug.
My doctor, Dr. Daniel Peterson in Incline Village, is one of the world’s experts on CFS. I am very grateful that he continues to treat me even though I am unable to pay his costs. He is absorbing the costs for quite a number of patients who cannot pay for this treatment.
Senator Neal:
Is this new, to have insurance cover clinical trials? Do any other states have legislation like this?
Mr. Whittemore:
We do not know of any other state covering Ampligen studies.
Dr. Ellerton:
There are 20 states with laws like this for cancer studies.
Senator Neal:
What were the results of the Ampligen study?
Mr. Whittemore:
The study showed Ampligen stops the virus and allows the body to recover dramatically for 18 to 20 percent of sufferers of CFS. The incidence of CFS may outpace that of multiple sclerosis. Nevada leads the nation in treatment of CFS.
Robert Miller:
I have written testimony (Exhibit F). Three of my siblings have participated in clinical trials that greatly increased their life span and quality of life. When my sisters were involved in medical trials for cancer treatments in the 1960s, the drug company shouldered all the costs. My brother is currently involved in a trial of cutting-edge chemotherapy in Florida. Some of the costs are being borne by the hospital, and some by the state of Florida. He will never be out of debt.
I would like to add back the original language to cover “other life-threatening illnesses” in addition to cancer. I have had chronic fatigue and immune dysfunction syndrome (CFIDS) since the 1980s. If I could not participate in the Ampligen trial, I would not be here today. Ampligen is only one medication being tested in a clinical trial approved by the Food and Drug Administration (FDA). While I was participating in the study, the drug company paid for the medication. When the study ended, my choice was to give up the renewed health and strength I had found or pay for the drug myself. While I am very grateful for my response to the drug, I am torn by the knowledge that I am taking away from my twin sons’ financial future. I am including a copy of a petition signed by patients and others who know how important access to cutting-edge treatment can be (Exhibit G).
Without people willing to participate in clinical trials, advances in medicine would come to a halt. The financial costs are considerable, and sometimes financially devastating. My family has benefited from clinical trials and contributed to better cancer therapies. It is important to tell everyone that the patient’s life is more important than the cost of treatment. I have insurance with the Culinary Union, which is one of the best in the State, and it covers some of the costs. It does not, however, cover the bulk of the cost, and most insurance companies cover none of the costs.
Chairman Townsend:
We appreciate the tough circumstances you face. Dr. Ellerton, do you have any comment on adding CFS to this bill?
Dr. Ellerton:
The original language said “life-threatening diseases.” We had a problem defining that phrase, which is why we agreed to start out limiting the bill to cancer.
Senator Carlton:
As I understand it, CFS affects the immune system, which means these patients have a greater risk of contracting cancer. Ampligen treatment is a way to prevent the costlier treatment of cancer, is that correct?
Dr. Ellerton:
Yes.
Mr. Whittemore:
I would like to read a letter into the record from my daughter Andrea, who has CFS.
My name is Andrea Whittemore, and I have been sick with chronic fatigue syndrome for at least 13 years. Almost 3 years ago I was blessed with the opportunity to enroll in one of the few Ampligen trials. Ampligen is currently a Stage III drug in FDA trials, which means no one can receive this drug unless they are enrolled in the study. Once their study time is up, regardless of their success on the drug, they can no longer be treated unless they can afford to pay for the drug themselves. Because my parents could afford to pay for the cost of the medication, I was able to stay on the drug for 20 months, and my symptoms went into remission. There have been many times when I have been approached by less-fortunate patients seeking financial help. Each time my heart broke to see the suffering they must endure because their insurance companies refused to help them get the only medication that worked for them. I am asking that you give these patients a chance to have a life with some hope of normalcy by voting to amend and pass this bill into law. There are no other alternatives at this time. Ampligen has been the only drug that has given me any relief from the pain that this disease causes. Without it, I was homebound, oftentimes too sick to even bathe myself. My quality of life was severely altered. This illness has robbed me of the chance to go to school, have a normal social life, or even try to support myself. While on Ampligen, I was able to get a part-time job and meet people my own age. I was able to enroll in a class at the university, and for the first time in many years began to hope for a near-normal life. I beg you to amend and pass this bill so that others may have the same chance to experience a renewed quality of life. Please help stop the needless suffering. Thank you for your kindness and consideration.
Mr. Whittemore:
I also have a letter from my wife Annette.
As the parent of a sick young adult, I have seen the results of the disease called chronic fatigue syndrome. I have witnessed the physical and emotional pain that she endures on a daily basis. Before we were offered Ampligen, there were only Band-Aids that attempted to alleviate the symptoms, but still my daughter continued to battle viruses that would not go away. After several months on Ampligen, our daughter Andrea began to have more energy and her pain began to ease. Medical tests proved what we had already suspected: the viruses were being held in check. Although we were paying several thousand dollars every few months for the medication, we knew we had been given the only chance she had to lead a more normal life. Others were not so lucky. There were and still are a great number of patients who have had to stop Ampligen after 6 months because they could not afford to pay the full cost of the medication. They returned to their homes and became sick again, but they now had the knowledge of a medication that could help, and it was just beyond their grasp.
I have supported many fund-raisers for other diseases, such as diabetes and multiple sclerosis. Each time, I come away thinking how lucky those people are to have a disease that has available treatments. Even most cancer patients are able to go about their lives, go to school and work, and enjoy social activities. Chronic fatigue patients like my daughter who are in need of Ampligen do not. They wait at home for some relief, oftentimes too sick to even take care of their basic needs. Shouldn’t they have some choice, some medication, that helps heal their broken immune systems? By amending and passing this bill of compassion and support, you give these patients the hope they need to face another day. Please vote to give these patients the ability to receive at least one medication that can truly make a difference. Sincerely, Annette Whittemore.
Gerald R. Crum:
I have written testimony (Exhibit H). I was diagnosed with CFS in 1985 and was lucky enough to be involved in a Phase I trial of Ampligen. I took the drug for 5 years, and it saved my life. After I discontinued the drug, I was diagnosed with a very rare form of non-Hodgkin’s lymphoma called mantle cell lymphoma. There is no known effective treatment for this disease. The only possibility for treatment is through clinical trials.
Clinical trials benefit the whole of society, the ones that fail as well as the ones that succeed. We should be doing everything we can to encourage people to participate in clinical trials. Shortsighted financial gate-keeping is an impediment to this process.
I have been told there is a proposed amendment to this bill that would restrict it to trials taking place within the State of Nevada. This would mean cancer patients could not avail themselves of the best treatments.
Buffy Gail Martin, Lobbyist, American Cancer Society/Reno:
We fully support this bill. I have written testimony (Exhibit I). In Nevada, 10,300 new cases of cancer will be diagnosed this year, and about 4300 Nevadans will die from cancer in 2003. This bill could dramatically change the lives of cancer patients in Nevada.
At the end of May 2003, ground will be broken to build the Nevada Cancer Institute in Las Vegas. This state-of-the-art cancer care center will allow Nevadans to have greater access to highly specialized care and will also conduct clinical trials. Insurance coverage of clinical trials would eliminate the need for cancer patients to leave the State for treatment.
Jack Kim, Lobbyist, Nevada Association of Health Plans, and Sierra Health Services, Incorporated:
We have covered Phase II, Phase III, and Phase IV clinical trials for cancer for years. The way the bill was originally written, it raised some concern. We have worked with Dr. Ellerton to address these concerns. I need to point out this bill will not help the gentleman covered by the Culinary Union, which is covered by federal law. We have technical amendments (Exhibit D). These are changes agreed to in the Assembly and inadvertently omitted from the reprint.
Senator Neal:
Do you have any objection to adding CFS to this bill?
Mr. Kim:
We have not seen the proposed amendment and have not analyzed the impact of adding CFS.
Senator O'Connell:
Since you already cover clinical trials, can you tell us how much that coverage usually costs you?
Mr. Kim:
That depends on the trial. Most of our cancer patients are in clinical trials of some type, including all of our children cancer patients. We cover ancillary expenses not covered by the trial, which changes from trial to trial. I can send you that information.
Senator Carlton:
Are you currently covering expenses for anyone with CFS who is participating in the Ampligen study? How expensive is it to treat outside of this study?
Mr. Kim:
I do not know. I will find out.
Fred L. Hillerby, Lobbyist, Hometown Health Plan of Nevada, and Nevada Association of Health Plans:
This bill was designed specifically for clinical trials for the treatment of cancer. It does not currently have safeguards in place for other diseases such as CFS. We are not necessarily opposed to the addition, but there are concerns that should be addressed.
Senator Neal:
Would you pay for trials using interferon? It was developed by the same doctor who developed Ampligen.
Mr. Kim:
It depends on whether it was used for cancer research.
Robert A. Ostrovsky, Lobbyist, Nevadans for Affordable Health Care, Employers insurance Company, and Nevada Resort Association:
I am representing Nevadans for Affordable Health Care in this matter. This bill does not affect the cost of insurance for the self-insured, Taft-Hartley funds, or the Culinary Union. It will affect the cost of insurance to small employers and individuals in the State. Whenever the cost of insurance goes up, the consequence is fewer people get insured. Uninsured people are a continuing problem in this State, and we want to ensure the pool does not grow. We have some concerns about the cost of this.
I was not prepared to address the issue of adding CFS this morning. However, if there are 100 people in a trial costing $30,000 each, the total cost is $3,000,000. We also heard testimony about people who cannot afford the drug after they leave the trial. This bill will do nothing to help them, as it is written to provide coverage during the clinical trial only. The cost of covering cancer trials is relatively small because a lot of it is already covered. If you are going to add a new mandate not otherwise covered, we need to explore those costs carefully.
Senator Neal:
I do not think the number of insured people who will be involved in clinical trials will be that big. It is doubtful whether the effect you speak of will come to pass. The costs you presuppose would be associated with this are phantom at best.
Christina Dugan, Lobbyist, Las Vegas Chamber of Commerce:
We are members of Nevadans for Affordable Health Care. We encourage the committee to take the cost issue into consideration when they look at this bill. Our concern is that smaller businesses are getting priced out of providing health care for their employees.
Bonnie L. Parnell, Lobbyist, Nevada Alzheimer's Advisory Council:
We support this bill. Even though Alzheimer’s disease is not mentioned in this bill, we are supportive of any legislation opening the door to acknowledging other diseases that could be helped by research and clinical trials.
Chairman Townsend:
At the top of this bill it says “Exempt.” There are several meanings for this word; do we know what it means in this case?
Kevin Powers, Committee Counsel:
I’m going to have to talk to legislative counsel on this one.
Chairman Townsend:
We will take up this bill again in work session this Friday. The involved parties should bring us appropriate language and answers to our questions about costs. We will close the hearing on A.B. 502 and open the hearing on A.B. 168.
ASSEMBLY BILL 168 (1st Reprint): Revises provisions governing industrial insurance. (BDR 53-255)
I want to put on the record my thanks to many of the self-insured groups and labor groups that sat down and worked with me on the legislation, the first reprint that’s before you.
This bill was first requested by former Assemblyman Douglas Bache, and I picked it up for him. It originally started as an “any willing provider” bill, then we went back to the language from 1993 dealing with the 20-mile rule and accessibility. Mr. Badger and others will present the bill step by step. We have friendly amendments from Jim Fry in Risk Management. They are acceptable amendments and actually make the bill better by minimizing risk to the State.
Ray Badger, Nevada Trial Lawyers Association:
I am an attorney in Carson City. For 27 years my practice has primarily involved representing injured workers. This bill is an attempt to fix some cracks in existing law. The bill was drastically amended in the Assembly, making it a better bill. We now have a few further amendments to offer (Exhibit J). The first page was recommended by the Division of Industrial Relations (DIR), and the second page was recommended by the Risk Management Division. We accept these amendments.
Sections 2, 3, and 4 of the bill deal with managed care. In 1993 the committee first authorized insurers to contract with health care providers to lower costs. This also lowered the number of doctors. This resulted in at least one carrier who required injured workers in Gardnerville or Carson City to travel to Reno to receive orthopedic treatment. This means a worker might be required to take off half of a day from work for a 20-minute appointment. Section 3 is a refinement of the old 20-mile rule, which says if the insurer does not have a physician within 20 miles of the injured worker’s home or work site, the worker may go to another physician who agrees to the DIR fee schedule. Section 4 asks the DIR to hold hearings to craft rules to ensure available and accessible medical care for injured workers. We knew we could not put all the issues that come up into the bill, and this provides a mechanism for those issues to be heard.
Section 7 stipulates that the most recently published edition of the American Medical Association’s Guides to the Evaluation of Permanent Impairment be used to evaluate permanent partial disability. This allows the DIR to use the most recent edition without having to return to the Legislature every time the Guides to the Evaluation of Permanent Impairment is updated.
As previously mentioned, I have an amendment suggested by Jim Fry. It adds, “In Nevada, the examination award must not consider any factors other than degree of physical impairment of the whole man in calculating the entitlement to compensation.” This is a quote from S.B. 320. We agree to this amendment. What it does is eliminate a percentage of disability for a purely psychological condition. You could get treatment for it under Nevada law, but you would not get a settlement for a permanent injury to your psychological or emotional system. This provision would also eliminate a chapter asking doctors to evaluate pain on other than physical bases. The effective date of this provision is October 1, 2003.
SENATE BILL 320 (1st Reprint): Makes various changes to provisions governing industrial insurance. (BDR 53-600)
Mr. Badger:
The amendment to section 10 requires the employer to make temporary, light‑duty employment offers to workers in writing. These offers may be made verbally, but there must be written confirmation of the offer. If the worker refuses the offer, they are not then entitled to a lost-wage payment, but the refusal does not affect later benefits down the line. In this same spirit, we have added language ensuring that the worker not lose seniority or benefits by taking a temporary job.
Senator Carlton:
Are you saying the worker has the same rights and benefits during the course of the temporary work, or that when they return to their original job they will come back at the same status?
Mr. Badger:
As I read it, it would be both. Sections 13, 14, 15, and 16 deal with benefit penalties. Benefit penalties are fines assessed by DIR against insurers who act improperly and harm injured workers. Under current law, if an injured worker accepts a permanent disability award in a lump sum, any pending benefit penalty cases associated with the worker’s claim are also closed. This bill keeps the benefit penalty case running separately. The bill also removes the requirement that the DIR find fraud, coercion, duress, or undue influence to impose a benefit penalty and changes the standard to “no justification” for the action. The bill then allows the worker to appeal if the DIR refuses to assess a benefit penalty.
Lastly, the bill repeals Nevada Revised Statutes (NRS) 616D.280. This section states when workers are injured because they removed or disabled a safety device, their benefits are reduced 25 percent. If the device was removed by the employer, the employer can be penalized $300 to $2000. After discussion with insurers and employer representatives, we agreed to do away with both penalties. In some cases, the employer will still be subject to penalties from the Occupational Safety and Health Administration.
Danny Thompson, Lobbyist, American Federation of Labor and Congress of Industrial Organizations:
This bill was prompted by the inadequacy of the provider list. There have been cases in which injured workers in Fallon had to be driven over 100 miles to receive emergency care. These kinds of situations can be addressed by this bill. We will be working with Mr. Ostrovsky this week on further language.
John E. Jeffrey, Lobbyist, Southern Nevada Builders and Construction Trades Council:
The lack of providers, particularly with the largest insurance companies, is a major problem in the more populous counties as well as the sparser ones. We suggest DIR adopt regulations to deal with this. With regard to benefit penalties, I have always felt this was lopsided. For an injured worker, losing 25 percent of benefits is a terrible price to pay. I have seen cases in the construction industry in which the employer encouraged the workers to remove safety devices because they slow production. This is supposed to be a no-fault system, and doing away with this provision makes it so.
Mr. Ostrovsky:
I represent Employers Insurance Company of Nevada in this matter. I am working with the parties involved in this bill. We have some concerns about the 20-mile rule because 20 miles will not get you across the Las Vegas Valley. The 20-mile rule was originally put in to protect Carson City workers from having to go to Reno for health care. Since the population centers have shifted, we want to talk to the parties about that. Provisions of section 4 that would allow the DIR to adopt regulations is a significant change. We do not oppose this change and think it may be a way to resolve issues about what constitutes an adequate panel of physicians. We do not oppose the repeal of the 25 percent penalty. I understand it is rarely used. It does not excuse a worker from ignoring safety devices or supervisors, but we do have a no-fault system.
Chairman Townsend:
The issue of the number of providers is probably better handled by the regulatory process. The location and spread of providers is more relevant than the absolute number. If an insurer has the requisite number of providers but they are all located in one town, the same problem exists.
Mr. Thompson:
We agree on the 20-mile rule and are discussing the problem with Mr. Ostrovsky.
Nancyann Leeder, Nevada Attorney for Injured Workers, Department of Business and Industry:
For my clients, an extensive panel is more helpful. In section 7, the edition of the Guides to the Evaluation of Permanent Impairment changes as medical knowledge changes. It is therefore much to our benefit to go with the most recent edition. In sections 10 and 12, our clients would be greatly helped by being allowed to keep their benefits while on light duty. Section 14 allows DIR to sanction employers or insurers who agree to provide medical treatment and then do not do so. In section 16, the benefit penalty procedure would follow the same procedure as all other injured worker benefits.
Don Jayne, Lobbyist, Nevada Self Insured Association:
I would like to continue to work on this bill. We also have concerns about the 20-mile rule which we will try to work out in discussions this week. We will also need to define the nuances of the word “seniority.”
Rose E. McKinney-James, Lobbyist, Clark County School District:
We were opposed to this bill before the amendments were made. We appreciate the opportunity to bring our remaining concerns to the table. There are certain areas we can support.
Chairman Townsend:
This bill will be discussed in work session on Friday. Today and tomorrow afternoon my office is available for your use as a conference room. We will close the hearing on A.B. 168 and open the work session on A.B. 182.
ASSEMBLY BILL 182: Authorizes employer to enter into fair share agreements with labor organizations. (BDR 53-1076)
Senator Carlton:
There is a mock-up of the bill with amendments in your workbook (Exhibit K. Original is on file in the Research Library.). The union halls are supported solely by dues. Contracts and other negotiations benefit every worker, whether they are members of the union or not. If a nonmember employee wants to be represented by the union in a grievance or disciplinary hearing, the union and the employer can require the worker to cover the reasonable costs of this representation.
As a disclosure, I must state that I am a volunteer. I do not get paid to handle grievances or disciplinary actions.
Chairman Townsend:
Who defines “reasonable cost”? Will the employee be notified of the cost before it is incurred? I do not want to see nonmembers receiving services and then protesting the bill.
Senator Carlton:
This can happen in any legal situation. There will be a contractual agreement between the employee and the union. To be equitable, we would look at the costs incurred in such representation and break them down. If the union investigates and decides not to take the grievance, there would be no charge to the employee.
Senator O'Connell:
Who was on the subcommittee on this? Who were the outside members who testified?
Senator Carlton:
There was no subcommittee. I discussed it with the sponsors of the bill, but there was no formal testimony other than that heard at the original committee hearing on April 17, 2003.
Robert Moore:
I have an amendment to offer regarding non-compete, non-solicitation agreements (Exhibit L). Employers in the service industry often require their employees to sign such agreements as a condition of employment. A typical agreement of this nature might read like this:
Upon termination of your employment, with or without cause, for a period of 12 months following the termination, you cannot directly or indirectly as a sole proprietor, member of a partnership, stockholder of a corporation, investor of a corporation, director of a corporation, officer of a corporation, employee, agent, associate, consultant, of any person, firm, or corporation, solicit or accept business of the type offered by the company for any of the clients or prospects of the company or any of its affiliates who were solicited or serviced directly or indirectly by you or by anyone supervised directly or indirectly by you, in whole or part, for a 2‑year period prior to your termination.
This is extremely broad and is inherently unfair and inequitable. It is a violation of public policy to allow such agreements to be enforced in Nevada in the event of involuntary termination without cause, such as the elimination of a position or a reduction in force. This type of agreement is worded so broadly that a person terminated is effectively forbidden to continue in his or her career for 2 years. In situations like this, agreements of this nature are despicable and should not be enforceable. I can completely embrace the concept of these agreements when the employee leaves voluntarily.
This happened to a friend of mine whose position was eliminated. After 34 years of service, he found himself without a job. Because of the non‑compete agreement he had signed, he could not continue his career. He was told any attempt to do so would result in the loss of shares of stock the company had given him. To add insult to injury, a week later his position was advertised on the company’s Web site. He had been a good employee. His only failing was to be over the age of 50 years.
Senator O'Connell:
Your friend has the right to go to the Equal Employment Opportunity Commission (EEOC) with his situation. This looks to be a clear case of age discrimination.
Chairman Townsend:
Is that not a prima facie case of discrimination?
Mr. Powers:
Of course, this is based on only the facts that have been presented here before the committee. The evidence that was referred to could be used in a discrimination action in order to prove that the discharge of the employee was a mere pretense or pretextual discharge, and that the actual intent of the employer was unlawful discrimination. So it’s possible that information could be used in evidence in an age discrimination suit. However, again, we have only been presented with one side.
Chairman Townsend:
If the facts are accurate, what is the remedy the EEOC provides? Is it abrogation of that portion of the contract or back pay?
Mr. Powers:
That is left up to the court. Under federal law, the Age Discrimination Employment Act, remedies typically include back pay, lost wages, lost benefits, and of course the court is given equitable powers to remedy any sort of injustice it sees. So it could rescind the contract using its equitable powers, if it believes that that’s a remedy appropriate under the Age Discrimination Employment Act.
Mr. Moore:
The age discrimination problem is a separate issue from the non-compete contract.
Senator O'Connell:
My concern is that we might already have laws in place to deal with this problem.
Senator Hardy:
The non-compete agreements I have signed have always concerned existing clientele of the company for which I was working. Nothing prohibited me from continuing in my career, as long as I did not steal clients from the old company. Are there non-compete agreements specifically prohibiting the person from engaging in that career for 2 years? Why would a person sign an agreement like that?
Chairman Townsend:
It sounds like a contract of adhesion: you cannot work here unless you sign this agreement.
Senator Hardy:
The courts will have to settle that. I am sensitive to the need for non-compete agreements. Some businesses are built on their relationship with their clients. The employer needs something for self-protection. I can understand the distinction when the employee has been discharged, but protection of one’s clientele is an issue even then.
Mr. Moore:
The agreement my friend signed stipulated that he could not solicit or accept any business of the type offered by the company for any clients or prospective clients of the company. This meant he could not do the work for anyone who might ever want that type of work done. The wording is too broad. It produces the fundamental inequity of terminating an employee and then essentially forbidding them to work in their chosen profession. Judicial relief is an excellent idea, but it takes 2 to 3 years and costs a considerable amount of money. It is a simpler solution to do what most states do and make such agreements null and void in the event of involuntary termination.
Chairman Townsend:
Mr. Powers, please review this amendment for our work session on Friday to see if this situation is covered by existing statutes. Mr. Ostrovsky, do you have any comment on Senator Carlton’s amendment?
Mr. Ostrovsky:
I am representing the Nevada Resort Association in this matter. It is my understanding this bill affects only state and local governments and public service corporations. Because it is limited to those entities, I did not participate in the bill. Regarding Senator Carlton’s amendment, in 2000 the Nevada Supreme Court ruled, in Cone v. Nevada Service Employees Union [116 Nev. 473 (2000)], that it was lawful to charge a fee for the purposes of representing someone in a grievance matter. On the other hand, in a 1974 case, Independent Guards Association Local No. 1 v. Wackenhut Services, Incorporated [90 Nev. 198 (1974)], the Nevada Supreme Court said it was illegal to charge a service fee. This bill would overturn that decision by allowing the employer to bargain such a clause into the contract. A union still has the ability to charge someone fees under Nevada law for direct services. This mirrors to some extent what the National Labor Relations Board does today with private employers.
Chairman Townsend:
Is this amendment codifying the 2000 Nevada Supreme Court decision or does it change it?
Mr. Powers:
First, and maybe Mr. Ostrovsky would like to clarify, this bill is not limited to state and local governments. As I read subsection 2, it’s any person who has in service a person under a contract of hire. Although it says, “including without limitation a public service corporation,” I don’t read the language to limit only to state and local government employers. Second, I would need more time to compare the language of the amendment to current case law and determine the effect.
Mr. Ostrovsky:
I will talk with committee’s counsel off the record about this before Friday.
Chairman Townsend:
We will take this matter up at the work session on Friday. There are a number of issues to be cleared up before then, including the impact of the case Mr. Ostrovsky referred to, public versus private, and the meaning of “bargaining unit” in section 3, subsection 2, of the bill. We will close the work session on A.B. 182 and open the work session on A.B. 220.
ASSEMBLY BILL 220 (1st Reprint): Makes various changes to provisions governing contractors. (BDR 54-502)
Senator Carlton:
We held a subcommittee on this yesterday. We wanted to protect people from bad contractors, and we wanted to give the contractors’ board the opportunity to find the red flags before problems occur. Our conceptual amendment to deal with this is included in the workbook (Exhibit K).
Ivan R. “Renny” Ashleman, Lobbyist, Southern Nevada Homebuilders Association:
I attended yesterday’s subcommittee and think this is a good shot at the concept. However, I do still have some concerns. Item 1 says a financial audit will be required when disciplinary proceedings of any kind are initiated. This might be a little too broad. There are all sorts of ways you can be involved in an investigation or complaint without being found guilty of anything significant. The board already has the ability to suspend a license without a hearing in an emergency. This is found in NRS 624.291. I do not think it is necessary to skip the usual due process.
Senator Carlton:
The provision in item 1 does not impose discipline. It merely requires the contractor to supply financial documents. This is one of the red flags we were talking about.
Senator Hardy:
We heard testimony from home owners who had problems with the construction of their homes. Most of the problems they had would have been addressed if they had used a construction control account. Giving the home owner the option of having construction overseen by a construction control company might avoid these problems on the front end.
Mr. Ashleman:
We discussed this extensively in the subcommittee. I have been informed by some contractors that they would stop offering upgrades if they were required to do construction control accounts, which cost roughly 1.5 percent.
Senator Hardy:
So it would probably be better to deal with the bad actors rather than impose it on the industry as a whole.
Mr. Ashleman:
My concern is that as it is now written, if a disciplinary proceeding is initiated, the board asks for financial information and requires a construction control account, all without a hearing. This is a due process issue.
Mr. Powers:
The language in subsection 2 of the conceptual amendment specifically says, “The board shall determine whether to require the contract.” It’s not required in every circumstance. The board must just make an independent determination in each circumstance whether to require the construction control account.
Senator Hardy:
I think we need something more substantial than the initiation of disciplinary proceedings to trigger the financial audit. I like having a construction control account as a remedy. This makes a lot of sense and will resolve a lot of problems, with perhaps a further penalty of requiring a payment or performance bond.
Mr. Ashleman:
You do not need both a construction control account and a performance or payment bond. It should be either one or the other.
Senator Neal:
As I recall, the bond was the suggestion of a testifier who had a builder walk away from an unfinished home. A performance bond might have solved his problem, whereas a construction control account would not.
Chairman Townsend:
Mr. Ashleman, I know your organization does not want any bad actors in your membership, and you pride yourselves on the great growth in southern Nevada and the quality of your workmanship. However, this committee has recently suffered through a great deal of testimony on less-than-adequate construction in the residential arena. As a result, we are running out of patience on two matters: the initial licensing of individuals and whether they are capable of meeting the professional and financial standards, and the tremendous reluctance of individuals to respond to construction issues. This proposal is the result. As you know, a handful of bad apples ruins it for everybody. Since the contractors’ board seems unable to weed out the bad apples on behalf of the consumers, we enlisted your organization to hold your members to a higher standard.
Mr. Ashleman:
We are not opposed to legislation in this area. I am still concerned about the due process issue and do not want the contractors’ board to be inundated with meaningless cases. I would also like to point out that any costs added to the cost of construction will be borne by consumers.
Senator O'Connell:
Which of these options would be the least expensive for the consumer?
Mr. Ashleman:
The construction control method is likely to be cheaper. It is also widely obtainable, whereas performance bonds and payment bonds are more expensive and harder to obtain. Construction control accounts also protect 100 percent of the money, since they ensure the work is done properly and on time before funds are dispensed. I recommend it because I believe it is truly the best way to avoid problems, not because I think it is nicer for the industry.
Senator Neal:
The bonds were my idea. I am willing to omit them if there is a better way to deal with this issue.
Senator Hardy:
My concern with regard to the performance and payment bonds is that they might put some fledgling companies out of business. A construction control account provides significant consumer protection against an unproven company. I am also concerned about the due process issue. I recommend we reword it to say that if a contractor has been engaged in residential construction for less than 24 months, or if the contractors’ board has imposed disciplinary action against a contractor, then they can consider a construction control account. I would then take out the performance and payment bonds altogether.
I would also like to look at item 4 in more detail. It gives the board the ability to limit the amount of construction a contractor does. I was under the impression the board already had the charge of looking at the amount of construction being done by individual contractors. If they are not, we need to clarify that.
Senator Carlton:
There was no intent to do away with due process. The contractors’ board already has the option to ask for financial documents. This amendment simply makes it mandatory if any discipline has been initiated. I would have concerns about making this process wait until the discipline has been imposed. The point of the amendment is to catch problems as early as possible. I would like Mr. Powers to address the due process issue.
Mr. Powers:
Reviewing the conceptual amendment, I don’t see any constitutional issues with regard to due process. The reason is that there is no disciplinary action in any of the concepts shown through 1, 2, 3, and 4. For example, in subsection 1 of the conceptual amendment, what it is is that if the contractors’ board has initiated disciplinary proceedings, they have to require the contractor to supply financial documents. Supplying financial documents is in no way a disciplinary action. Indeed, the Legislature could require all contractors to provide financial documents all the time. It’s not a form of disciplinary action, so constitutional due process would not attach to that issue. And the same with 2, 3, and 4. All of these are actions taken by the contractors’ board to ensure the performance and guarantee that consumers are protected, but none of them results in a deprivation of a constitutionally protected right, such as a revocation of a license or suspension of a license, the payment of a fine. None of that occurs here.
Senator Hardy:
Are you saying due process is taken care of by the phrase in item 2, “… the board shall determine whether to require … “?
Mr. Powers:
The board has to make an independent determination at this point whether to require the contractor to utilize a construction control. But because no adverse rights are being determined and the contractor isn’t being subject to a deprivation of a constitutionally protected right, unless the statute provides for a hearing, then the hearing wouldn’t be required. The contractors’ board would be able to make that determination based strictly on the financial documents.
Senator Hardy:
So a hearing would not necessarily be required by this language. How would the board determine?
Mr. Powers:
The board can make an independent determination based on the financial statement provided. They can make a determination at a public hearing, but a public hearing is not an adversarial hearing. So they can make a determination at a public hearing and their determination would be part of the record, but there’s not necessarily an opportunity for the contractor to come in and argue his case one way or another. Unless the statute provided for that opportunity, or the contractors’ board decided that opportunity was appropriate.
Senator Hardy:
I would be more comfortable if the action was triggered after disciplinary action was imposed rather than when it was initiated.
Senator Neal:
Do you think this would better resolve the consumer’s complaint?
Senator Hardy:
No, but it would better protect the rights of contractors.
Chairman Townsend:
I have no problem with the amendment as written. The board is only asking for a financial statement.
Mr. Ashleman:
My problem is the combination of items 1 and 2. Between the two of them, you end up with a construction control account or the inability to offer improvements without a hearing at all. At some point you ought to have a right to make your case before the board.
Chairman Townsend:
If we leave item 1 as is and change item 2 to read, “… the Board shall determine, after a hearing, whether to require …”, would that meet your needs?
Mr. Ashleman:
Yes.
Senator Neal:
We did not particularly want the contractor exposed in a public hearing.
Chairman Townsend:
We will take this up again in Friday’s work session. Senator Carlton, Senator Neal, and Senator Hardy, please meet to agree on the language. I would like to make sure there is a representative from the contractors’ board at the Friday session. I would also like to see someone from the Builders’ Association of Northern Nevada at the work session.
We will close the work session on A.B. 220 and open the work session on A.B. 258.
ASSEMBLY BILL 258 (2nd Reprint): Revises provisions relating to cosmetology. (BDR 54-912)
Senator Carlton:
I do not feel there is any need to process this bill. The concerns addressed were taken care of in Senate Bill (S.B.) 372. I have spoken to a number of people from the health department who were involved in this and the sponsor of the bill, and they understand.
SENATE BILL 372 (1st Reprint): Revises provisions relating to cosmetology. (BDR 54-886)
SENATOR HARDY MOVED TO INDEFINITELY POSTPONE A.B. 258.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
We will open the work session on A.B. 343.
ASSEMBLY BILL 343 (1st Reprint): Makes various changes related to sellers of travel. (BDR 52-881)
Chairman Townsend:
There is a document in the workbook provided by those who worked on this bill (Exhibit K). The first two pages are amendments agreed to by all parties, and the last page is disputed items. This bill was already amended once. Why are there so many amendments?
Jan-Marie Brown, President, Organization for Professional Travel Agents:
Once we looked the bill over, the travel agent section had many issues that were unclear.
Chairman Townsend:
We will review the disputed items one at a time.
Patricia Jarman-Manning, Commissioner, Consumer Affairs Division, Department of Business and Industry:
We could not reach agreement on section 4 requiring the phrase, “Nevada Seller of Travel/Registration # ” in advertising. Yesterday I received a fax on my home fax machine from a Florida travel agent showing how this phrase is used in their advertising (Exhibit M). The suggestion was to instead use “NEV.ST# ,” and I do not agree to this. No one would know what that means.
Chairman Townsend:
What is the problem with the longer phrase?
Ms. Brown:
Spelled out with the number at the end, it adds considerable cost to Yellow Page and newspaper advertising.
Ms. Jarman-Manning:
This is already a requirement for other professionals. All the ads for contractors, for example, include the phrase, “State Contractors’ License # .”
Ms. Brown:
This is not true in Reno and Carson City.
Senator Hardy:
This comes down to what a reasonable person can understand. In context, “NEV.ST# ” is clearly some sort of official number. I understand this abbreviated form is copied from what they do in other states.
Chairman Townsend:
The next item is an amendment requiring consumers to pay a mandatory $25 fee to file a complaint.
Ms. Jarman-Manning:
I want to go on the record that I think it’s appalling. It’s discrimination to isolate one particular group of consumers and charge them to file a complaint after they have possibly been aggrieved. There’s no one else in the State of Nevada or who does business with the State of Nevada who has to file and pay a fee to file a complaint against any particular industry. I just want that on the record.
Assemblyman John C. Carpenter, Assembly District No. 33:
I added that provision. My purpose was to help cut down frivolous complaints, and also to give the Consumer Affairs Division funds to investigate these claims. The amount is reasonable in my opinion.
Chairman Townsend:
Ms. Jarman-Manning, do you have the jurisdiction to dismiss frivolous claims?
Ms. Jarman-Manning:
Yes. This money would go to the General Fund in any case. The only way to give us more funds would be to increase our budget.
Chairman Townsend:
Item 3 changes the notice of a complaint from 30 days to 10 days, and changes the notice from “the injured person” to “all interested parties.” This is in section 7, subsection 4, paragraph (b) of the bill.
Ms. Brown:
We have discussed and are willing to accept 10 days as long as all interested parties are notified at the same time.
Ms. Jarman-Manning:
I agree with that.
Chairman Townsend:
Item 4 changes the time for the division to respond from 6 months to 60 days. This is in section 7, subsection 7, of the bill.
Mr. Carpenter:
I believe these matters must be resolved within 60 days.
Ms. Jarman-Manning:
The division may open and investigate the complaint within 60 days, and we certainly try to get them done as soon as possible. However, if it is a complicated case and involves the attorney general’s office or some other regulatory body, 6 months is not an abnormal length of time. We will certainly work as expeditiously as we possibly can, but we do not want the 60-day window imposed on us.
Chairman Townsend:
Suppose we specify that you will resolve all complaints within 60 days unless you notify the interested parties that it will be as much as 6 months. As long as you tell them how long it will be, I think that is fair to the consumer and to you, given your limited resources.
Ms. Jarman-Manning:
We will try to work with that. When we send out our initial paperwork, we currently tell the consumer it may take up to 90 days to complete the process. We are constantly in contact with the business and the consumer.
Chairman Townsend:
Item 5 concerns providing a written statement explaining the recovery fund. This is in section 9 of the bill.
Ms. Jarman-Manning:
We want the seller to give the buyer a copy of this statement when they issue the ticket.
Chairman Townsend:
My experience suggests this document will be tossed away unread.
Ms. Brown:
My suggestion is to have the statement conspicuously posted in the place of business and on the Web site, and also require the seller of travel to disclose this information on request.
Ms. Jarman-Manning:
Many reservations are made over the phone. In this case, the statement would have to be read to the consumer.
Chairman Townsend:
Some of this comes down to being an intelligent consumer. Item 6 changes the definition of “seller of travel” by including employees of agents and auto clubs. Section 13, subsection 2, paragraphs (a) and (e), currently exempt those groups from registration.
Kathleen Delaney, Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General:
The attorney general’s office would like to have all employee agents and motor club agents registered as sellers of travel. In order to do that, we must delete lines 15 through 22 and 29 on page 8 of the bill. The issue of whether the assessment should be paid by all registered sellers of travel is a separate issue.
Lisa A. Foster, Lobbyist, California State Automobile Association (dba AAA Nevada):
We have asked to keep our exemption because our travel agency is already regulated by the insurance commissioner under the Motor Club Act. We post a $100,000 bond covering all activities of our travel agency.
Gail Kosach, Destinations Incorporated:
Travel agencies would also like to keep our exemption. Claims and complaints are handled by the owner of the agency, not the individual employees. The bill does not specifically exempt them from the $100 assessment, which in the case of a large agency would be a huge financial burden.
Chairman Townsend:
Am I right in thinking there is an agency relationship between the employee and employer of a travel agency, such that the employer is responsible for the actions of the employee?
Mr. Powers:
That is correct, Mr. Chairman. In certain circumstances, the employer can be responsible for the acts of the employee.
Bonnie McDaniel, A Quick Trip Incorporated:
I have spoken with approximately 30 travel agencies in southern Nevada this week. We would like to keep the exemption because of the $100 assessment. We would like to have every agent pay the $25 registration fee and be registered, with their registration number being composed of the agency’s number and an individual number.
Chairman Townsend:
This is a new proposal. Have you not been involved in the discussions on this bill?
Ms. Kosach:
This is not a suggestion that came up in the conference call last week.
Mr. Carpenter:
We discussed this bill quite a bit in the industry and everyone had a chance to give us their input. In my opinion it would be very difficult to register all employee agents. It is enough to register those in control of the agencies. The bill as it is written is a good foundation to start from. If problems arise, they can come back next session and change it.
Ms. Jarman-Manning:
It is not onerous for the division to register agents and businesses and keep them separate. We think it is vital for all sellers of travel to be registered. We need to know who is out there providing this service.
Ms. Kosach:
I do not understand what purpose that serves.
Chairman Townsend:
Is it true that all parties agree to the first two pages of “agreed” items?
Ms. Kosach:
We thought we had agreed that on page 4, lines 31 through 35 regarding subrogation of bonds were to be deleted entirely. This is section 8, subsection 6, of the bill. The third bullet point on page 2 of the “agreed” items instead deletes only the phrase, “including, without limitation, the right to collect from a surety bond or a cash bond.” We are not in favor of open-ended subrogation by the Consumer Affairs Division. This should be more specific.
SENATOR NEAL MOVED TO LEAVE SECTION 4 OF A.B. 343 AS WRITTEN.
SENATOR SHAFFER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR HARDY VOTED NO. SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
SENATOR NEAL MOVED TO REJECT THE PROPOSED AMENDMENT OF A.B. 343 TO REQUIRE A $25 FEE TO FILE A COMPLAINT.
SENATOR HARDY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
SENATOR HARDY MOVED TO AMEND A.B. 343 TO REQUIRE THE RECOVERY FUND STATEMENT BE POSTED IN THE BUSINESS AND ON THE WEBSITE.
SENATOR CARLTON SECONDED THE MOTION.
Senator Neal:
This does not cover reservations made over the phone. Not every seller has a Web site, and not every consumer has access to a Web site.
Chairman Townsend:
There would be no way to enforce a law requiring a verbal recitation of consumers’ rights.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
SENATOR NEAL MOVED TO LEAVE SECTION 8 OF A.B. 343 AS WRITTEN.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Tony Sanchez, Attorney:
The effective date of this bill was originally October 1, 2003, and the proposed amendment changes that to January 1, 2004. Legislation in the 71st Legislative Session requiring agents to get surety bonds had an effective date of October 1. If this bill is effective January 1, those with bonds will have to renew them for another year to cover the additional 3 months.
Ms. Jarman-Manning:
We asked for a starting date of January 1 to give the division time to implement these new procedures.
Ms. Delaney:
An easy compromise is to make the effective date October 1 for issues such as this and January 1 for implementation of the bill.
Mr. Powers:
My recommendation would be that the entire bill is effective October 1, 2003, but that no one can file a claim to recover from the recovery fund sooner than January 1, 2004. The reason being, from October 1, 2003, to January 1, 2004, you don’t want to cut off someone’s right to recover under the recovery fund. That would give the time for the division to put their procedures in place, and then any claims that arose between October 1 and January 1 could be processed after January 1, 2004.
SENATOR NEAL MOVED TO AMEND THE EFFECTIVE DATE OF A.B. 343 TO OCTOBER 1, 2003, WITH THE PROVISION THAT NO CLAIMS COULD BE FILED UNTIL JANUARY 1, 2004.
SENATOR O’CONNELL SECONDED THE VOTE.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Mr. Powers:
On the issue of subrogation, if you take out the subrogation clause, you essentially permit the injured person to have a double recovery. The reason you have a subrogation clause is that the person recovers from the fund, and then he gives up his rights to a civil action to the division, who then can go after the seller of travel. If you take out the subrogation rights, the injured person goes to the fund, recovers the money from the fund, and they still have a civil action against the seller of travel, and they can go and recover against the seller of travel as well.
Ms. Kosach:
My concern is the division could go after personal assets of an agency owner. We have paid to establish and sustain this fund, but the division can go after us any way they see fit. If there is to be subrogation, we want it clearly defined where they are going to get the money.
Mr. Powers:
The rights they are going to be subrogated to are the rights that the injured person would otherwise have, and whether or not you can go after personal assets is based on the civil law and what you could get with a civil action. … The subrogation provision won’t change the liability of the seller of travel. It just changes the person who can go after the seller of travel in suit.
With regard to the amendment proposed in tab B of the workbook (Exhibit K), I talked to legislative counsel. Under joint standing rule no. 14.7, this would not be germane to this bill, and therefore legislative counsel could not process it.
SENATOR NEAL MOVED TO AMEND AND DO PASS A.B. 343.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
We will open the work session on A.B. 493.
ASSEMBLY BILL 493: Provides for money collected by Commissioner of Financial Institutions and Division of Financial Institutions of Department of Business and Industry to be deposited to and expended from the Fund for Financial Institutions. (BDR 55-463)
Chairman Townsend:
I have an amendment to offer which is included in the workbook (Exhibit K). The committee was uncertain as to the need for the fund referred to in the bill. During discussion, it became clear that it was hard for the various licensees regulated by the Division of Financial Institutions to figure out how the assessments were being calculated. This amendment speaks to that.
John Sande III, Lobbyist, Nevada Bankers Association:
I have talked to people from the Division of Financial Institutions and the Budget Division. There is no need to have this fund as long as the commissioner has the authority to assess people for the cost of the financial institutions division. We would support the amendment with the understanding that the rest of the bill would not be necessary.
SENATOR NEAL MOVED TO AMEND A.B. 493 AS A WHOLE BY DELETING ALL SECTIONS AND INSERTING THE AMENDMENT DATED MAY 11, 2003.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
We will open the work session on A.B. 453.
ASSEMBLY BILL 453 (1st Reprint): Makes various changes to provisions relating to insurance. (BDR 57-546)
Alice A. Molasky-Arman, Commissioner of Insurance, Division of Insurance, Department of Business and Industry:
This amendment was prompted by Assemblywoman Buckley’s concern about a recent Nevada Supreme Court decision in which a claimant against underinsured motorist coverage was denied that coverage, and the denial was upheld by the Nevada Supreme Court. The claim was originally denied because the tortfeasor was a public entity, and the public entity was subject to a $50,000 statutory cap on damages. This corrects an error that was never intended with the creation of underinsured or uninsured motorist coverage.
Chairman Townsend:
Amendments were also offered by Messrs. Hillerby, Jayne, Wadhams, Kim, and Ostrovsky. These amendments were incorporated into the draft bill in the workbook (Exhibit K).
Ms. Molasky-Arman:
I have reviewed the amendments and am in agreement with them.
Mr. Hillerby:
I am representing the American Council of Life Insurers in this matter. This amendment is in regard to nondeferral of individual annuities. There has been a change at the national level, and this brings us in line with that.
Mr. Powers:
That is sections 56.7 and 56.9, on pages 10, 11, and 12.
Scott Young, Committee Policy Analyst:
Before the amendment in the workbook, there is an e-mail that details where these amendments are located.
Mr. Kim:
I am representing the Sierra Insurance Company, Incorporated, in this matter. Our amendments are on pages 5 and 6, and they pertain to cancellation provisions related to workers’ compensation. They affect section 55.2.
Mr. Ostrovsky:
We requested the bill be changed to show the insurance commissioner has adopted the National Council on Compensation Insurance (NCCI) guidelines for renewal of workers’ compensation policies. The bill as written would conflict with that, and since we have agreed to use those guidelines, we took out the conflicting piece.
There is a section that was not previously discussed before this committee. Section 96 directs the Governor’s office to prepare a study of the feasibility of the potential benefits of consolidating the powers and duties of the Division of Insurance and the Division of Industrial Relations. The recommendations of this study would come back to the Legislature in 2005. The Governor’s office has expressed their support of this section, as has the Division of Industrial Relations.
I have one final amendment to offer (Exhibit N). It has to do with the de‑mutualization language we adopted last year. There are two issues that need correction. One is the bill required mutual companies to be de-mutualized into a single intermediate stock company. We want that to read, “… one or more intermediate stock companies.” This is to be done with the approval of the insurance commissioner; it does not change her powers and authority to approve the de-mutualization. The second issue is that we authorized management incentive compensation programs, but not employee incentive compensation programs. We would like to add that employees can participate, not just management. I have shared these with the insurance commissioner, and she has no objection to either.
James L. Wadhams, Lobbyist, American Home Shield:
I have an amendment to NRS 690B and 693. This amendment assigns household appliance repair and warranty companies to NRS 690C. They are still regulated.
SENATOR NEAL MOVED TO AMEND AND DO PASS A.B. 453 WITH THE AMENDMENTS DISCUSSED.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CARLTON ABSTAINED FROM THE VOTE. SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
[Exhibit K also includes information regarding A.B. 352 and A.B. 431.]
There being no further business, the meeting is adjourned at 11:17 a.m.
RESPECTFULLY SUBMITTED:
Lynn Hendricks,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: