MINUTES OF THE MEETING
LEGISLATIVE COMMISSION’S SUBCOMMITTEE CONCERNING THE STATUTORY LIMITATION ON DAMAGES THAT MAY BE AWARDED
TO A PERSON IN A TORT ACTION AGAINST THE STATE OF NEVADA,
ITS POLITICAL SUBDIVISIONS OR CERTAIN OTHER PERSONS
(Assembly Concurrent Resolution No. 46, File No. 140, Statutes of Nevada 1999)
April 19, 2000
Carson City, Nevada
The fourth meeting of the Legislative Commission’s Subcommittee Concerning the Statutory Limitation on Damages that may be Awarded to a Person in a Tort Action Against the State of Nevada, Its Political Subdivisions or Certain Other Persons (Assembly Concurrent Resolution No. 46, File No. 140, Statutes of Nevada 1999) for the 1999-2000 interim was held on Wednesday, April 19, 2000, at 9:30 a.m., at the Legislative Building, 401 South Carson Street, Room 4100, Carson City, Nevada. The meeting was video conferenced to the Grant Sawyer State Office Building, 555 East Washington Avenue, Room 4401, Las Vegas, Nevada. Pages 3 and 4 contain the “Meeting Notice and Agenda” for this meeting.
SUBCOMMITTEE MEMBERS PRESENT:
Assemblyman Bernie Anderson, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Mike McGinness
Senator Michael A. Schneider
Assemblyman John C. Carpenter
Assemblyman Jerry D. Claborn
Assemblywoman Genie Ohrenschall
SUBCOMMITTEE MEMBERS EXCUSED:
Senator Dean A. Rhoads
ADVISORY COMMITTEE MEMBERS PRESENT IN CARSON CITY:
Bill Bradley, Representing the Nevada Trial Lawyers Association
Mike Davidson, Representing the Nevada Association of Counties
P. Mark Ghan, Representing the Office of Attorney General
Bill Isaeff, Representing the Nevada League of Cities
Madelyn Shipman, Representing the Nevada Association of Counties
ADVISORY COMMITTEE MEMBERS PRESENT IN LAS VEGAS:
J.R. Crockett, Jr., Representing the Nevada Trial Lawyers Association
Bill Hoffman, Representing the Nevada Association of School Boards
Shauna Hughes, Representing the Nevada League of Cities
LEGISLATIVE COUNSEL BUREAU STAFF PRESENT:
Scott Young, Principal Research Analyst
Risa B. Lang, Principal Deputy Legislative Counsel
Roxanne Duer, Senior Research Secretary
MEETING NOTICE AND AGENDA
Name of Organization: Legislative Commission’s Subcommittee to Study the Statutory Limitation on Damages that may be Awarded to a Person in a Tort Action Against the State of Nevada, its Political Subdivisions or Certain Other Persons (A.C.R. 46)
Date and Time of Meeting: Wednesday, April 19, 2000
Place of Meeting: Legislative Building
401 South Carson Street
Carson City, Nevada
Note: Some members of the Subcommittee may be attending the meeting and other persons may observe the meeting and provide testimony, through a simultaneous video conference conducted at the following location:
Grant Sawyer State Office Building
555 East Washington Avenue
Las Vegas, Nevada
If you cannot attend the meeting, you can listen to it live over the Internet. The address for the legislative web site is For audio broadcasts, click on the link “Listen to Meetings Live on the Internet.”
I. Opening Remarks and Introductions
Assemblyman Bernie Anderson, Chairman
*II. Approval of Minutes for the Subcommittee’s Meeting in Las Vegas, Nevada, on February 23, 2000
III. Public Testimony
*IV. Work Session — Discussion and Subcommittee Action on Recommendations to the 71st Session of the Nevada Legislature (see Attached “Work Session Document” for a Summary of Proposals Compiled from Previous Subcommittee Meetings and Correspondence)
*Denotes items on which the Subcommittee may take action.
Note: We are pleased to make reasonable accommodations for members of the public who are disabled and wish to attend the meeting. If special arrangements for the meeting are necessary, please notify the Research Division of the Legislative Counsel Bureau, in writing, at the Legislative Building, 401 South Carson Street, Carson City, Nevada 89701-4747, or call Roxanne Duer, at 775/684-6825, as soon as possible.
Notice of this meeting was posted in the following Carson City, Nevada, locations: Blasdel Building, 209 East Musser Street; Capitol Press Corps, Basement, Capitol Building; City Hall, 201 North Carson Street; Legislative Building, 401 South Carson Street; and Nevada State Library, 100 Stewart Street. Notice of this meeting was faxed for posting to the following Las Vegas, Nevada, locations: Grant Sawyer State Office Building, 555 East Washington Avenue; and Clark County Office, 500 South Grand Central Parkway.
LEGISLATIVE COMMISSION’S SUBCOMMITTEE
CONCERNING THE STATUTORY LIMITATION ON DAMAGES
THAT MAY BE AWARDED TO A PERSON IN A TORT ACTION
AGAINST THE STATE OF NEVADA, ITS POLITICAL SUBDIVISIONS
OR CERTAIN OTHER PERSONS
(Assembly Concurrent Resolution No. 46, File No. 140, Statutes of Nevada 1999)
Work Session Document
April 19, 2000
This work session document was prepared by the staff of the A.C.R. 46 Subcommittee. It contains a summary of major recommendations which have been presented in public hearings and correspondence during the course of the study. It is designed as a working document to assist the members of the Subcommittee in making decisions during the work session.
The possible recommendations listed in this document do not necessarily have the support or opposition of the Subcommittee. These proposals simply are compiled and organized so the members may review them to decide if they should be adopted, changed, rejected, or considered further. The source of each recommendation is noted in parentheses. Any recommendations adopted by the Subcommittee will be submitted to the Legislative Commission for consideration. The recommendations, if any, will be highlighted in the Subcommittee’s report, and any recommendations for legislation will be included in the report as bill draft requests (BDRs). The report will be made to the 71st Session of the Nevada Legislature.
Subsection 2 of Nevada Revised Statutes (NRS) 218.240 provides that an interim committee or Subcommittee appointed by the Legislative Commission may request no more than ten BDRs. However, Subcommittees may request the preparation of additional legislative measures if the Legislative Commission approves each additional BDR by a majority vote.
Under the provisions of A.C.R. 46, the Subcommittee may adopt a recommendation only if a majority of the Senators and a majority of the Assemblymen on the Subcommittee concur. Given the foregoing requirement, the Subcommittee may wish to consider at the outset whether there is sufficient support for changing the existing statutory cap prior to examining specific proposals to effectuate any change.
Recommendations for Changing the Existing Statutory Tort Damage Cap
1. Enact legislation effective July 1, 2001, eliminating the cap for damages incurred for medical expenses and lost wages but retaining the existing cap of $50,000 set forth in NRS 41.035 until July 1, 2003, for all other types of damages (this includes, without limitation, pain and suffering, loss of consortium). Additionally, include a provision to:
a. Increase the cap set forth in NRS 41.035 for counties with a population greater than 100,000 to:
i. $75,000 for incidents occurring on or after July 1, 2003; and
ii. $100,000 for incidents on or after July 1, 2005; and
b. Increase the cap set forth in NRS 41.035 for counties with a population less than 100,000 to:
i. $60,000 for incidents on or after July 1, 2003; and
ii. $75,000 for incidents on or after July 1, 2005. (Proposed by Chairman Bernie Anderson at the February 26,2000, meeting).
2. Enact legislation establishing a special fund for governmental entities that service a population of less than 100,000, including those governmental entities which are located within counties with a population of more than 100,000. (Proposed by Chairman Bernie Anderson at the February 26, 2000, meeting.)
3. Enact legislation to amend NRS 41.035 to increase the cap on damages and to create a special fund for persons injured by public agencies as follows: (Proposed by Bill Isaeff representing the Nevada League of Cities, and Wayne Carlson of the Nevada Public Agency Insurance Pool in an e-mail dated March 22, 2000, a copy of which is attached hereto as Exhibit A; supported [except as noted] by the Nevada Association of Counties per a letter from Robert S. Hadfield, Executive Director, dated March 22, 2000, a copy of which is attached hereto as Exhibit B; supported by the Nevada Association of School Boards per Bill Hoffman, representative for Nevada Association of School Boards.)
a. Increase Tort Cap and Create Special Fund for Certain Cases.
i. Increase the cap set forth in NRS 41.035 and limit the amount of damages in tort actions: For any accident or occurrence on or after October 1, 2001, except as provided in Recommendation No. 3.a.ii, an award for tort damages against a present or former officer or an employee of the state or any political subdivision, immune contractor or state legislator arising out of an act or omission within the scope of his public duties or employment may not exceed $75,000, exclusive of interest computed from the date of judgment, to or for the benefit of any claimant, subject to a total limit of $150,000 in the aggregate for all separate, distinct, and independent causes of action or number of state actors involved for any one person arising out of said accident or occurrence. An award may not include any amount for prejudgment interest or as exemplary or punitive damages.
ii. Certain persons may apply for money from special fund: For any accident or occurrence on or after October 1, 2001, a person injured in any occurrence involving a public agency, including the state or any political subdivision of the state, which results in paraplegia, quadriplegia, a persistive vegetative state, permanent total physical incapacitation from any gainful employment or death, may apply to the Special Fund for Persons Injured by Public Agencies for payment up to $250,000 for medical expenses and loss of earnings damages combined that exceed the amount resulting from the application of the limitation on damages pursuant to NRS 41.035 concluded by settlement or judgment.
b. Eligibility for Payment from Special Fund.
i. Determination of damages: Eligibility to make application to the Special Fund for medical expenses and loss of earnings damages must be certified in writing to the Board of Trustees by the public agency in the settlement agreement or be adjudicated by the court. In the event the parties to a settlement cannot agree as to the amount of such damages, the parties may agree to petition the court for a determination of the amount of damages incurred, which determination shall be binding upon the parties. In the alternative, either party may request a jury trial to determine both liability and damages, if any. “Medical expenses and loss of earnings damages” means damages that are specifically claimed and proven and shown to have been sustained in the circumstances of the particular wrong and may include future loss of earnings and medical expenses.
ii. Application process: The Board of Trustees of the Special Fund shall review the application and approve or disapprove reimbursement of all or part of the unpaid medical expenses or loss of earnings damages. Applications must be filed with the Board within 30 days after a final determination of damages has been made. If reimbursement or partial reimbursement is approved, payment of such damages to the person injured must be made from the fund, to the extent money is available in the fund for this purpose. Within 30 days after the close of a fiscal year, the Board shall determine the amount of money on hand as of the close of the fiscal year. If claims against the fund in any given year exceed the amount of money available at the close of the fiscal year, the available money shall be distributed on a pro rata basis among all recipients eligible in that year. The method of determining the pro rate division of money in the Special Fund shall be fixed by regulations adopted by the Board. An applicant is eligible to receive payment from the Special Fund for an accident or occurrence only once. The determination by the Board of Trustees as to the amount of money available for reimbursement or partial reimbursement of medical expenses and loss of earnings damages is made in the sole discretion of the board and is final and binding on the applicant.
iii. The application to the Board must be in such form and contain such information as the Board requires by regulation. No application will be processed without a certification of medical expenses and loss of earnings damages by the public agency.
c. Creation and Powers of Board of Trustees.
i. The Board of Trustees shall consist of five members of which one member shall be from each county with a population of 100,000 or greater, two shall be from counties with a population of less than 100,000, and one shall be a representative from the State Board of Examiners. The Board shall have the same powers as the Board of Trustees for the Fund for Hospital Care to Indigent Persons as set forth in NRS 428.205. [If the state does not participate in the Special Fund as outlined in Section e below, then the proposed revisions to NRS Chapter 41 and the provisions of the Special Fund will not apply to the state and the fifth member of the Board shall be from a county with a population of less than 100,000.]
ii. The existing Board of Trustees for the Fund for Hospital Care to Indigent Persons established pursuant to NRS 428.195 shall administer the Special Fund. The Nevada Association of Counties, under the control of the Board, shall serve as the administrative and claims agency for the Special Fund.
iii. Once the Special Fund has been initially funded, the Board shall have authority to determine future allocations of excess Special Fund Revenue to support the Fund for Hospital Care to Indigent Persons and the Fund for the Institutional Care for the Medically Indigent, based on the funding needs of all three funds. (Recommendation No. 3.c.ii and iii proposed by the Nevada Association of Counties per a letter from Robert S. Hadfield, Executive Director4, dated March 22, 2000, attached hereto as Exhibit B.)
d. Reimbursement of Medical Expenses or Loss of Earnings; Board Subrogated to Right of Applicant.
Upon payment of medical expenses or loss of earnings to the applicant, the Board of Trustees is subrogated to the right of the applicant to recover the unpaid charges from any responsible party other than the certifying public agency or the applicant to the extent of the reimbursement or partial reimbursement paid, and may maintain an independent action therefor in a manner similar to that employed by the Board of Trustees for the Fund for Hospital Care to Indigent Persons pursuant to NRS 428.245.
e. Funding for Special Fund
From the taxes levied pursuant to NRS 428.185 and any tax levied pursuant to NRS 450.425, the board of county commissioners of each county shall set aside money from the ad valorem tax at a rate of 0.25 cents (one‑quarter of a cent).
i. If a permanent source of money is identified in the legislation to match the money contributed to the special fund by the earmarking of the 0.25 cents from the ad valorem tax, then the bill will be drafted so that a person injured by an employee of the state may apply for money under the special fund. This permanent source of money could include dedicating a portion of an existing state tax or creating a new tax for this purpose. [The estimated annual revenue if the state matches equally at 0.25 cents (one-quarter of a cent) is $2,248,373.]
ii. If a permanent source of money is not identified, then the bill will be drafted so that a person injured by a state employee may not apply for money in the fund. In addition, the bill will be drafted so that the limitation on awards for damages in tort actions set forth in NRS 41.035 will remain at $50,000 for state employees and there will be no restriction on the number of causes of action that may be brought against the state.
STAFF NOTE: If the bill is drafted pursuant to Recommendation No. 3.e.i, the source of money to be committed must be identified before the bill may be drafted. If the bill is drafted pursuant to Recommendation No. 3.e.ii, then the different award of damages available to a person who is injured by a state employee rather than a local government employee will have to be shown to meet the rational basis test.
4. Enact legislation increasing the tort cap set forth in NRS 41.035 for all claims to $125,000 while continuing to allow multiple causes of action arising from the same incident. The new cap applies to all claims occurring on or after October 1, 2001. (Proposed by Bill Bradley representing the Nevada Trial Lawyers Association in a March 28, 2000, letter, a copy of which is attached hereto as Exhibit C.)
5. Enact legislation increasing the cap for all claims as provided in Recommendation No. 4 and in addition, authorize an interim legislative study to consider the feasibility of creating a catastrophic injury fund for claims which exceed the new statutory cap. (Proposed by J.R. Crockett, Jr., representing the Nevada Trial Lawyers Association at the January 10, 2000, Advisory Committee meeting.)
6. Enact legislation providing for an index in the cap as established in Recommendation No. 4 to automatically increase the cap in the future to keep pace with the cost of living based on the Consumer Price Index-All Urban Consumers (Current Series). (Proposed by J.R. Crockett, Jr., representing the Nevada Trial Lawyers Association at the January 10, 2000, Advisory Committee meeting.)
7. Enact legislation effective July 1, 2001, retaining the existing cap of $50,000 set forth in NRS 41.035 but establishing a schedule providing for higher caps for certain specified injuries as follows:
$75,000 for total loss of hearing in both ears;
$100,000 for the loss of one foot, one leg, or of one hand or arm;
$200,000 for the loss of both feet or legs, or of both hands or arms;
$300,000 for the loss of vision in both eyes;
$400,000 for paraplegia or quadriplegia; and
$500,000 for death.
Funding for the increased caps would be provided as specified in Recommendation No. 3.b. through 3.e. (Proposed by Assemblyman John C. Carpenter on April 12, 2000.)
8. Enact a sunset provision effective at the end of four years for any change in the cap to allow for evaluation of the effects of the change. (Proposed by Senator Maurice E. Washington at the February 26, 2000, meeting.)
On February 23, 2000, the Advisory Committee submitted a report concerning its two meetings which occurred on January 10, 2000, and February 16, 2000. Although the Advisory Committee was not able to reach consensus on any recommendations to present to the Subcommittee, it did present a list of options the Subcommittee could consider. These options are included here in the event the Subcommittee does not want to adopt any of the proposals set out above, but still wants to consider other options. However, more detail would be necessary before most of these options could be drafted. The list of options is attached hereto as Exhibit D.
A.C.R. 46 ADVISORY COMMITTEE
LIST OF OPTIONS
1. No change in the current statutory limitation or cap.
2. No change in the current cap, but create a new fund for major injury and death cases.
3. Increase the cap by:
a. Immediate cost of living adjustment (COLA) from 1979 to present.
b. Gradual phase-in of any increase in the cap.
c. Prospective only COLA adjustment.
d. Immediate COLA adjustment and thereafter COLA adjustments annually or some other period of time.
e. Increasing only within counties whose population is above a certain number.
f. Increasing for medical negligence cases only.
g. Increasing the amount for each claim, but reducing or limiting the number of claims under which an individual may recover.
h. A fixed amount, but with a sunset provision to allow study of the effects of the increase.
i. Random selection of a new cap amount.
OPENING REMARKS AND INTRODUCTIONS
Chairman Anderson called the meeting to order and roll was called. He explained the primary purpose of today’s hearing is to consider recommendations for submission to the 71st Legislative Session. The recommendations were compiled from proposals presented in previous A.C.R. 46 Subcommittee and Advisory Committee hearings and from correspondence submitted during the course of the study. Chairman Anderson expressed his appreciation to the A.C.R. 46 Subcommittee, the Advisory Committee, and staff for the expertise and experience they provided during the interim study on such a complex issue.
APPROVAL OF MINUTES FOR THE SUBCOMMITTEE’S MEETING
IN LAS VEGAS, NEVADA, ON FEBRUARY 23, 2000
ASSEMBLYMAN CARPENTER MOVED FOR APPROVAL OF THE MINUTES OF THE FEBRUARY 23, 2000, MEETING OF THE LEGISLATIVE COMMISSION’S SUBCOMMITTEE TO STUDY THE STATUTORY LIMITATION ON DAMAGES THAT MAY BE AWARDED TO A PERSON IN A TORT ACTION AGAINST THE STATE OF NEVADA, ITS POLITICAL SUBDIVISIONS OR CERTAIN OTHER PERSONS, WHICH WAS HELD IN LAS VEGAS, NEVADA. ASSEMBLYMAN CLABORN SECONDED THE MOTION WHICH PASSED UNANIMOUSLY.
Chairman Anderson commented that the Subcommittee has the complex task of determining whether to retain or raise the current $50,000 statutory cap, while keeping in mind the realization that many of the counties and governmental entities in the State of Nevada are operating on a “bare bones” budget. The Subcommittee is deeply concerned with its responsibility to the individuals within the state, as well as the sovereign immunity issue that the state and its political subdivisions provide governmental structure. Chairman Anderson was optimistic the Subcommittee could reach consensus on this issue to avoid revisiting this topic during the 71st Legislature.
Chairman Anderson referred to the Subcommittee’s “Work Session Document” which appears as Exhibit A. In addition, he referenced two legal documents provided by Risa B. Lang, Principal Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau. The first document dated April 7, 2000, addresses the constitutionality of using population classification of counties to apply differing limits on damages that may be awarded to a person in a tort action against a government entity (please refer to Exhibit B); and a legal opinion on the recent decision of the Nevada Supreme Court in the case entitled Calloway v. City of Reno, No. 00-25628, 2000 WL 228641 (Nev. Feb. 29, 2000), to determine the effect that case would have on the liability of local governments in construction defect cases (please refer to Exhibit C). Chairman Anderson opened the meeting for public testimony.
Jeff Blanck, District Counsel, Washoe County School District (WCSD), stated although there is no legislative history available, the intent of the statutory cap was to waive sovereign immunity to provide some type of compensation. If that purpose is kept in perspective, it may assist the Subcommittee in today’s decision-making process. He indicated the WCSD supports Recommendation No. 3 because it increases the cap to $75,000 with no associated increase in funding. On the stacking issue, however, it limits total compensation to $150,000. Although there is a tradeoff, WCSD anticipates it can operate within that context. The proposal also provides an additional fund for catastrophic injuries, whereas most of the other proposals increase the cap to $125,000 with no associated funding. This would have a dramatic impact on the school districts that are self-insured.
Wayne E. Carlson
Wayne Carlson, Executive Director, Nevada Public Agency Insurance Pool and Public Agency Compensation Trust (POOL), provided the Subcommittee with his testimony and outlined his concerns regarding the recommendations (please refer to Exhibit D):
1. Mr. Carlson summarized the conflicting elements in Recommendation No. 1:
< Eliminates the existing cap entirely for medical expenses and lost wages;
< Divides counties with a population greater than 100,000 or under 100,000 and does not afford equal protection for citizens;
< If a tortfeasor is from a county with a population over 100,000, but the incident occurs in a county with a population under 100,000, it is unclear how the limit would be exercised;
< If the state is the tortfeasor, what limit would apply; and
< The substantial cost increase is not affordable for the rural entities.
2. Recommendation No. 2 proposes:
< Establishing a special fund for governmental entities;
< A membership in which none of the members have a population base greater than 100,000; and
< Members pay an assessment to finance the claims fund, excess insurance, and administrative expenses.
Mr. Carlson indicated that governments with populations greater than 100,000 have individual self-funded accounts which utilize current tax rates. Should the Legislature create a special tax rate that supports additional funding to assist the POOL membership, this concept may be an alternative for further discussion. Additionally, this proposal does not address a change in the tort cap amount.
3. Recommendation No. 3 was developed by the governmental agency advisors as a compromise to the other proposals. It balances several elements:
< Increases the cap amount;
< Limits the number of causes of action;
< For the most catastrophic losses it creates a fund that would be managed and operated similarly to the Indigent Accident Fund which is administered currently by a board of county officials appointed by Nevada’s Governor Kenny C. Guinn; and
< If the State of Nevada participates in this proposal, it would require funding assistance. Since the goal of the recommendation is to avoid utilizing county tax monies to fund the state’s risks, it is suggested the state match the local government rate.
4. Recommendation No. 4 is the most costly proposal. It increases the statutory cap two and a half times with no relief for multiple causes of action. No mechanism is offered to fund the increase.
5. Recommendation No. 5 is similar to Recommendation No. 4, but authorizes a further study for the creation of a catastrophic injury fund for claims that exceed the cap.
6. Recommendation No. 6 increases the tort limit by an arbitrary Consumer Price Index-All Urban Consumers factor that has little or no relevance to tort costs and creates an enormous opportunity for additional litigation.
7. Recommendation No. 7 retains the existing limit without restricting the number of causes of action. It creates a schedule for specified injuries that would result in a substantial increase in the $50,000 tort cap.
8. Recommendation No. 8 would enact a sunset provision. Four years may not be sufficient time for evaluation of the effect of any changes made because the injury must occur after the effective date of the law. There is a two-year statute of limitations for a number of tort claims and an additional two to four years for a case to proceed through the litigation process. While further study may be necessary, the proposed time frame may yield inconclusive results.
9. Most of the options on the Advisory Committee’s list have been incorporated in one of the recommendations.
Chairman Anderson thanked Mr. Carlson for the technical expertise and background he provided to the Subcommittee relative to the rural jurisdictions.
Bill Isaeff, Co-Chairman of the A.C.R. 46 Advisory Committee and the Nevada League of Cities’ representative, responding to a question from Assemblyman Carpenter explained the $150,000 limitation set forth in Recommendation No. 3 would apply to each individual plaintiff in a lawsuit and not necessarily all plaintiffs. If, for instance, three plaintiffs were involved, each with individual causes of action, there could be appropriate recovery by each plaintiff within the context of the proposal. The total case would not be limited to the $150,000.
Mary Walker, representing Carson City, Douglas, and Lyon Counties, and the Carson-Tahoe Hospital, voiced support for Recommendation No. 3 as submitted by the POOL, the Nevada Association of Counties, and the League of Cities. She indicated the entities she represents would be able to operate within the limits of the proposal. From a local government perspective, it is not just the increased cost to taxpayers, it is also the increased fees for users of the services entities provide. For example, because of the limited population in the rural areas, private ambulance service is not available which leaves responsibility to the local government for providing the service. In the area of parks and recreation, there are numerous high risk activities such as basketball, soccer, ski classes, and skateboard parks. Ms. Walker indicated the local entities cannot assume additional increased liability costs and will have to evaluate services to determine cost effectiveness, passing the additional expense on to the taxpayer, or discontinuing the service.
Chairman Anderson inquired about the liability aspect and noted local governments have traditionally offered various public services. He asked why an increase in the cap could possibly discontinue such activities. Ms. Walker responded that current day activities which include skateboarding and snow boarding are considered high risk activities in which injuries are more prevalent. Of particular concern are the recommendations submitted by the Nevada Trial Lawyers Association that would increase the statutory cap two and a half times with no aggregate cap.
There being no further testimony, Chairman Anderson closed the public testimony portion of the meeting.
DISCUSSION AND SUBCOMMITTEE ACTION ON RECOMMENDATIONS
TO THE 71ST SESSION OF THE NEVADA LEGISLATURE
Scott Young, Principal Research Analyst, Research Division, Legislative Counsel Bureau, explained the Nevada Revised Statutes (NRS) directs the A.C.R. 46 Subcommittee to adopt no more than ten BDRs. Additionally, under the terms of Assembly Concurrent Resolution No. 46 there must be a majority of the members of the Senate and the Assembly to adopt a resolution. He noted a report will be filed on behalf of the Subcommittee with the Legislative Commission and, in turn, presented to the 71st Session of the Legislature. If there are recommendations for enactment of statutes or resolutions, they will be included in the report as BDRs. At the request of the Subcommittee members Mr. Young provided a brief overview of the recommendations contained in the “Work Session Document”:
1. Recommendation No. 1 was submitted by Chairman Anderson at the February 23, 2000, meeting of the A.C.R. 46 Subcommittee. Under this proposal legislation would be enacted which would become effective July 1, 2001. It would eliminate the cap for damages as to medical expenses and lost wages. The current cap of $50,000 would remain in effect for all other damages until July 1, 2003. After July 1, 2003, the cap would increase in counties with a population of greater than 100,000 to $75,000, and thereafter on July 1, 2005, it would increase to $100,000. Similarly, on July 1, 2003, the $50,000 cap would be raised to $60,000 for counties with a population of less than 100,000, and on July 1, 2005, it would increase to $75,000. As noted by Mr. Carlson, Recommendation Nos. 1 and 2 could be considered jointly because Recommendation No. 2 speaks to the funding mechanism that would cover the proposals in Recommendation No. 1. Recommendation No. 2 would establish a special fund that would assist entities that serve a population of less than 100,000. It includes general improvement districts which are actually located in counties of greater than 100,000, but where the entity itself serves less than 100,000 people. It is important to know that in passing, if Recommendation No. 2 were enacted, more specifics would be needed to convert the recommendation to a BDR.
1. Recommendation No. 3 was submitted by Bill Isaeff on behalf of the Nevada Association of Counties and Wayne Carlson of the Nevada Public Agency Insurance Pool. This recommendation is supported by Robert S. Hadfield, Executive Director, Nevada Association of Counties, as well as the Nevada Association of School Boards represented by Bill Hoffman.
§ Referring to subsection 3.a.i., Mr. Young explained that for accidents occurring on or after October 1, 2001, the present $50,000 cap would raise to $75,000. The proposal also contemplates that you could “stack” for a limit of $150,000. That would include all separate and distinct and independent causes of action for any one person. An award may not include any amount for prejudgment interest or any exemplary or punitive damages.
§ Subsection 3.a.ii. pertains to injuries which result in paraplegia, quadriplegia, a persistive vegetative state, or permanent total physical incapacitation from any gainful employment or death. In addition to the $75,000 cap, which could be stacked to $150,000, an additional $250,000 is available for medical expenses and/or losses of earnings only. It may include future damages, but all damages would have to be calculated “up front.”
§ Subsection 3.b.i. addresses eligibility for payment from the Special Fund for medical expenses and loss of earnings damages. A Special Fund would be created as well as a Board of Trustees to manage the fund. In the event the parties were able to agree on an amount of damages and liability, they could stipulate to that; if not able to agree, they could request the court to determine the amount of damages, or any party could request a jury trial and have the damages and the issue of liability established as is currently done.
§ Subsection 3.b.ii. is the application process in which the Board of Trustees would make a determination within 30 days of the end of each fiscal year as to how much money was available in the Special Fund. The Board would review the claims submitted during the year and authorize payment. If there were more claims pending in a given year than funds available, the Board would distribute the available funds on a pro rata basis. The Board would adopt regulations specifying how the pro rata division and distribution would be implemented. The determination as to the amount of money available and distribution would be at the sole discretion of the Board and would not be subject to appeal.
§ Under subsection 3.b.iii., the application would be in a form and contain information as specified by the Board as required by regulation.
§ Subsection 3.c. addresses the creation and powers of the Board of Trustees with two variations:
a. Subsection 3.c.i. would create a new Board of Trustees with five members, one each from a county with a population of 100,000 or more, and two from counties from counties with a population of less than 100,000. If this provision were made applicable to the State of Nevada, the fifth member would be a representative of the State Board of Examiners. The Board would have the same powers as the Board of Trustees for the Fund for Hospital Care to Indigent Persons pursuant to NRS 428.205. However, if the state does not participate, the Special Fund would only apply to persons injured by local entities. Additionally, the fifth member of the Board of Trustees would be from a county with a population of less than 100,000.
b. In Subsection 3.c.ii., Mr. Hadfield proposed an alternative. Rather than create a new Board of Trustees, the existing Board of Trustees for the Fund for Hospital Care to Indigent Persons would be used. The Nevada Association of Counties would serve as the administrative and claims agency for the Special Fund. Once the Special Fund has been initially funded, the Board would have authority to determine future allocations of excess Special Fund revenue. That revenue could be allocated between the Special Fund for tort injuries, the Fund for Hospital Care to Indigent Persons, and the Fund for the Institutional Care for the Medically Indigent.
§ Subsection 3.d. is a provision that currently exists for the Board of the Fund for Hospital Care to Indigent Persons and would essentially grant the same powers to a new Board if it is created. This would allow the Board to recover outstanding debts from any responsible party other than the certifying public agency or the applicant.
§ Subsection 3.e. addresses funding for the Special Fund. Currently, there are existing taxes available pursuant to NRS 428.185 and NRS 450.425. This proposal would set aside one‑quarter of a cent from these taxes through the board of county commissioners of each county.
§ Subsection 3.e.i. states if a permanent source of money is identified in the legislation for a state match, the BDR would be written so that if a person were injured either by a state actor or a local entity actor, the victim could apply to the Special Fund. The estimated annual revenue if the state matches equally is $2,248,373.
§ Under subsection 3.e.ii., if for any reason the state did not participate in the funding, a person injured by a state actor would not have access to the Fund. In this scenario, a person would remain under the $50,000 cap with no limit on stacking.
§ Mr. Young did note it is possible to have a different cap based upon population, but a rational basis must be shown for doing so. Normally, the rational basis for having a higher cap for the state as opposed to the counties is the state is a larger entity with more resources to absorb greater losses. If the state was not included in this recommendation, counties would have a higher limit and a rational basis would need to be articulated why the counties and cities have a higher level than the state’s $50,000 cap. A possible rationale could be that there are limits on the $75,000, $150,000, and $250,000, whereas, due to the multiple causes of action under the $50,000 cap, a higher total amount of damages could occur. Thus, if the state is not included in this proposal, there must be a rational basis for having the differential between the state and the counties.
3. Recommendation No. 4, submitted by Bill Bradley on behalf of the Nevada Trial Lawyers Association, would enact legislation increasing the $50,000 tort cap for all claims to $125,000 and continue to allow multiple causes of action.
4. Recommendation No. 5, submitted by J.R. Crockett, Jr., representing the Nevada Trial Lawyers Association, would increase the cap as specified in Recommendation No. 4. In addition, it would authorize an interim legislative study to consider the feasibility of creating a catastrophic injury fund for claims which exceed $125,000. In concept, this proposal is similar to Recommendation No. 3 in which there is a cap and a special category for higher damages.
5. At the request of Mr. Crockett, Recommendation No. 6 would enact legislation providing an index in the cap as established in Recommendation No. 4. The cap would increase based upon the Consumer Price Index-All Urban Consumers on an annual basis.
6. Recommendation No. 7, submitted by Assemblyman John C. Carpenter, would provide legislation effective July 1, 2001, that would retain the $50,000 cap, not affect stacking, but would establish a schedule of higher limits for certain specified injuries. The funding would be as specified in Recommendation No. 3.b. through 3.e.
7. Recommendation No. 8 was submitted by Senator Maurice E. Washington and would enact a sunset provision to expire at the end of four years to evaluate the effect of the change on the cap.
8. Referring to the list of options submitted by the A.C.R. 46 Advisory Committee Mr. Young mentioned the list of options is not a consensus document, but simply an attempt to provide other approaches the Subcommittee may want to pursue.
Chairman Anderson suggested taking the recommendations out of their order of listing and reviewing Recommendation No. 3 first. He asked Mr. Isaeff and Mr. Hadfield, the proponents of this measure, to comment on the proposal and address any questions the Subcommittee may have.
Mr. Isaeff, identified previously, offered a few brief comments on Recommendation No. 3. He explained the government attorneys who authored this proposal considered the testimony presented at previous meetings of this body and crafted a fair and reasonable cost-effective measure which addresses a full range of issues:
• A large portion of discussion centered around the need to increase the cap and the fiscal difficulties the rural entities are experiencing. To counterbalance this situation, it is suggested to increase the cap 50 percent per individual claim, and limit the total to $150,000 in the aggregate for multiple causes of action.
• In addition, the Special Fund has been structured in such a way that with respect to the local government’s contribution to the fund there would be no tax increase. Mr. Isaeff stated he was sensitive to the state’s participation in the plan and aware of the possibility of “binding” legislators in the future from taking fiscal actions. He was of the opinion that this issue was not an insurmountable task and that language could be drafted regarding appropriating revenue to a specific funding source.
• Additional funding is available within the Special Fund for those cases that incur increased medical expenses and higher losses of earnings.
• The Board of Trustees of the Special Fund would be created to review applications and approve or disapprove reimbursement of unpaid medical expenses or loss of earnings damages. Although the government attorneys were not aware of the Nevada Association of Counties’ proposal that the Board of Trustees for the Fund for Indigent Hospital Care assume this responsibility, it is not a point of contention. It is at the discretion of the Subcommittee as to whether the existing Board of Trustees administer the Special Fund.
Chairman Anderson thanked Mr. Isaeff for his hard work and the personal endeavor he contributed to the Advisory Committee.
Responding to Senator Washington’s inquiry, Mr. Isaeff replied:
• The Board of Trustees, as proposed, would not have the authority to make factual determinations as to the extent of lost wages or the extent of medical expenses incurred. That decision would be completed prior to filing with the Board by the parties to the lawsuit, the government, and the private parties who have entered into a stipulation to settle the unresolved issues. The signed stipulation would be attached to the application submitted to the Board. However, if the factual issues remain in dispute, the proposal authorizes the parties to petition an appropriate court to present their particular issues. If resolution is not reached, the case would proceed to trial in which a judgment would be entered and said judgment would determine the liability and damages, if any.
• Regarding disbursement of funds, the Board of Trustees would examine the fund on a specified date, not yet agreed upon, to determine the amount of money available and the number of claims received since the preceding payout. If sufficient revenue is available to pay all pending claims, the Board would authorize payment. If, however, more claims were filed than funds were available, the Board, pursuant to its own regulations, would make a pro rata distribution among all claimants to ensure all parties receive some compensation but not necessarily full payment. The proposal would not allow persons to return to the fund in the future to collect full funding.
• The proposal also gives the Board some discretion when there is excess money to allocate funds to other funds within their jurisdiction to pay legitimate claims. A base amount would be maintained in the Special Fund for future claims.
Robert Hadfield, Executive Director, Nevada Association of Counties (NACO), responded to questions from the Subcommittee in which he explained:
• Based on the procedure by which the existing ad valorem tax is administered, there would be no need for additional sources of money in the rural counties to replace the one-quarter of a cent proposal for the Special Fund.
• The Fund for Hospital Care to Indigent Persons has maintained sufficient funds for the past two years to pay 100 percent of all claims submitted. This is based on a review of the growth and assessed valuation of the state, and the assumption that caseloads will continue to track the normal pattern.
Mr. Hadfield explained NACO suggested using the Board of Trustees for the Fund for Hospital Care to Indigent Persons because of their 15 years’ experience administering claims. If the state were to participate in the program, it would have representation on the Board as proposed in Recommendation No. 3. Further, he stated he recognized the sensitivity of the legislative body to granting an appointed body the authority to transfer money from fund to fund. He suggested implementing a $6 million “trigger” mechanism for the Special Fund. When the Special Fund reached that amount, it would be up to the Board of Trustees to evaluate the situation and determine whether or not those county funds needed to be reallocated to the hospital funds to pay their claims appropriately.
Responding to Assemblyman Carpenter’s inquiry, Mr. Hadfield explained that once a claim is paid there is no further action on the claim. The payment is accepted as full payment for services. He also indicated hospitals have had to accept less than dollar-for-dollar payment which currently occurs in the supplemental fund.
Chairman Anderson queried if the unused funds could revert back to the county hospital fund. In response Mr. Hadfield stated that could occur if the $6 million trigger mechanism were in place to allow the Board of Trustees to determine if there was a surplus. That being the case, county funds could be returned to the county hospitals for payment of claims.
Bill Bradley, A.C.R. 46 Advisory Committee Co-Chairman and the Nevada Trial Lawyers Association’s (NTLA) representative, stated the current compensation program for victims of governmental negligence is insufficient. The main objective in addressing this issue is to establish a more compassionate and fair way to compensate injured victims. He indicated the NTLA supports the concept of the fund, particularly the funding mechanism; however, the application and the strict guidelines for those who can apply to the fund are limited. He expressed concern it will not fairly compensate the victims of governmental negligence and further noted:
• By limiting the recovery or the applicability of the Special Fund to medical expenses and wage loss, those individuals who do not work are discriminated against. For instance, the death of a child can occur in a situation where there is no medical expense. The child was not earning an income or supporting the household. So in that situation there is no application to the Fund. Additionally, the family who suffered the loss of that child is limited to two claims of $75,000 each.
• The only time an injured person may apply to the fund is if they are paralyzed, paraplegia, quadriplegia, in a persistive vegetative state, or disabled from any type of gainful employment. If an injured person can perform a menial task, which would be considered gainful employment, there is no eligibility for the Fund.
• In the proposal, only medical bills and wage loss can be requested from the Fund. The only type of potential expenses that the catastrophically injured victim can recover are lost wages; however, if that injured victim was not working, he cannot apply to the Fund.
• Pain and suffering has not been considered in the application to the Fund. The catastrophic portion of injuries are often considered the physical and mental pain, suffering, disability, and anguish which is difficult to calculate.
J.R. Crockett, Jr.
J.R. Crockett, A.C.R. 46 Advisory Committee member and representative of the Nevada Trial Lawyers Association, discussed two recent incidents involving potential government liability.
1. The first case involves government employees that were supervising teenagers picking up trash along Interstate 15 in Las Vegas, Nevada. A young woman driving a car veered off Interstate 15 and hit and killed six of the teenagers. The government faces potential liability because they placed the children at a location not protected by a guardrail. In this situation, there are six deceased children who are not wage earners, with virtually nonexistent medical expenses.
2. The second incident involves a Clark County school bus that struck a car from behind and pushed it approximately 900 feet. A woman and her three children were in the car. The woman is partially paralyzed from the waist down, is the only parent in the family unit, and has hospital bills in excess of $100,000 not including physician’s expenses. The four-year-old involved in the accident incurred hospital expenses exceeding $55,000.
Continuing, Mr. Crockett commented that to only address medical bills and loss of earnings in a catastrophic injury fund does not adequately recognize the “catastrophe.” Pain and suffering is one way to compensate the mother for what she will experience separate and apart from the medical bills. He noted in many instances money is collected from the responsible tortfeasor which then “passes through” to the medical provider or the insurance carrier. Thus, an injured person is without any compensation for loss of earnings for the entire duration of the claim.
Responding to Senator Washington’s inquiry, Mr. Isaeff was of the opinion it is possible to provide for pain and suffering damages in the first $75,000 of the settlement or judgment. However, adding such an element could create a situation that would require the Fund to pay more often on a pro rata basis than if the claims were limited to medical expenses and loss of earnings damages. He also mentioned there would probably be a great deal of difficulty if this component were included as another element under the Special Fund recovery provisions.
Mr. Bradley questioned whether the $2.2 million allocated for the Special Fund could be utilized in a more beneficial way. He suggested insurance providers be solicited to determine what kind of excess insurance policy a $2.2 million premium would provide the political subdivisions of the State of Nevada to cover catastrophic losses.
P. Mark Ghan
Mark Ghan, representing the Attorney General’s Office and an A.C.R. 46 Advisory Committee member, voiced his support for Recommendation No. 3. He addressed the issue of funding for the State of Nevada and remarked:
• Any increase in the statutory cap would have to be funded by the Legislature; and
• Recommendation No. 3 proposes a 50 percent match of $1.1 million for the state. He questioned whether the state claims represent 50 percent of the catastrophic claims made annually. To some limited extent, the state’s match could provide revenue toward underwriting claims in the counties and cities and, perhaps, the Fund for Hospital Care to Indigent Persons.
Indicating Senator Washington would be leaving the meeting due to a prior commitment which would leave the Senate membership lacking a majority for voting purposes, Chairman Anderson asked the Subcommittee if more discussion was needed or if a motion was in order.
Risa B. Lang, Principal Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau, stated if a motion to adopt Recommendation No. 3 passes, a number of details from a drafting perspective need to be addressed.
Chairman Anderson indicated the questions at hand are:
• Shall the tort cap be increased for the governmental entities in Nevada;
• If the cap is raised, shall it be phased in over a specified period of time;
• Establishment of a funding mechanism for the rural entities; and
• The state’s participatory role if Recommendation No. 3 is adopted.
Regarding the state’s involvement, Assemblyman Carpenter asked if a different cap could be set for the counties if the state choose not to participate. Responding, Mr. Young explained if there were a difference between the caps for the state and the counties, the rational basis test would have to be met. If Recommendation No. 3 was adopted only for the non-state public entities, it may be difficult to articulate a rational basis because the traditional explanation addresses the situation where the state has a higher cap rather than the other entities. However, if that situation were reversed, it still must be justified and it would be difficult to explain why the smaller, financially weaker entities have a higher cap than the state.
Assemblyman Claborn requested additional testimony relative to the elimination of a pain and suffering component in Recommendation No. 3. Mr. Isaeff reiterated his previous testimony stating there may be an opportunity to include pain and suffering damages in the initial $75,000 claim. The component was not eliminated, it is covered under a different limit. Continuing, he explained the authors of the proposal crafted a recommendation that would maintain fiscal credibility for local governments. It provides an increase in the cap and seeks to balance some of the exposure by restricting claims to two independent causes of action. It limits local exposure by utilizing the Special Fund for those occasional catastrophic cases that can be so devastating from an economic perspective to local entities.
Mr. Hadfield commented that Mineral County is cutting its budget by 20 percent because the assessed valuation of the county decreased and that three other counties are at their statutory cap. The counties simply do not have the fiscal capacity to fund a process that provides no limits. The goal in drafting Recommendation No. 3 was to provide an alternative that would not increase insurance premiums and utilize existing tax dollars dedicated to the creation of a Special Fund. The inclusion of a pain and suffering component will ultimately lead to paying people 10 cents on the dollar.
Chairman Anderson asked if the woman involved in the Clark County school bus incident were to be admitted to a county hospital, is it conceivable her medical obligations could fall upon the hospital that had initially provided the resource. Mr. Hadfield replied, if that individual is certified as “indigent” they would apply to the supplemental fund which pays 21 cents on the dollar. Additionally, once claims are submitted and paid by the payer of last resort, any unpaid monies are absorbed by the medical provider. He stated he was not aware of any outstanding claims made against the supplemental fund or the indigent accident fund resulting from the negligence of a governmental employee and indicated those claims are normally settled outside the fund. He would, however, research that issue and provide the Subcommittee with a definite answer.
Stephen C. Balkenbush
Stephen Balkenbush, General Counsel for the Liability Cooperative of Nevada (LiCON), stated from the perspective of the rural hospitals and the Nevada Public Agency Insurance Pool, there will never be an agreement to include a pain and suffering component in the Special Fund. That component of damages is the singular most difficult portion of damages to assess in a personal injury case. What an individual’s loss is worth in terms of pain and suffering for the rest of their life is the unquantifiable issue in every trial. If included, this component could essentially bankrupt the Fund. Furthermore, conducting another hearing on this issue will not lead to an agreement on behalf of the counties and the rural hospitals to include a pain and suffering component. What has been presented to the Subcommittee is the maximum proposal from the rural counties and hospitals with a funding mechanism in place.
In response to Mr. Balkenbush’s testimony, Mr. Bradley was of the opinion that including pain and suffering does not “blow the cap wide open.” It allows for the initial objective to be carried out which is to fairly compensate victims of state negligence. The claims would only pertain to accidents that result in paraplegia, quadraplegia, a persistive vegetative state, or permanent total physical incapacitation from gainful employment or death. The request is not to expand the cap on a statewide basis, only for catastrophic situations. Regarding previous testimony relative to incapacitation from any gainful employment, he offered the suggestion that the language be amended to the “inability to return to the employment they were at.” In order to be eligible for the Fund that classification should be more liberal in that a person is not able to return to his customary job.
Focusing his testimony on the pain and suffering element, Mr. Balkenbush explained if an agreement is reached between the parties, pain and suffering can be allocated in the settlement in a manner to avoid the lien of a medical provider such as a county hospital. In the case of a jury trial, the jury can allocate pain and suffering and economic damages utilizing a special verdict form and again, avoid the lien of a medical provider.
Responding to Chairman Anderson, Mr. Balkenbush explained that if $250,000 in pain and suffering were awarded in a case, under Recommendation No. 3 the claimants would not be fully compensated. If a jury awarded pain and suffering in excess of the $150,000, the judge would reduce it pursuant to the statutory provisions.
Regarding the ability to segregate the pain and suffering award, Mr. Bradley responded that in his experience, a lien letter is received from the hospital requiring any money received from a governmental entity be paid directly to the health care provider and that the lien cannot be defeated by stipulation of the parties.
Mr. Crockett indicated a lien is not limited by jury designation. For example, if a lien claimed $50,000 in medical bills but the jury determined $20,000 in medical bills were reasonable and collectable, that would not impair the county hospital’s right to collect the full $50,000 from any and all recoveries the plaintiff makes. Even if a lien letter is never received by the client, the county hospital has a statutory priority for entitlement to any and all recoveries.
Assemblyman Claborn recommended increasing the cap to $75,000 for three years, retaining the statutory provisions, and then raising it to $100,000.
Chairman Anderson thanked Assemblyman Claborn for his suggestion, and noted a quorum of the Senate was not present to take action on the recommendation. The Subcommittee was polled to determine a date for the next meeting. There being no conflicts, the work session was scheduled for Friday, May 19, 2000, at 9:30 a.m., in Carson City. He asked that the following items be addressed:
• A presentation depicting how an actual claim would function under Recommendation No. 3;
• A recreation of Mr. Bradley’s case scenario as compared to Recommendation No. 3;
• The fiscal impact to the counties in Senator McGinness’ senatorial district in terms of loss revenue; and
• A realistic figure from the state regarding the number of claims received based upon the contention they do not bear 50 percent of the claims and, therefore, should not pay half the expenses.
Mr. Bradley requested information be provided regarding what type of excess insurance policy could be purchased using the $2.2 million proposed for the Special Fund. Chairman Anderson agreed to the request.
Exhibit E is the “Attendance Record” for this meeting.
There being no further business, the meeting adjourned at 1 p.m.
Senior Research Secretary
Principal Research Analyst
Assemblyman Bernie Anderson, Chairman
LIST OF EXHIBITS
Exhibit A is the “Work Session Document,” dated April 19, 2000.
Exhibit B is correspondence to Assemblyman Bernie Anderson from Risa B. Lang, Principal Deputy Legislative Counsel, Legal Division, Legislative Counsel Bureau (LCB), regarding the constitutionality of using a population classification of counties to apply differing limits on damages awarded to a person in a tort action, dated April 7, 2000.
Exhibit C is correspondence to Assemblyman Bernie Anderson from Risa B. Lang, Principal Deputy Legislative Counsel, Legal Division, LCB, on the Calloway v. City of Reno decision, dated April 11, 2000
Exhibit D is the testimony of Wayne Carlson, Executive Director, Nevada Public Agency Insurance Pool and Public Agency Compensation Trust, titled “Testimony of Wayne Carlson about A.C.R. 46 Work Session Document for the April 19, 2000, Meeting of the A.C.R. 46 Committee.
Exhibit E is the “Attendance Record” for this meeting.
Copies of the materials distributed during the meeting are on file in the Research Library of the Legislative Counsel Bureau, Carson City, Nevada. You may contact the library at (775) 684‑6827.