THIS WEEK IN
Prepared by Norwood & Associates
Survey Shows Strong Support for Workers’ Comp Reform
& Initiative
A survey released this week
revealed that nearly 80 percent of California voters support Governor
Schwarzenegger’s workers’ compensation reform package and would vote in favor
of a ballot measure in November containing the reforms proposed by the Governor,
if the Legislature failed to act.
The survey was sponsored by
the California Chamber of Commerce, the Workers’ Compensation Action Network
(WCAN) and the Committee for Workers’ Compensation Reform and
Accountability.
Key findings of the survey
included:
· When asked to pick between two directions, 70 percent
of voters believe the workers’ comp system is too expensive and costs must be
reduced to make it more affordable, compared to only 19 percent who believe
benefits are inadequate and should be increased.
· Support for major elements of the Governor’s proposal
is overwhelming, including the use of objective medical findings (90 percent),
use of independent medical reviews (81 percent), prohibiting compensation when
injuries are not primarily work related (80 percent), prohibiting chiropractors
from making medical evaluations for which they are not qualified (75 percent),
making sure that treatments are medically necessary (68 percent), limiting the
circumstances in which lawsuits can be filed (66 percent), interpreting the
laws equally between workers and employers (65 percent), and prohibiting
workers from collecting benefits for pre-existing conditions (65 percent).
· The only provision of the reform proposal that does
not garner majority support is granting employers the right to select a
physician, which 39 percent of voters support. However, this provision does not
diminish the overall support for the proposal.
· When told which groups support the measure (including
Governor Schwarzenegger, the California Chamber of Commerce, school districts
and insurance companies), and those who oppose it (including the California
Labor Federation, physicians, attorneys and consumer groups), 64 percent of
voters say they will vote in favor of the proposal while only 28 percent will
oppose it.
The complete survey results are available at the WCAN
website, www.fixworkerscompnow.com.
Legislative Analyst’s Office Issues Workers’ Comp
Report
The state’s Legislative
Analyst Office (LAO), a nonpartisan review organization, released its review of
the Committee for Workers’ Compensation Reform and Accountability Act’s
initiative to reform
The report showed potential
cost savings to state and local governments of several hundreds of millions of
dollars, system-wide savings in the billions and increased business profits
that could significantly boost state revenues.
The LAO’s
complete report is available on line at www.lao.ca.gov
and www.reformworkerscomp.com.
Garamendi, Vargas Introduce New Workers’ Comp
Bill
California Insurance
Commissioner John Garamendi and Assemblymember
Juan Vargas (D-Chula Vista), chairman of the Assembly Insurance Committee,
introduced yet another comprehensive workers’ compensation reform bill.
Commissioner Garamendi and Assemblyman Vargas believe the bill, ABx4 15,
has the potential to bridge the gap between labor and employers and to break
down the obstacles currently slowing the passage of reform. In addition, Assemblyman Vargas stated that
the measure contains important elements that will help complete the overhaul of
the system that began with the news laws he helped pass last year.
Some of the key provisions of
the measure include:
·
Creating an independent medical examiner (IME) to resolve disputes over
treatment in permanent, partial and total disability cases.
·
Requiring employers to deliver immediate benefits for injured workers
and allowing the employer additional time - up to one year - to dispute claims.
·
Through the utilization of effective and efficient medical treatment,
requiring physicians to use the descriptions and procedures of American Medical
Association guidelines.
·
Collecting medical billing data to identify medical billing and
treatment abuse by providers.
·
Making uninsured employers subject to felony charges, as opposed to the
current misdemeanor charges.
·
Changing the system to encourage employees and employers to work toward
returning injured workers to the job faster.
·
Adding two additional voting members to the State Compensation Insurance
Fund Board and clarifying the Insurance Commissioner's authority over State
Fund.
·
Addressing the irrational penalty structure on refused or delayed
benefits.
·
Regulating minimum loss cost insurance rates to stabilize the market and
pass through reform savings to policyholders.
·
Establishing a pilot program for qualifying carve-outs to integrate
health and disability benefit delivery.
Garamendi is strongly urging the passage of this measure by March 31, so that
savings could be passed on to employers in July when he is scheduled to
announce the advisory pure premium rate.
Workers’
SBx4 9, the workers’
compensation cleanup measure sponsored by Senator Richard Alarcón
(D-Van Nuys), passed the Senate Labor and Industrial Relations Committee this week
with a vote of 5 to 2.
The two “no” votes were both
Republican members of the committee.
Their votes seemed to reflect the Administration’s position that they
are not interested in half a loaf. Instead,
they want the cleanup bill to be a part of the larger workers’ compensation
reform legislation.
SBx4 9 provides technical and
clarifying amendments to last year’s workers’ compensation reform laws (AB
227/SB 228). Specifically, the bill
would restore the 100 percent user funding to the Department of Industrial
Relations and change the Illness and Injury Prevention Program requirements for
insurers, applying the law only to high experience employers and allowing
insurer reviews to be done by in-house personnel.
The bill will be heard in the
Senate Appropriations Committee next.
Department of Insurance Issues Regulations Limiting
Use of CLUE Reports
The California Department of
Insurance issued emergency regulations this week which would significantly
limit the use of CLUE reports and similar underwriting tools for property
insurance coverage.
Among other things, the
regulations would prohibit insurers and agents from making any adverse
underwriting decisions based on losses or loss exposure. Additionally, insurers would be required to
show that a hazard or condition exists in the risk that bears both substantial
relationship to the loss exposure and presents an increased risk of loss.
Under the regulations,
insurers would be prohibited from relying solely on information obtained from
an insurance support organization, such as CLUE or A+, in the underwriting of
property insurance. The regulations
would also prohibit insurers from basing adverse underwriting decisions on
fully remedied or otherwise resolved losses, or on inquiries regarding coverage.
The regulations will likely
be submitted to the Office of Administrative Law (OAL) some time next
week. Once submitted, the OAL has up to
10 days to determine whether the Department has properly determined that the
regulations are necessary, that they comply with legal standards and to take
public comments.
Bill Introductions
As reported last week,
February 20th was the last day for bill introductions. Introduced legislation must be in print for
30 days before being heard in a committee.
Several bills were introduced
late last week. Many of the proposals are considered “spot bills,”
meaning the original text is intended to “hold a spot” for later amendments on
the same or related topics. Among the introductions:
AB 2249 (Horton): This bill would require the Insurance Commissioner, on December 1 of
each even-numbered year, after consultation with the insurance industry of this
state, to file with the Legislature a report on insurance industry community
investments in California.
AB 2316 (Chan): This bill would create the Senior Protection Fund in the Insurance
Fund, and provide that the moneys deposited therein from a $1 fee levied
against insurers based upon each life insurance or annuity policy issued or
renewed to a resident of this state would be dedicated to protecting senior
consumers of insurance products. This
bill would provide that the Insurance Commissioner shall distribute 50% of the
funds within the department for senior consumer protection functions, as
specified, and 50% of the funds to district attorneys for investigating and
prosecuting senior financial abuse cases involving licensees and for other
projects beneficial to senior insurance consumers.
AB 2369 (Correa): This bill would impose specified requirements on an unfair competition
action brought on or after January 1, 2005, by a private person acting for the
interests of the general public, which the bill would designate as a
representative cause of action. The bill
would require that a representative cause of action be verified and accompanied
by a statement under penalty of perjury attesting to specified
information. The bill would prohibit a
private person acting for the interests of the general public from soliciting a
settlement or resolution of an alleged act of unfair competition without first
filing a complaint with the court. The bill would also require a licensing
board to indicate whether its action against a licensee is intended as the
exclusive and final enforcement remedy for the violation it alleges and would,
subject to specified exceptions, require a court to strike representative cause
of action based on such a designated action.
The bill would require a plaintiff who within a 6-month period filed one
or more representative cause of actions against more than 20 defendants to
notify each defendant and the court in which each action is pending and would
require the court to schedule a class certification hearing and refer the
matter to the Judicial Council for certification.
AB 2371 (Bates): Existing law requires an attorney who contracts to represent a
plaintiff on a contingency fee basis, in any case other than a contract for
recovery of workers' compensation benefits, to provide specified information to
the plaintiff at the time the contract is entered into. This bill would enact
the Legal Consumers' Protection Act, which would require a contingency fee
attorney to make certain disclosures and reports to a potential or existing
client regarding (1) chances of success in the case, (2) estimated and actual
attorney hours, (3) estimated fees, and (4) other fee information. The act would prohibit an attorney, or his or
her representative, from making unsolicited contact with a potential claimant
for at least 45 days after an event resulting in personal injury or death that
could give rise to a cause of action.
The act would also give the consumer the right to request an objective
review of a contingency fee by a court or bar association committee, and to
seek specified remedies against an attorney violating any of the above
provisions.
AB 2384 (Nakano): This bill would require that any policy, contract, or certificate
providing life insurance or any other annuity contract be filed with the
commissioner before being marketed, issued, delivered, or used. Existing law
provides that an insurer licensed to transact life insurance that fails to pay
the proceeds of, or payments under, any policy of life insurance issued by it
within 30 days after the death of the insured shall pay interest on the death
proceeds left on deposit, as specified. This bill would make this provision
applicable to insurers admitted to transact credit life insurance and
accidental death insurance. This bill would provide that, in addition, policies
of disability insurance that provide for death benefits, shall, as to those
death benefits, also be subject to provisions that provide that an insurer that
fails or refuses to pay the proceeds of, or payments under, any policy issued
by it within 30 days after the date of death shall pay interest on death
proceeds left on deposit with the insurer, as specified.
AB 2399 (Wiggins): This bill would prohibit an insurer from refusing to issue or renew a
homeowners' policy based upon the breed of dog owned by the applicant or
insured. The bill would allow an insurer
to consider a breed of dog when setting rates for a homeowners' policy if the
rate charged is supported by actuarial data regarding the risk of loss posed by
the particular breed, but would require that a specified discount be granted if
the dog has passed the test for the American Kennel Club Canine Good Citizen
certification.
AB 2427 (Samuelian): This bill would prohibit specified policies of
insurance that are issued, amended, or renewed on or after January 1, 2005,
from being canceled, and would prohibit an insurer from refusing to renew this
policy, only on the grounds of the presence of mold if the policy contains an
existing exclusion for payment of loss for that peril.
AB 2441 (Levine): This bill would prohibit an insurer from raising a policyholder's
rates or changing a policyholder's classification based upon any claim filed by
the policyholder that has not yet been paid, denied, or otherwise resolved.
This bill would prohibit any physician or medical provider from being reimbursed
for services rendered under the workers' compensation system unless the claim
for reimbursement specifies both the date and time that each service was
rendered by the physician or medical provider.
AB 2444 (Dutton): Existing law requires all insurers licensed to write and engaged in
writing basic property insurance to establish the California FAIR Plan
Association to formulate and administer the program serving this purpose. This
bill would require the association to provide an annual report to the
Legislature on policies in force and probable maximum losses in very high fire
hazard severity zones.
AB 2490 (Maddox): Existing law provides that, in the case of commercial insurance coverages, if an applicant requires that insurance coverage
be bound immediately for specified reasons, and the applicant cannot meet in
person with the agent or broker to sign the disclosure form, the agent or
broker may obtain the signature of the applicant within 5 days of binding
coverage, provided that the applicant may cancel the insurance so placed within
5 days of receiving the disclosure form from the agent or broker. This bill
would allow this procedure for immediately binding coverage to be used for any
insurance coverage.
AB 2557 (Koretz): Existing law makes it a misdemeanor to act, offer to
act, or assume to act in a capacity for which a license as an insurance agent,
broker, solicitor, or life agent is required without being properly licensed to
do so. This misdemeanor is punishable by
imprisonment of not more than 6 months in a county jail, a fine of not more
than $1,000, or both that imprisonment and fine. This bill would make this
unlicensed conduct punishable as a felony by 16 months, 2, or 3 years in the
state prison, or by a fine of up to $10,000 dollars, or both that fine and
imprisonment, or as a misdemeanor by imprisonment in a county jail of not more
than one year, a fine of $1,000 or both that fine and imprisonment. This bill
would also require an applicant or licensee to notify the commissioner in writing,
within a specified period, when certain background information changes after
the application has been filed or the license has been issued. This bill would,
in addition, authorize the commissioner to make and serve an order rescinding
approval for a provider who fails to comply with the commissioner's
standards. The bill would authorize the
commissioner to impose penalties for failure to comply with the commissioner's
standards.
AB 2604 (Pacheco): This bill would provide that unfair competition means acts occurring
within the state that are a violation of a state or federal law or
regulation. The bill would prohibit a
court from discriminating against a defendant in an unfair competition action
based on its domicile, headquarters, or principal place of business being
located in this state. The bill would
allow a person other than a government entity acting for the interests of
itself, its members, or the general public to bring an action for unfair
competition, or an injunction in an unfair competition action, only if it, its
members, or a member of the general public suffered injury in fact and a loss
of money or property as a result of the act of unfair competition. The bill would require a person other than a
government entity bringing an unfair competition action to comply with
specified procedural requirements. The
bill would instead require an unfair competition action to be commenced within
the time period specified for the violation or 3 years, whichever is shorter.
AB 2639 (Cox): Existing
law requires that a title insurer obtain a certificate of authority from the
Insurance Commissioner, and that an underwritten title company obtain a license
from the commissioner, to conduct business relating to title insurance in the
state. Existing law allows the commissioner, after a hearing, to suspend or
revoke the certificate of authority of any title insurer or the license of any
underwritten title company that, after 10 days' written notice from the
commissioner, willfully fails to comply with specified regulatory provisions.
This bill would, in addition, allow the commissioner, after notice and a
hearing as described above, to restrict the certificate of authority of a title
insurer or the license of an underwritten title company for willfully failing
to comply with these provisions.
AB 2677 (Ridley-Thomas): This bill would require every insurer licensed to
sell residential property insurance or personal auto insurance to maintain a
toll-free telephone number available to consumers in the State of California,
except as specified. The bill would
require each insurer to provide this toll-free telephone number to the
Department of Insurance and to make this toll-free number available to the
consumer by maintaining a listing in the toll-free telephone directory. The toll-free number would either provide the
caller with a quote for the requested insurance coverage or refer the caller to
an insurer representative, insurance agent, or insurance broker who would provide
a quote for the requested coverage. This
bill would provide that a violation of these provisions would be an unfair and
deceptive act or practice in the business of insurance.
AB 2684 (Lieber): Existing law requires each insurer admitted to
transact life insurance in the state that fails or refuses to pay the proceeds
of any policy of life insurance within 30 days after the death of the insured
to pay interest on the money payable, as specified, and to provide notice of
that fact to the named beneficiaries. This bill would apply these provisions to
disability insurance policies that provide for death benefits.
AB 2709 (Levine): This bill would require an insurance company or a surety company to
notify the department upon the issuance, renewal, cancellation, or expiration
of an automobile policy or bond issued by that company. The bill would require
the notice to include specified information, would require it to be submitted
by electronic means in a form developed by the department and would specify
that the notice would satisfy the notification of financial responsibility
requirements associated with renewal of the registration of a motor vehicle.
AB 2770 (Richman): This bill would require the administrative director, on or before
AB 2771 (Richman): This bill is a comprehensive workers’ compensation bill which includes
provisions relating to collective bargaining agreements, dispute resolution,
fraud, penalties, and the unreasonable delay of payments.
AB 2772 (Richman):
This bill is also a
comprehensive workers’ compensation bill.
This bill includes provisions relating to qualified medical examiners,
physicians, fee schedules, medical utilization schedules, treatment guidelines
and permanent disability.
AB 2780 (Maze): This bill, to the extent permitted by federal law, would require a
federally recognized Indian tribe to secure the payment of compensation by
securing from the director a consent to self-insure.
AB 2804 (Calderon): This bill would provide that, except as specified, all agreements
affecting any residential construction contract that purport to indemnify the promisee against liability for all claims for actionable
defects, or other damages to property, arising from the negligence or willful
misconduct of the promisee or the promisee's
agents, servants or independent contractors who are directly responsible to the
promisee, or for defects in design furnished by those
persons, are against public policy and are void and unenforceable. The bill
would further provide that under any insurance contract for residential
construction defects that names an additional insured, the duty to defend additional
insured is limited to only those claims and causes of action that arise out of
the named insured' s construction contract.
The bill would specify that in any action alleging construction defects,
each type of defect claimed is a separate cause of action. The bill would provide, however, that the
unreasonable failure of an insurer to provide a defense to an additional
insured shall be deemed a waiver of this provision.
AB 2866 (Nunez): Existing law provides that it is unlawful to make or cause to be made
any knowingly false or fraudulent statement, whether made orally or in writing,
of any fact material to the determination of the premium, rate, or cost of any
policy of workers' compensation insurance, for the purpose of reducing the
premium, rate, or cost of the insurance. This bill would specify that a
statement made in writing includes one made electronically.
AB 2937 (Nation): Existing law requires the department to claim against the estate of
any person who received benefits under the Medi-Cal
program in an amount equal to the payments for the health care received or the
value of the property received by any recipient from the decedent, with certain
exceptions. This bill would require the department to claim against the estate
of any decedent who, not more than 60 months prior to applying for long-term
care benefits under the Medi-Cal program, purchased
an annuity for the purpose of becoming eligible for Medi-Cal
benefits and not for the provision of income.
AB 2962 (Pavley): Under existing law, under an open policy, the measure
of indemnity in fire insurance is the expense to the insured of replacing the
thing lost or injured in its condition at the time of the injury, the expense
being computed as of the time of the commencement of the fire. This bill would
compute the expense at the inception of the loss. In addition, the bill would
provide that under an open policy that requires payment of actual cash value,
the measure of recovery shall be determined as follows: (1) in case of total
loss to the structure, the policy limit or the fair market value of the thing
lost or injured, whichever is less or (2) in case of a partial loss to the
structure, or the total loss to its contents, the amount it would cost the
insured to repair, rebuild, or replace the thing lost or injured less a fair
and reasonable deduction for physical depreciation, as specified, based upon
its condition at the time of the injury or the policy limit, whichever is less.
AB 2985 (McCarthy): The Health Insurance Act of 2003 (SB 2, Chapter 673 of the
Statutes of 2003), which is
the subject of a referendum to appear on the November 2, 2004, general election
ballot, creates the State Health Purchasing Program, to be administered by the
Managed Risk Medical Insurance Board.
Under that act, certain employers would be required to provide specified
health care coverage to employees, and in the case of large employers, to
dependents of employees, either by arranging for that coverage directly or
through payment of a fee to the program for coverage through the program. Employees and dependents of large employers
would be required to be covered beginning
SB 1466 (Ortiz): This bill would repeal existing rate regulations. Instead, the bill would require the
commissioner to approve or issue as adequate for all admitted workers'
compensation insurers a classification of risks and premium rates. It would prohibit insurers from using rates
lower than the approved rates. The bill would make related changes. The bill
would provide that, notwithstanding the above provisions, if the commissioner
declares that a state of crisis exists in the workers' compensation insurance
market in
SB 1474 (Escutia): This bill would prohibit an insurer from refusing to
issue or renew a homeowners' policy on the basis of claims made by the
applicant or insured unless the applicant has made 3 or more claims, as
specified, within the preceding 3-year period.
It would prohibit an insurer from charging a surcharge to issue or renew
a policy on the basis of claims unless this circumstance exists. The bill would provide that certain types of
claims may not be considered in determining the number of claims filed for the
purposes of these provisions, and would specify claims with respect to which
the prohibitions regarding refusals to issue or renew policies would not apply.
The bill would provide that a nonrenewal based on the
number of claims filed that is otherwise allowed under these provisions shall
not be effective unless the insurer has provided to the insured a written
notice containing specified information after the last claim.
SB 1496 (Romero): This bill would require a publicly traded corporation, insurance
company and financial institution that is obligated to file a California
corporate income or franchise tax return for taxable years beginning on or
after January 1, 2004, to include in the entity's annual statement certain
information from the California tax return, as specified.
SB 1500 (Speier): The bill would require each applicant for an original
registration or a transfer of registration of a motor vehicle to also submit
the described financial responsibility documents. This bill would delete the
provisions making these financial responsibility requirements inapplicable, on
or after
SB 1582 (Bowen): This bill would make it an infraction for a person under 18 years of
age to drive while using a wireless telephone.
SB 1833 (Dunn): This bill would require a builder against whom a construction defect
claim has been received to offer all other potentially responsible persons a
joint cost sharing agreement. The bill
would specify the required contents and effect of that agreement, including the
duty to indemnify other potentially responsible persons, and relief from specified
legal responsibilities. The bill would
require the builder to select the defense counsel to represent all parties to
the agreement, as specified, and would prohibit claimants from bringing an
action directly against a party to the agreement other than the builder. The bill would apply to all contracts between
potentially responsible persons entered into after
SB 1839 (Figueroa): Existing law makes certain indemnity agreements contained in, or
affected by, a construction contract void and unenforceable as against public
policy to the extent that they purport to indemnify the promisee
against liability for damages for death, or bodily injury, injury to property,
or other loss or expense arising from his or her sole negligence or willful
misconduct, or that of his or her agents, servants, or independent contractor,
including defects in design provided by those persons, except as specified.
This bill would revise and recast that provision to apply to damages arising in
whole or in part from the negligence or willful misconduct of the indemnitee or his or her agents, servants, or independent
contractors who are directly or indirectly responsible to the indemnitee, as well as to agreements to defend an indemnitee. The bill would also set forth related
provisions.
SB 1855 (Alpert): Existing law requires the insurer, following the issuance or initial
renewal of a residential property insurance policy, to provide the disclosure
statement to the insured every other year. This bill would require that this
disclosure statement include a cost comparison of each of the different
categories of coverage offered by that insurer. It would require that the cost
comparison state the premium that would be charged to the insured for each
category of coverage if the insured were to opt for that category of coverage.
This bill would allow a policyholder under a homeowners' insurance policy,
within 30 days of the effective date of the policy, or any renewal thereof, to
increase or decrease the limits of liability with respect to any residence
covered under the policy based upon reasonable and supportable estimates of
value or replacement cost. This bill would require that the declarations page
or disclosure form provide an explanation of the basis for the determination of
these limits, and advise the policyholder that he or she may increase or
decrease the limits as described above. The bill would require that this
information also be provided in writing to the insured whenever the limits of
liability for the structure are changed.
The bill would provide that an insurer that fails to provide this notice
is responsible for the accuracy of the replacement cost of the structure
indicated in the limits of liability, and shall be liable for the full
replacement cost of the structure in the event of a loss that exceeds the
limits established by the insurer.
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