Guinn’s privatization of workers’ compensation passes

Thursday, May 27, 1999 | 10:23 a.m.

CARSON CITY -- Gov. Kenny Guinn's plan to turn the state's 86-year-old workers' compensation program into a private company took a major step toward final passage Wednesday in the Legislature.

By a 38-4 vote, the Assembly approved Senate Bill 37 to convert the Employers Insurance Co. of Nevada, formerly the State Industrial Insurance System, into a private company in January.

As part of a compromise with the governor, the bill also includes a provision to create a new agency where health care consumers can take complaints against their insurers.

The bill returns to the Senate for agreement on amendments tacked on by the Assembly that restores some benefits to injured workers. Sen. Randolph Townsend, R-Reno, who drafted the original bill, thinks the Senate will go along with the changes and send the bill to Guinn.

Assemblywoman Barbara Buckley, D-Las Vegas, whose Commerce and Labor Committee drew up the current version, said the bill includes many safeguards that protect both the employer and state worker.

Starting July 1 private companies would be permitted to compete with Employers Insurance, which expects to lose as much as 50 percent of its business. Anywhere from 300 to 600 employees of the 900-worker staff will have to be laid off.

The bill includes early retirement buyouts, preference in getting other state positions and $2 million for retraining for those who may lose their jobs.

The state would pay $775 million to a reinsurance company to assume its $1.6 billion liability for current claims against the system by workers who may draw benefits for as long as 40 years.

That would relieve the state of any debt.

SB37, Buckley said, also would restore $25 million to $40 million in benefits to injured workers that were eliminated in 1993 when the system was near bankruptcy. The benefits would include an almost 10 percent increase in payments for partial permanent disability and extended rehabilitation programs.

In a compromise between Guinn and legislators who were wary of the plan to privatize workers' comp, the bill also would create a new cabinet level position under Guinn to deal with complaints from injured workers and from other consumers who have grievances with their health maintenance or other insurance coverage.

Buckley, who wrote an Assembly bill to create such an office that did not pass, pushed hard to include the health care ombudsman in the workers' comp bill. "This is a great step forward in our ongoing effort to improve the quality of health care in Nevada," she said.

The office will be staffed from people now working for Employers Insurance and from the state Health Division.

"The winners in this agreement are the taxpayers of Nevada and health care consumers throughout our state," Guinn said. "We have taken a major step forward in ensuring Nevadans have quality health care and at the same time relieved the state of a $1.6 billion liability."

Assemblywoman Chris Giunchigliani, D-Las Vegas, one of those who voted against the bill, said she was uncomfortable with eliminating the state's program, in which about 45,000 employers pay premiums to cover medical and rehabilitation costs for workers injured on the job. In exchange for the coverage, workers cannot sue employers over on-the-job injuries.

While she appreciated the restoration of benefits, Giunchigliani said there were still lots of unanswered issues. She noted the Internal Revenue Service must agree there is no tax or minimal tax liability in the conversion of the debt to a private company.

Assemblymen David Goldwater, D-Las Vegas, and Bob Price, D-North Las Vegas, predicted there would be a need for a state fund in the future. Assemblyman Tom Collins, D-North Las Vegas, warned other legislators there's a lot of risk in taking this step.

But Buckley said if it doesn't work, the money that Employers Insurance Company has will be in a trust fund to pay the claims of the workers.