The following testimony was provided to the PEBP Board by NFA Legislative Liaison Kent Ervin, on behalf of NFA:

The Nevada Faculty Alliance (NFA) is the statewide association of faculty at all eight NSHE institutions, most of whom participate in the Public Employees’ Benefits Program along with other state employees. We are the state affiliate of the American Association of University Professors.

The NFA appreciates the efforts of PEBP to protect program interests via subrogation efforts when a third party may be responsible for medical expenses incurred by PEBP. We also strongly agree with the part of the regulation that says the out-of-pocket medical costs for the participant should be covered first and in whole from any recovery.

We are however concerned that the subrogation actions by the lawyers hired by Healthscope can at times be overly aggressive, particularly when the party being pursued is the participant or a close relative or their own insurance companies. When a participant buys homeowners or automotive liability insurance, they are doing it to protect themselves, not to protect PEBP or to lower PEBP premiums for others. The examples provided in the Board packet sound innocuous—involving traffic accidents with an unrelated third party at fault. However, the proposed regulations allow subrogation actions against, say, the grandmother of a PEBP participant’s covered child when a simple accident (neither intentional nor negligent) occurred in her home. Should PEBP and by extension the State as employer really be pursuing such a case? It is questionable whether the applicable statute actually was intended to apply to first party coverage, since it refers to legal liability rather than contractual liability created by purchase of an insurance policy.

We recommend that the Board restrict the subrogation efforts to third party coverages only. A minimum alternative would be to create a policy to evaluate the merit of cases against participants or their close relatives. The decision to pursue a subrogation case should not be primarily based on money potential by Healthscope’s “vendors”—their hired lawyers—as it is described on page 12 of the Health Claims Auditors report (agenda item 4.3).

Thank you.