BILL NUMBER: SB 899	CHAPTERED
	BILL TEXT

	CHAPTER  34
	FILED WITH SECRETARY OF STATE  APRIL 19, 2004
	APPROVED BY GOVERNOR  APRIL 19, 2004
	PASSED THE SENATE  APRIL 16, 2004
	PASSED THE ASSEMBLY  APRIL 16, 2004
	CONFERENCE REPORT NO.  1
	PROPOSED IN CONFERENCE  APRIL 15, 2004
	AMENDED IN ASSEMBLY  JULY 14, 2003
	AMENDED IN SENATE  APRIL 21, 2003

INTRODUCED BY   Senator Poochigian
   (Coauthors:  Senators Machado, Florez, Aanestad, Battin, Karnette,
Margett, McPherson, Perata, Scott, and Speier)
   (Coauthors:  Assembly Members Parra, Aghazarian, Bogh, Cohn,
Dutra, Dutton, Firebaugh, Frommer, Harman, Jerome Horton, Keene,
Leno, Leslie, Liu, Maddox, Matthews, McCarthy, Montanez, Nakanishi,
Nation, Nunez, Reyes, Salinas, Samuelian, Simitian, Strickland, Wolk,
and Wyland)

                        FEBRUARY 21, 2003

   An act to amend Sections 62.5, 139.2, 139.48, 2699, 3201.5,
3201.7, 3201.9, 3202.5, 3207, 3823, 4060, 4061, 4062, 4062.1, 4062.5,
4600, 4603.2, 4604.5, 4650, 4656, 4658, 4660, 4706.5, 4903.05, 5402,
5703, and 6401.7 of, to amend, repeal, and add Section 5814 of, to
add Sections 138.65, 4062.3, 4062.8, 4658.1, 4664, and 5814.6 to, to
add Article 2.3 (commencing with Section 4616) to Chapter 2 of Part 2
of Division 4 of, to repeal Sections 4062.01, 4062.9, 4750, and
4750.5 of, to repeal and add Sections 4062.2 and 4663 of, and to
repeal, add, and repeal Section 139.5 of, the Labor Code, relating to
workers' compensation, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 899, Poochigian.  Workers' compensation.
   Existing workers' compensation law generally requires employers to
secure the payment of workers' compensation, including medical
treatment, for injuries incurred by their employees that arise out
of, or in the course of, employment.
   Existing law establishes the Workers' Compensation Administration
Revolving Fund as a special account in the State Treasury and moneys
in the fund may be expended by the Department of Industrial
Relations, upon appropriation by the Legislature, for the
administration of the workers' compensation program.
   This bill would expand the purposes for which money in the fund
may be used to include the Return-to-Work Program.
   Existing law requires that 80% of the costs of the program be
borne by the General Fund and 20% of the costs of the program be
borne by the employers through assessments levied by the Director of
Industrial Relations.
   This bill would instead refer to the assessments as surcharges and
require that these employer surcharges account for the total costs
of the program.
   Existing law requires the Administrative Director of the Division
of Workers' Compensation to conduct a study of medical treatment
provided to workers who have sustained industrial injuries and
illnesses.
   This bill would require the administrative director, after
consultation with the Insurance Commissioner, to contract with a
qualified organization to study the 2003 and 2004 legislative reforms
on insurance rates.  It would require insurers to submit to the
contracting organization information, as established by the
contracting organization, at least quarterly and annually.  It would
require the study to be submitted to the Governor, the Insurance
Commissioner, and the Legislature on or before January 1, 2006.  The
bill would require the Governor and the Insurance Commissioner to
review the study, make recommendations, and permit them to submit
proposals to the Legislature if they make certain determinations.  It
would require insurers to bear up to $1,000,000 of the cost of the
study.
   Existing law requires the administrative director to appoint
qualified medical evaluators in each of the respective specialties as
required for the evaluation of medical-legal issues.  Existing law
further requires the administrative director to adopt regulations
concerning procedures to be followed by all qualified medical
evaluators in evaluating the existence and extent of permanent
impairment and limitations resulting from the injury, and specifies
the factors upon which these evaluations are to be based.
   This bill would delete these factors and would require that the
evaluations be conducted in a manner consistent with other specified
standards.
   Existing law permits aggrieved employees to bring civil actions to
recover penalties for violations of the Labor Code, but does not
alter the exclusive remedy provided by the workers' compensation
provisions of the code.
   This bill would provide that the right to recover these penalties
does not apply to the recovery of penalties in connection with the
workers' compensation provisions of the code.
   Existing law requires the administrative director to adopt
regulations regarding procedures governing the determination of any
disputed medical issues.
   This bill would require that these procedures be consistent with
standards used in connection with the medical treatment utilization
schedule adopted by the administrative director.
   Existing law, until January 1, 2009, requires the administrative
director to establish the Return-to-Work Program in order to promote
the early and sustained return to work of the employee following a
work-related injury, and to pay a wage reimbursement, workplace
modification expense reimbursement, and premium reimbursement to an
employer that employs 100 or fewer employees, if certain conditions
are met.
   This bill would eliminate the payment of wage reimbursement and
premium reimbursement from the program.  The bill would instead make
reimbursements under the program available, to the extent funds are
available, for an eligible employer, as defined.
   Existing law establishes the Workers' Compensation Return-to-Work
Fund as a special fund in the State Treasury, moneys from which may
be expended by the administrative director, upon appropriation by the
Legislature, only for purposes of making the above reimbursements.
   This bill would provide that the fund shall consist of certain
penalties imposed in connection with delayed or refused compensation
payments and transfers made by the administrative director from the
Workers' Compensation Administration Revolving Fund.
   Existing law, until January 1, 2004, required the administrative
director to establish a vocational rehabilitation unit to perform
duties in connection with vocational rehabilitation services, and
provided that when an employee was determined to be medically
eligible and chose to participate in a vocational rehabilitation
program, he or she would continue to receive temporary disability
benefits, a maintenance allowance, and additional living expenses.
Chapter 639 of the Statutes of 2003, which became effective on
January 1, 2004, eliminated vocational rehabilitation as part of the
workers' compensation system.
   This bill, until January 1, 2009, would reenact the above
provisions relating to vocational rehabilitation for employees
injured prior to January 1, 2004.
   Existing law requires any insurer, self-insured employer,
3rd-party administrator, workers' compensation administrative law
judge, audit unit, attorney, or other person that believes that a
fraudulent claim has been made by any person or entity providing
medical care to report the apparent fraudulent claim.
   This bill would prohibit any person making such a report in good
faith from being subject to any civil liability.
   Existing law authorizes collective bargaining agreements between a
private employer or groups of employers engaged in
construction-related activities and a recognized or certified
exclusive bargaining representative that establishes a dispute
resolution process for workers' compensation instead of the hearing
before the Workers' Compensation Appeals Board and its workers'
compensation administrative law judges, or that provides for other
alternative workers' compensation programs.  Existing law also
authorizes similar dispute resolution provisions contained in
labor-management agreements.
   This bill would authorize parties to these agreements to negotiate
any aspect of the delivery of medical benefits and the delivery of
disability compensation to the employees who are eligible for health
care coverage for nonoccupational injuries and illnesses through
their employer.  It would also require the Commission on Health and
Safety and Workers' Compensation, on or before June 30, 2006, and
annually thereafter, to prepare and publish a report in connection
with these provisions.
   Existing law requires that workers' compensation provisions be
liberally construed by the courts with the purpose of extending their
benefits for the protection of persons injured in the course of
their employment.
   Existing law prohibits this provision from being construed as
relieving a party or a lien claimant from meeting the evidentiary
burden of proof by a preponderance of the evidence.
   This bill would repeal this provision and instead would require
that all parties and lien claimants shall meet the evidentiary burden
of proof on all issues by a preponderance of the evidence in order
that all parties are considered equal before the law.
   Existing law establishes procedures for the resolution of disputes
regarding the compensability of an injury.  Existing law also
establishes procedures, including procedures regarding the selection
of agreed and qualified medical evaluators, that apply if the parties
do not agree to a permanent disability rating based on the treating
physician's evaluation and the employee is represented by an
attorney, as well as when the employee is not represented by an
attorney.
   This bill would revise and recast these provisions.
   Existing law provides that regardless of the date of injury, if
the employee has been treated by his or her personal physician, no
presumption of correctness shall apply to the opinion of that
physician on the issue of extent and scope of medical treatment,
either prior or subsequent to the issuance of an award, unless the
physician or chiropractor was predesignated prior to the date of
injury, in which case the opinion of that physician or chiropractor
is presumed to be correct.
   This bill would repeal this presumption.  It would also revise
provisions in connection with the predesignation of a physician prior
to injury.
   Existing law generally provides for the reimbursement of medical
providers for services rendered in connection with the treatment of a
worker's injury.
   This bill would limit the amounts paid for these services to the
reasonable maximum amounts in the official medical fee schedule in
effect on the date of service.
   Existing law requires an employer to provide all medical services
reasonably required to cure or relieve the injured worker from the
effects of the injury.
   This bill would define medical treatment that is reasonably
required to cure or relieve the injured worker from the effects of
the injury.
   Existing law permits an employee, after 30 days from the date the
injury is reported, to be treated by a physician of his or her own
choice or at a facility of his or her own choice within a reasonable
geographic distance.
   This bill, instead, would authorize the employee to be treated by
a physician or at a facility of his or her own choice under these
provisions if the employer has not established a medical provider
network.
   This bill would authorize an insurer or employer, as defined, on
or after January 1, 2005, to establish a medical provider network for
the provision of medical treatment to injured employees, and would
require the administrative director to approve the plans for these
medical provider networks.  The bill would require an injured
employee to select a physician from the provider network to provide
treatment for the injury.  The bill would permit an employee to
obtain 2nd and 3rd opinions regarding treatment from physicians
within the network and would establish an independent medical review
process to resolve disputes regarding whether the treatment is
medically necessary.
   Existing law provides that upon adoption by the administrative
director of a medical treatment utilization schedule, the recommended
guidelines set forth in the schedule create a rebuttable presumption
of correctness on the issue and extent and scope of medical
treatment of a worker's injuries.
   This bill would provide that the presumption may be controverted
by a preponderance of the scientific medical evidence and would
provide that the presumption is one affecting the burden of proof.
   Existing law further requires that the recommended guidelines set
forth in the medical treatment utilization schedule reflect practices
as generally accepted by the health care community.
   This bill instead would require that the guidelines be evidence
and scientifically based, nationally recognized, and peer-reviewed.
   Existing law provides that until the medical treatment utilization
schedule is adopted by the administrative director, the guidelines
set forth in the American College of Occupational and Environmental
Medicine's Occupational Medicine Practice Guidelines shall be
presumptively correct on the issue of extent and scope of medical
treatment.
   This bill would provide that this presumption is applicable
regardless of the date of injury.
   Existing law provides that for injuries occurring on and after
January 1, 2004, an employee shall be entitled to no more than 24
chiropractic and 24 physical therapy visits per industrial injury.
   This bill would similarly provide that an employee shall be
entitled to no more than 24 occupational therapy visits per
industrial injury.
   Existing law prohibits aggregate disability payments for a single
injury occurring on or after January 1, 1979, causing temporary
partial disability, from extending for more than 240 compensable
weeks within a period of 5 years from the date of injury.
   This bill would instead prohibit aggregate disability payments for
a single injury occurring on or after the effective date of this
bill, causing temporary disability, from extending for more than 104
compensable weeks within a period of 2 years from the date of
commencement of temporary disability payment, except if an employee
suffers from certain injuries or conditions.
   Existing workers' compensation law authorizes the administrative
director to prepare, adopt, and from time to time amend a schedule
for the determination of the percentage of permanent disabilities in
accordance with specified provisions.
   This bill would require, rather than authorize, the administrative
director to amend the schedule at least once every 5 years.  The
bill would provide that the schedule as revised pursuant to changes
made in legislation enacted during the 2003-04 Regular and
Extraordinary Sessions would apply to comparable compensable claims
arising before January 1, 2005, under certain circumstances.  It also
would require the schedule to promote consistency, uniformity, and
objectivity.
   Existing law provides that when determining the percentages of
permanent disability, account shall be taken of various factors,
including the nature of the physical injury or disfigurement and with
consideration being given to the diminished ability of the injured
employee to compete in an open labor market.
   This bill would eliminate the requirement to consider the ability
of the injured employee to compete in the open labor market and,
instead, would require that consideration be given to an employee's
diminished future earning capacity, which would be a numeric formula
based on criteria established by the bill.  The bill would require
the nature of the physical injury or disfigurement to incorporate
descriptions and measurements contained in a specific publication of
the American Medical Association.  It would also require the
administrative director to formulate the adjusted rating schedule
based on empirical data and findings contained in a specified report,
and to adopt regulations, on or before January 1, 2005, to implement
the changes made to these provisions by this bill.
   Existing law provides that when the extent of permanent disability
cannot be determined at the date of last payment of temporary
disability indemnity, the employer nevertheless shall commence and
continue to make the timely payment of permanent disability until the
employer's reasonable estimate of permanent disability indemnity due
has been paid.
   This bill would instead require the employer to commence and
continue the timely payment of permanent disability indemnity based
on a reasonable estimate of the amount due at the end of the period
for the payment of temporary disability indemnity specified above,
regardless of whether the extent of permanent disability can be
determined at that date.
   Existing law provides a schedule containing the method for the
computation of permanent disability benefits.
   This bill would establish the schedule for the computation of
these benefits, for injuries occurring on or after the effective date
of the revised permanent disability schedule adopted by the
administrative director pursuant to this bill, with the amounts under
the schedule to be increased by 15% if, within 60 days of the
disability becoming permanent and stationary, the employee is offered
regular work, modified work, or alternative work, as defined, that
lasts at least 12 months.  The bill would provide that this schedule
for permanent disability payments also would apply to compensable
claims arising before April 30, 2004, under certain circumstances.
The bill would exempt employers that employ fewer than 50 employees
from the above provisions of the schedule.
   Existing law contains provisions with respect to the apportionment
of permanent disability in connection with an employee's injury or
condition.
   This bill would repeal and recast these provisions.  This bill
would additionally require any physician who prepares a report
addressing the issue of permanent disability due to a claimed
industrial injury to address the issue of causation of the
disability.  It would also require an employee who claims an
industrial injury to disclose, upon request, all previous permanent
disabilities or physical impairments, and would impose limits on the
percentage of permanent disability an employee may receive.
   Existing law provides for the filing of a claim form by the
injured employee with the employer and also provides that if
liability is not rejected within 90 days after that form is filed,
the injury is presumed compensable.
   This bill would provide that within one working day after an
employee files a claim form, the employer shall authorize the
provision of treatment, for the alleged injury and shall continue to
provide the treatment until the date that liability for the claim is
accepted or rejected.  It would, however, limit liability for medical
treatment to $10,000 until the date the claim is accepted or
rejected.
   Existing law provides that when payment has been unreasonably
delayed or refused, the full amount of the order, decision, or award
shall be increased by 10%.
   This bill would make these provisions inoperative on June 1, 2004,
and repeal them as of January 1, 2005.  The bill would, instead,
commencing June 1, 2004, prescribe procedures under which, when the
payment of compensation has been unreasonably delayed or refused, the
amount of the payment unreasonably delayed or refused shall be
increased up to 25% or $10,000, whichever is less.  The bill would
provide that these provisions shall apply to all injuries, without
regard to the date of the injury.  It would permit an employer to pay
a self-imposed penalty in lieu of the penalty that may be awarded by
the appeals board.
   The bill would provide that any employer or insurer that knowingly
delays or refuses to pay compensation with a frequency that
indicates a general business practice is liable for administrative
penalties of not to exceed $400,000, which would be deposited in the
Return-to-Work Fund.
   Existing law authorizes the Workers' Compensation Appeals Board to
receive as evidence and use as proof of any fact in dispute various
reports, statements, publications, and medical treatment protocols.
Existing law requires the administrative director to adopt guidelines
for use in the medical treatment utilization schedule.
   This bill would authorize the appeals board to receive as evidence
the medical treatment utilization guidelines or the medical
treatment utilization guidelines adopted by the administrative
director.
   Existing law requires every employer to establish, implement, and
maintain an effective injury prevention program.  Existing law also
authorizes an employer to adopt the Model Injury and Illness
Prevention Program for Non-High-Hazard Employment and the Model
Injury and Illness Prevention Program for Employers in Industries
with Intermittent Employment, developed by the Division of
Occupational Safety and Health.  Existing law requires every workers'
compensation insurer to conduct a review of these injury and illness
prevention programs of each of its insureds within 4 months of the
commencement of the initial insurance policy term.
   This bill would instead require any workers' compensation insurer
to conduct a review of these programs of each of its insureds with an
experience modification of 2.0 or greater to determine whether the
insured has implemented all of the required components within 6
months of the commencement of the initial insurance policy term.
   The bill would also make various conforming changes.
  This bill would declare that it would take effect immediately as an
urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 62.5 of the Labor Code is amended to read:
   62.5.  (a) The Workers' Compensation Administration Revolving Fund
is hereby created as a special account in the State Treasury.  Money
in the fund may be expended by the department, upon appropriation by
the Legislature, for the administration of the workers' compensation
program set forth in this division and Division 4 (commencing with
Section 3200), other than the activities financed pursuant to Section
3702.5, and the Return-to-Work Program set forth in Section 139.48,
and may not be used or borrowed for any other purpose.
   (b) The fund shall consist of surcharges made pursuant to
subdivision (e).
   (c) (1) The Uninsured Employers Benefits Trust Fund is hereby
created as a special trust fund account in the State Treasury, of
which the director is trustee, and its sources of funds are as
provided in subdivision (e).  Notwithstanding Section 13340 of the
Government Code, the fund is continuously appropriated for the
payment of nonadministrative expenses of the workers' compensation
program for workers injured while employed by uninsured employers in
accordance with Article 2 (commencing with Section 3710) of Chapter 4
of Part 1 of Division 4, and shall not be used for any other
purpose.  All moneys collected shall be retained in the trust fund
until paid as benefits to workers injured while employed by uninsured
employers.  Nonadministrative expenses include audits and reports of
services prepared pursuant to subdivision (b) of Section 3716.1.
The surcharge amount for this fund shall be stated separately.
   (2) Notwithstanding any other provision of law, all references to
the Uninsured Employers Fund shall mean the Uninsured Employers
Benefits Trust Fund.
   (3) Notwithstanding paragraph (1), in the event that budgetary
restrictions or impasse prevent the timely payment of administrative
expenses from the Workers' Compensation Administration Revolving
Fund, those expenses shall be advanced from the Uninsured Employers
Benefits Trust Fund.  Expense advances made pursuant to this
paragraph shall be reimbursed in full to the Uninsured Employers
Benefits Trust Fund upon enactment of the annual Budget Act.
   (d) (1) The Subsequent Injuries Benefits Trust Fund is hereby
created as a special trust fund account in the State Treasury, of
which the director is trustee, and its sources of funds are as
provided in subdivision (e).  Notwithstanding Section 13340 of the
Government Code, the fund is continuously appropriated for the
nonadministrative expenses of the workers' compensation program for
workers who have suffered serious injury and who are suffering from
previous and serious permanent disabilities or physical impairments,
in accordance with Article 5 (commencing with Section 4751) of
Chapter 2 of Part 2 of Division 4, and Section 4 of Article XIV of
the California Constitution, and shall not be used for any other
purpose.  All moneys collected shall be retained in the trust fund
until paid as benefits to workers who have suffered serious injury
and who are suffering from previous and serious permanent
disabilities or physical impairments.  Nonadministrative expenses
include audits and reports of services pursuant to subdivision (c) of
Section 4755.  The surcharge amount for this fund shall be stated
separately.
   (2) Notwithstanding any other provision of law, all references to
the Subsequent Injuries Fund shall mean the Subsequent Injuries
Benefits Trust Fund.
   (3) Notwithstanding paragraph (1), in the event that budgetary
restrictions or impasse prevent the timely payment of administrative
expenses from the Workers' Compensation Administration Revolving
Fund, those expenses shall be advanced from the Subsequent Injuries
Benefits Trust Fund.  Expense advances made pursuant to this
paragraph shall be reimbursed in full to the Subsequent Injuries
Benefits Trust Fund upon enactment of the annual Budget Act.
   (e) (1) Separate surcharges shall be levied by the director upon
all employers, as defined in Section 3300, for purposes of deposit in
the Workers' Compensation Administration Revolving Fund, the
Uninsured Employers Benefits Trust Fund, and the Subsequent Injuries
Benefits Trust Fund.  The total amount of the surcharges shall be
allocated between self-insured employers and insured employers in
proportion to payroll respectively paid in the most recent year for
which payroll information is available.  The director shall adopt
reasonable regulations governing the manner of collection of the
surcharges.  The regulations shall require the surcharges to be paid
by self-insurers to be expressed as a percentage of indemnity paid
during the most recent year for which information is available, and
the surcharges to be paid by insured employers to be expressed as a
percentage of premium.  In no event shall the surcharges paid by
insured employers be considered a premium for computation of a gross
premium tax or agents' commission.  In no event shall the total
amount of the surcharges paid by insured and self-insured employers
exceed the amounts reasonably necessary to carry out the purposes of
this section.
   (2) The regulations adopted pursuant to paragraph (1) shall be
exempt from the rulemaking provisions of the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code).
  SEC. 1.5.  Section 138.65 is added to the Labor Code, to read:
   138.65.  (a) The administrative director, after consultation with
the Insurance Commissioner, shall contract with a qualified
organization to study the effects of the 2003 and 2004 legislative
reforms on workers' compensation insurance rates.  The study shall
do, but not be limited to, all of the following:
   (1) Identify and quantify the savings generated by the reforms.
   (2) Review workers' compensation insurance rates to determine the
extent to which the reform savings were reflected in rates.  When
reviewing the rates, consideration shall be given to an insurer's
premium revenue, claim costs, and surplus levels.
   (3) Assess the effect of the reform savings on replenishing
surpluses for workers' compensation insurance coverage.
   (4) Review the effects of the reforms on the workers' compensation
insurance rates, marketplace, and competition.
   (5) Review the adequacy and accuracy of the pure premium rate as
recommended by the Workers' Compensation Insurance Bureau and the
pure premium rate adopted by the Insurance Commissioner.
   (b) Insurers shall submit to the contracting organization premium
revenue, claims costs, and surplus levels in different timing
aggregates as established by the contracting organization, but at
least quarterly and annually.  The contracting organization may also
request additional materials when appropriate.  The contracting
organization and the commission shall maintain strict confidentiality
of the data.  An insurer that fails to comply with the reporting
requirements of this subdivision is subject to Section 11754 of the
Insurance Code.
   (c) The administrative director shall submit to the Governor, the
Insurance Commissioner, and the President pro Tempore of the Senate,
the Speaker of the Assembly, and the chairs of the appropriate policy
committees of the Legislature, a progress report on the study on
January 1, 2005, and July 1, 2005, and the final study on or before
January 1, 2006.  The Governor and the Insurance Commissioner shall
review the results of the study and make recommendations as to the
appropriateness of regulating insurance rates.  If, after reviewing
the study, the Governor and the Insurance Commissioner determine that
the rates do not appropriately reflect the savings and the timing of
the savings associated with the 2003 and 2004 reforms, the Governor
and the Insurance Commissioner may submit proposals to the
Legislature.  The proposals shall take into consideration how rates
should be regulated, and by whom.  In no event shall the proposals
unfairly penalize insurers that have properly reflected the 2003 and
2004 reforms in their rates, or can verify that they have not
received any cost savings as a result of the reforms.
   (d) The cost of the study shall be borne by the insurers up to one
million dollars ($1,000,000).  The cost of the study shall be
allocated to an insurer based on the insurer's proportionate share of
the market.
  SEC. 2.  Section 139.2 of the Labor Code is amended to read:
   139.2.  (a) The administrative director shall appoint qualified
medical evaluators in each of the respective specialties as required
for the evaluation of medical-legal issues.  The appointments shall
be for two-year terms.
   (b) The administrative director shall appoint or reappoint as a
qualified medical evaluator a physician, as defined in Section
3209.3, who is licensed to practice in this state and who
demonstrates that he or she meets the requirements in paragraphs (1),
(2), (6), and (7), and, if the physician is a medical doctor, doctor
of osteopathy, doctor of chiropractic, or a psychologist, that he or
she also meets the applicable requirements in paragraph (3), (4), or
(5).
   (1) Prior to his or her appointment as a qualified medical
evaluator, passes an examination written and administered by the
administrative director for the purpose of demonstrating competence
in evaluating medical-legal issues in the workers' compensation
system.  Physicians shall not be required to pass an additional
examination as a condition of reappointment.  A physician seeking
appointment as a qualified medical evaluator on or after January 1,
2001, shall also complete prior to appointment, a course on
disability evaluation report writing approved by the administrative
director.  The administrative director shall specify the curriculum
to be covered by disability evaluation report writing courses, which
shall include, but is not limited to, 12 or more hours of
instruction.
   (2) Devotes at least one-third of total practice time to providing
direct medical treatment, or has served as an agreed medical
evaluator on eight or more occasions in the 12 months prior to
applying to be appointed as a qualified medical evaluator.
   (3) Is a medical doctor or doctor of osteopathy and meets one of
the following requirements:
   (A) Is board certified in a specialty by a board recognized by the
administrative director and either the Medical Board of California
or the Osteopathic Medical Board of California.
   (B) Has successfully completed a residency training program
accredited by the American College of Graduate Medical Education or
the osteopathic equivalent.
   (C) Was an active qualified medical evaluator on June 30, 2000.
   (D) Has qualifications that the administrative director and either
the Medical Board of California or the Osteopathic Medical Board of
California, as appropriate, both deem to be equivalent to board
certification in a specialty.
   (4) Is a doctor of chiropractic and meets either of the following
requirements:
   (A) Has completed a chiropractic postgraduate specialty program of
a minimum of 300 hours taught by a school or college recognized by
the administrative director, the Board of Chiropractic Examiners and
the Council on Chiropractic Education.
   (B) Has been certified in California workers' compensation
evaluation by a provider recognized by the administrative director.
The certification program shall include instruction on disability
evaluation report writing that meets the standards set forth in
paragraph (1).
   (5) Is a psychologist and meets one of the following requirements:

   (A) Is board certified in clinical psychology by a board
recognized by the administrative director.
   (B) Holds a doctoral degree in psychology, or a doctoral degree
deemed equivalent for licensure by the Board of Psychology pursuant
to Section 2914 of the Business and Professions Code, from a
university or professional school recognized by the administrative
director and has not less than five years' postdoctoral experience in
the diagnosis and treatment of emotional and mental disorders.
   (C) Has not less than five years' postdoctoral experience in the
diagnosis and treatment of emotional and mental disorders, and has
served as an agreed medical evaluator on eight or more occasions
prior to January 1, 1990.
   (6) Does not have a conflict of interest as determined under the
regulations adopted by the administrative director pursuant to
subdivision (o).
   (7) Meets any additional medical or professional standards adopted
pursuant to paragraph (6) of subdivision (j).
   (c) The administrative director shall adopt standards for
appointment of physicians who are retired or who hold teaching
positions who are exceptionally well qualified to serve as a
qualified medical evaluator even though they do not otherwise qualify
under paragraph (2) of subdivision (b).  In no event shall a
physician whose full-time practice is limited to the forensic
evaluation of disability be appointed as a qualified medical
evaluator under this subdivision.
   (d) The qualified medical evaluator, upon request, shall be
reappointed if he or she meets the qualifications of subdivision (b)
and meets all of the following criteria:
   (1) Is in compliance with all applicable regulations and
evaluation guidelines adopted by the administrative director.
   (2) Has not had more than five of his or her evaluations that were
considered by a workers' compensation administrative law judge at a
contested hearing rejected by the workers' compensation
administrative law judge or the appeals board pursuant to this
section during the most recent two-year period during which the
physician served as a qualified medical evaluator.  If the workers'
compensation administrative law judge or the appeals board rejects
the qualified medical evaluator's report on the basis that it fails
to meet the minimum standards for those reports established by the
administrative director or the appeals board, the workers'
compensation administrative law judge or the appeals board, as the
case may be, shall make a specific finding to that effect, and shall
give notice to the medical evaluator and to the administrative
director.  Any rejection shall not be counted as one of the five
qualifying rejections until the specific finding has become final and
time for appeal has expired.
   (3) Has completed within the previous 24 months at least 12 hours
of continuing education in impairment evaluation or workers'
compensation-related medical dispute evaluation approved by the
administrative director.
   (4) Has not been terminated, suspended, placed on probation, or
otherwise disciplined by the administrative director during his or
her most recent term as a qualified medical evaluator.
   If the evaluator does not meet any one of these criteria, the
administrative director may in his or her discretion reappoint or
deny reappointment according to regulations adopted by the
administrative director.  In no event may a physician who does not
currently meet the requirements for initial appointment or who has
been terminated under subdivision (e) because his or her license has
been revoked or terminated by the licensing authority be reappointed.

   (e) The administrative director may, in his or her discretion,
suspend or terminate a qualified medical evaluator during his or her
term of appointment without a hearing as provided under subdivision
(k) or (l) whenever either of the following conditions occurs:
   (1) The evaluator's license to practice in California has been
suspended by the relevant licensing authority so as to preclude
practice, or has been revoked or terminated by the licensing
authority.
   (2) The evaluator has failed to timely pay the fee required by the
administrative director pursuant to subdivision (n).
   (f) The administrative director shall furnish a physician, upon
request, with a written statement of its reasons for termination of,
or for denying appointment or reappointment as, a qualified medical
evaluator.  Upon receipt of a specific response to the statement of
reasons, the administrative director shall review his or her decision
not to appoint or reappoint the physician or to terminate the
physician and shall notify the physician of its final decision within
60 days after receipt of the physician's response.
   (g) The administrative director shall establish agreements with
qualified medical evaluators to assure the expeditious evaluation of
cases assigned to them for comprehensive medical evaluations.
   (h) (1) When requested by an employee or employer pursuant to
Section 4062.1, the medical director appointed pursuant to Section
122 shall assign three-member panels of qualified medical evaluators
within five working days after receiving a request for a panel.  If a
panel is not assigned within 15 working days, the employee shall
have the right to obtain a medical evaluation from any qualified
medical evaluator of his or her choice.  The medical director shall
use a random selection method for assigning panels of qualified
medical evaluators.  The medical director shall select evaluators who
are specialists of the type requested by the employee.  The medical
director shall advise the employee that he or she should consult with
his or her treating physician prior to deciding which type of
specialist to request.
   (2) The administrative director shall promulgate a form that shall
notify the employee of the physicians selected for his or her panel
after a request has been made pursuant to Section 4062.1 or 4062.2.
The form shall include, for each physician on the panel, the
physician's name, address, telephone number, specialty, number of
years in practice, and a brief description of his or her education
and training, and shall advise the employee that he or she is
entitled to receive transportation expenses and temporary disability
for each day necessary for the examination.  The form shall also
state in a clear and conspicuous location and type:  "You have the
right to consult with an information and assistance officer at no
cost to you prior to selecting the doctor to prepare your evaluation,
or you may consult with an attorney.  If your claim eventually goes
to court, the workers' compensation administrative law judge will
consider the evaluation prepared by the doctor you select to decide
your claim."
   (3) When compiling the list of evaluators from which to select
randomly, the medical director shall include all qualified medical
evaluators who meet all of the following criteria:
   (A) He or she does not have a conflict of interest in the case, as
defined by regulations adopted pursuant to subdivision (o).
   (B) He or she is certified by the administrative director to
evaluate in an appropriate specialty and at locations within the
general geographic area of the employee's residence.
   (C) He or she has not been suspended or terminated as a qualified
medical evaluator for failure to pay the fee required by the
administrative director pursuant to subdivision (n) or for any other
reason.
   (4) When the medical director determines that an employee has
requested an evaluation by a type of specialist that is appropriate
for the employee's injury, but there are not enough qualified medical
evaluators of that type within the general geographic area of the
employee's residence to establish a three-member panel, the medical
director shall include sufficient qualified medical evaluators from
other geographic areas and the employer shall pay all necessary
travel costs incurred in the event the employee selects an evaluator
from another geographic area.
   (i) The medical director appointed pursuant to Section 122 shall
continuously review the quality of comprehensive medical evaluations
and reports prepared by agreed and qualified medical evaluators and
the timeliness with which evaluation reports are prepared and
submitted.  The review shall include, but not be limited to, a review
of a random sample of reports submitted to the division, and a
review of all reports alleged to be inaccurate or incomplete by a
party to a case for which the evaluation was prepared.  The medical
director shall submit to the administrative director an annual report
summarizing the results of the continuous review of medical
evaluations and reports prepared by agreed and qualified medical
evaluators and make recommendations for the improvement of the system
of medical evaluations and determinations.
   (j) After public hearing pursuant to Section 5307.3, the
administrative director shall adopt regulations concerning the
following issues:
   (1) (A) Standards governing the timeframes within which medical
evaluations shall be prepared and submitted by agreed and qualified
medical evaluators.  Except as provided in this subdivision, the
timeframe for initial medical evaluations to be prepared and
submitted shall be no more than 30 days after the evaluator has seen
the employee or otherwise commenced the medical evaluation procedure.
  The administrative director shall develop regulations governing the
provision of extensions of the 30-day period in both of the
following cases:
   (i) When  the evaluator has not received test results or
consulting physician's evaluations in time to meet the 30-day
deadline.
   (ii) To extend the 30-day period by not more than 15 days when the
failure to meet the 30-day deadline was for good cause.
   (B) For purposes of subparagraph (A), "good cause" means any of
the following:
   (i) Medical emergencies of the evaluator or evaluator's family.
   (ii) Death in the evaluator's family.
   (iii) Natural disasters or other community catastrophes that
interrupt the operation of the evaluator's business.
   (C) The administrative director shall develop timeframes governing
availability of qualified medical evaluators for unrepresented
employees under Sections 4061 and 4062.  These timeframes shall give
the employee the right to the addition of a new evaluator to his or
her panel, selected at random, for each evaluator not available to
see the employee within a specified period of time, but shall also
permit the employee to waive this right for a specified period of
time thereafter.
   (2) Procedures to be followed by all physicians in evaluating the
existence and extent of permanent impairment and limitations
resulting from an injury in a manner consistent with Section 4660.
   (3) Procedures governing the determination of any disputed medical
treatment issues in a manner consistent with Section 5307.27.
   (4) Procedures to be used in determining the compensability of
psychiatric injury.  The procedures shall be in accordance with
Section 3208.3 and shall require that the diagnosis of a mental
disorder be expressed using the terminology and criteria of the
American Psychiatric Association's Diagnostic and Statistical Manual
of Mental Disorders, Third Edition-Revised, or the terminology and
diagnostic criteria of other psychiatric diagnostic manuals generally
approved and accepted nationally by practitioners in the field of
psychiatric medicine.
   (5) Guidelines for the range of time normally required to perform
the following:
   (A) A medical-legal evaluation that has not been defined and
valued pursuant to Section 5307.6.  The guidelines shall establish
minimum times for patient contact in the conduct of the evaluations,
and shall be consistent with regulations adopted pursuant to Section
5307.6.
   (B) Any treatment procedures that have not been defined and valued
pursuant to Section 5307.1.
   (C) Any other evaluation procedure requested by the Insurance
Commissioner, or deemed appropriate by the administrative director.
   (6) Any additional medical or professional standards that a
medical evaluator shall meet as a condition of appointment,
reappointment, or maintenance in the status of a medical evaluator.
   (k) Except as provided in this subdivision, the administrative
director may, in his or her discretion, suspend or terminate the
privilege of a physician to serve as a qualified medical evaluator if
the administrative director, after hearing pursuant to subdivision
(l), determines, based on substantial evidence, that a qualified
medical evaluator:
   (1) Has violated any material statutory or administrative duty.
   (2) Has failed to follow the medical procedures or qualifications
established pursuant to paragraph (2), (3), (4), or (5) of
subdivision (j).
   (3) Has failed to comply with the timeframe standards established
pursuant to subdivision (j).
   (4) Has failed to meet the requirements of subdivision (b) or (c).

   (5) Has prepared medical-legal evaluations that fail to meet the
minimum standards for those reports established by the administrative
director or the appeals board.
   (6) Has made material misrepresentations or false statements in an
application for appointment or reappointment as a qualified medical
evaluator.
   No hearing shall be required prior to the suspension or
termination of a physician's privilege to serve as a qualified
medical evaluator when the physician has done either of the
following:
   (A) Failed to timely pay the fee required pursuant to subdivision
(n).
   (B) Had his or her license to practice in California suspended by
the relevant licensing authority so as to preclude practice, or had
the license revoked or terminated by the licensing authority.
   (l) The administrative director shall cite the qualified medical
evaluator for a violation listed in subdivision (k) and shall set a
hearing on the alleged violation within 30 days of service of the
citation on the qualified medical evaluator.  In addition to the
authority to terminate or suspend the qualified medical evaluator
upon finding a violation listed in subdivision (k), the
administrative director may, in his or her discretion, place a
qualified medical evaluator on probation subject to appropriate
conditions, including ordering continuing education or training.  The
administrative director shall report to the appropriate licensing
board the name of any qualified medical evaluator who is disciplined
pursuant to this subdivision.
   (m) The administrative director shall terminate from the list of
medical evaluators any physician where licensure has been terminated
by the relevant licensing board, or who has been convicted of a
misdemeanor or felony related to the conduct of his or her medical
practice, or of a crime of moral turpitude.  The administrative
director shall suspend or terminate as a medical evaluator any
physician who has been suspended or placed on probation by the
relevant licensing board.  If a physician is suspended or terminated
as a qualified medical evaluator under this subdivision, a
                                   report prepared by the physician
that is not complete, signed, and furnished to one or more of the
parties prior to the date of conviction or action of the licensing
board, whichever is earlier, shall not be admissible in any
proceeding before the appeals board nor shall there be any liability
for payment for the report and any expense incurred by the physician
in connection with the report.
   (n) Each qualified medical evaluator shall pay a fee, as
determined by the administrative director, for appointment or
reappointment.  These fees shall be based on a sliding scale as
established by the administrative director.  All revenues from fees
paid under this subdivision shall be deposited into the Workers'
Compensation Administration Revolving Fund and are available for
expenditure upon appropriation by the Legislature, and shall not be
used by any other department or agency or for any purpose other than
administration of the programs the Division of Workers' Compensation
related to the provision of medical treatment to injured employees.
   (o) An evaluator may not request or accept any compensation or
other thing of value from any source that does or could create a
conflict with his or her duties as an evaluator under this code.  The
administrative director, after consultation with the Commission on
Health and Safety and Workers' Compensation, shall adopt regulations
to implement this subdivision.
  SEC. 3.  Section 139.48 of the Labor Code is amended to read:
   139.48.  (a) (1) The administrative director shall establish the
Return-to-Work Program in order to promote the early and sustained
return to work of the employee following a work-related injury or
illness.
   (2) This section shall be implemented to the extent funds are
available.
   (b) Upon submission by eligible employers of documentation in
accordance with regulations adopted pursuant to subdivision (h), the
administrative director shall pay the workplace modification expense
reimbursement allowed under this section.
   (c) The administrative director shall reimburse an eligible
employer for expenses incurred to make workplace modifications to
accommodate the employee's return to modified or alternative work, as
follows:
   (1) The maximum reimbursement to an eligible employer for expenses
to accommodate each temporarily disabled injured worker is one
thousand two hundred fifty dollars ($1,250).
   (2) The maximum reimbursement to an eligible employer for expenses
to accommodate each permanently disabled worker who is a qualified
injured worker is two thousand five hundred dollars ($2,500).  If the
employer received reimbursement under paragraph (1), the amount of
the reimbursement under paragraph (1) and this paragraph shall not
exceed two thousand five hundred dollars ($2,500).
   (3) The modification expenses shall be incurred in order to allow
a temporarily disabled worker to perform modified or alternative work
within physician-imposed temporary work restrictions, or to allow a
permanently disabled worker who is an injured worker to return to
sustained modified or alternative employment with the employer within
physician-imposed permanent work restrictions.
   (4) Allowable expenses may include physical modifications to the
worksite, equipment, devices, furniture, tools, or other necessary
costs for accommodation of the employee's restrictions.
   (d) This section shall not create a preference in employment for
injured employees over noninjured employees.  It shall be unlawful
for an employer to discriminatorily terminate, lay off, demote, or
otherwise displace an employee in order to return an industrially
injured employee to employment for the purpose of obtaining the
reimbursement set forth in subdivision (c).
   (e) For purposes of this section, the following definitions apply:

   (1) "Eligible employer" means any employer, except the state or an
employer eligible to secure the payment of compensation pursuant to
subdivision (c) of Section 3700, who employs 50 or fewer full-time
employees on the date of injury.
   (2) "Employee" means a worker who has suffered a work-related
injury or illness on or after July 1, 2004.
   (f) The administrative director shall adopt regulations to carry
out this section.  Regulations allocating budget funds that are
insufficient to implement the workplace modification expense
reimbursement provided for in this section shall include a
prioritization schema.
   (g) The Workers' Compensation Return-to-Work Fund is hereby
created as a special fund in the State Treasury.  The fund shall
consist of all penalties collected pursuant to Section 5814.6 and
transfers made by the administrative director from the Workers'
Compensation Administration Revolving Fund established pursuant to
Section 62.5.  The fund shall be administered by the administrative
director.  Moneys in the fund may be expended by the administrative
director, upon appropriation by the Legislature, only for purposes of
implementing this section.
   (h) This section shall be operative on July 1, 2004.
   (i) This section shall remain in effect only until January 1,
2009, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2009, deletes or extends
that date.
  SEC. 4.  Section 139.5 of the Labor Code is repealed.
  SEC. 5.  Section 139.5 is added to the Labor Code, to read:
   139.5.  (a) The administrative director shall establish a
vocational rehabilitation unit, which shall include appropriate
professional staff, and which shall have all of the following duties:

   (1) To foster, review, and approve vocational rehabilitation plans
developed by a qualified rehabilitation representative of the
employer, insurer, state agency, or employee.  Plans agreed to by the
employer and employee do not require approval by the vocational
rehabilitation unit unless the employee is unrepresented.
   (2) To develop rules and regulations, to be adopted by the
administrative director, providing for a procedure in which an
employee may waive the services of a qualified rehabilitation
representative where the employee has been enrolled and made
substantial progress toward completion of a degree or certificate
from a community college, California State University, or the
University of California and desires a plan to complete the degree or
certificate.  These rules and regulations shall provide that this
waiver, as well as any plan developed without the assistance of a
qualified rehabilitation representative, must be approved by the
rehabilitation unit.
   (3) To develop rules and regulations, to be adopted by the
administrative director, which would expedite and facilitate the
identification, notification, and referral of industrially injured
employees to vocational rehabilitation services.
   (4) To coordinate and enforce the implementation of vocational
rehabilitation plans.
   (5) To develop a fee schedule, to be adopted by the administrative
director, governing reasonable fees for vocational rehabilitation
services provided on and after January 1, 1991.  The initial fee
schedule adopted under this paragraph shall be designed to reduce the
cost of vocational rehabilitation services by 10 percent from the
level of fees paid during 1989.  On or before July 1, 1994, the
administrative director shall establish the maximum aggregate
permissible fees that may be charged for counseling.  Those fees
shall not exceed four thousand five hundred dollars ($4,500) and
shall be included within the sixteen thousand dollar ($16,000) cap.
The fee schedule shall permit up to (A) three thousand dollars
($3,000) for vocational evaluation, evaluation of vocational
feasibility, initial interview, vocational testing, counseling and
research for plan development, and preparation of the Division of
Workers' Compensation Form 102, and (B) three thousand five hundred
dollars ($3,500) for plan monitoring, job seeking skills, and job
placement research and counseling.  However, in no event shall the
aggregate of (A) and (B) exceed four thousand five hundred dollars
($4,500).
   (6) To develop standards, to be adopted by the administrative
director, for governing the timeliness and the quality of vocational
rehabilitation services.
   (b) The salaries of the personnel of the vocational rehabilitation
unit shall be fixed by the Department of Personnel Administration.
   (c) When an employee is determined to be medically eligible and
chooses to participate in a vocational rehabilitation program, he or
she shall continue to receive temporary disability indemnity payments
only until his or her medical condition becomes permanent and
stationary and, thereafter, may receive a maintenance allowance.
Rehabilitation maintenance allowance payments shall begin after the
employee's medical condition becomes permanent and stationary, upon a
request for vocational rehabilitation services.  Thereafter, the
maintenance allowance shall be paid for a period not to exceed 52
weeks in the aggregate, except where the overall cap on vocational
rehabilitation services can be exceeded under this section or former
Section 4642 or subdivision (d) or (e) of former Section 4644.
   The employee also shall receive additional living expenses
necessitated by the vocational rehabilitation services, together with
all reasonable and necessary vocational training, at the expense of
the employer, but in no event shall the expenses, counseling fees,
training, maintenance allowance, and costs associated with, or
arising out of, vocational rehabilitation services incurred after the
employee's request for vocational rehabilitation services, except
temporary disability payments, exceed sixteen thousand dollars
($16,000).  The administrative director shall adopt regulations to
ensure that the continued receipt of vocational rehabilitation
maintenance allowance benefits is dependent upon the injured worker's
regular and consistent attendance at, and participation in, his or
her vocational rehabilitation program.
   (d) The amount of the maintenance allowance due under subdivision
(c) shall be two-thirds of the employee's average weekly earnings at
the date of injury payable as follows:
   (1) The amount the employee would have received as continuing
temporary disability indemnity, but not more than two hundred
forty-six dollars ($246) a week for injuries occurring on or after
January 1, 1990.
   (2) At the employee's option, an additional amount from permanent
disability indemnity due or payable, sufficient to provide the
employee with a maintenance allowance equal to two-thirds of the
employee's average weekly earnings at the date of injury subject to
the limits specified in subdivision (a) of Section 4453 and the
requirements of Section 4661.5.  In no event shall temporary
disability indemnity and maintenance allowance be payable
concurrently.
   If the employer disputes the treating physician's determination of
medical eligibility, the employee shall continue to receive that
portion of the maintenance allowance payable under paragraph (1)
pending final determination of the dispute.  If the employee disputes
the treating physician's determination of medical eligibility and
prevails, the employee shall be entitled to that portion of the
maintenance allowance payable under paragraph (1) retroactive to the
date of the employee's request for vocational rehabilitation
services.  These payments shall not be counted against the maximum
expenditures for vocational rehabilitation services provided by this
section.
   (e) No provision of this section nor of any rule, regulation, or
vocational rehabilitation plan developed or adopted under this
section nor any benefit provided pursuant to this section shall apply
to an injured employee whose injury occurred prior to January 1,
1975.  Nothing in this section shall affect any plan, benefit, or
program authorized by this section as added by Chapter 1513 of the
Statutes of 1965 or as amended by Chapter 83 of the Statutes of 1972.

   (f) The time within which an employee may request vocational
rehabilitation services is set forth in former Section 5405.5 and
Sections 5410 and 5803.
   (g) An offer of a job within state service to a state employee in
State Bargaining Unit 1, 4, 15, 18, or 20 at the same or similar
salary and the same or similar geographic location is a prima facie
offer of vocational rehabilitation under this statute.
   (h) It shall be unlawful for a qualified rehabilitation
representative or rehabilitation counselor to refer any employee to
any work evaluation facility or to any education or training program
if the qualified rehabilitation representative or rehabilitation
counselor, or a spouse, employer, co-employee, or any party with whom
he or she has entered into contract, express or implied, has any
proprietary interest in or contractual relationship with the work
evaluation facility or education or training program.  It shall also
be unlawful for any insurer to refer any injured worker to any
rehabilitation provider or facility if the insurer has a proprietary
interest in the rehabilitation provider or facility or for any
insurer to charge against any claim for the expenses of employees of
the insurer to provide vocational rehabilitation services unless
those expenses are disclosed to the insured and agreed to in advance.

   (i) Any charges by an insurer for the activities of an employee
who supervises outside vocational rehabilitation services shall not
exceed the vocational rehabilitation fee schedule, and shall not be
counted against the overall cap for vocational rehabilitation or the
limit on counselor's fees provided for in this section.  These
charges shall be attributed as expenses by the insurer and not losses
for purposes of insurance rating pursuant to Article 2 (commencing
with Section 11730) of Chapter 3 of Part 3 of Division 2 of the
Insurance Code.
   (j) Any costs of an employer of supervising vocational
rehabilitation services shall not be counted against the overall cap
for vocational rehabilitation or the limit on counselor's fees
provided for in this section.
   (k) This section shall apply only to injuries occurring before
January 1, 2004.
   (l) This section shall remain in effect only until January 1,
2009, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2009, deletes or extends
that date.
  SEC. 5.5.  Section 2699 of the Labor Code is amended to read:
   2699.  (a) Notwithstanding any other provision of law, any
provision of this code that provides for a civil penalty to be
assessed and collected by the Labor and Workforce Development Agency
or any of its departments, divisions, commissions, boards, agencies,
or employees, for a violation of this code, may, as an alternative,
be recovered through a civil action brought by an aggrieved employee
on behalf of himself or herself and other current or former
employees.
   (b) For purposes of this part, "person" has the same meaning as
defined in Section 18.
   (c) For purposes of this part, "aggrieved employee" means any
person who was employed by the alleged violator and against whom one
or more of the alleged violations was committed.
   (d) For purposes of this part, whenever the Labor and Workforce
Development Agency, or any of its departments, divisions,
commissions, boards, agencies, or employees has discretion to assess
a civil penalty, a court is authorized to exercise the same
discretion, subject to the same limitations and conditions, to assess
a civil penalty.
   (e) For all provisions of this code except those for which a civil
penalty is specifically provided, there is established a civil
penalty for a violation of these provisions, as follows:
   (1) If, at the time of the alleged violation, the person does not
employ one or more employees, the civil penalty is five hundred
dollars ($500).
   (2) If, at the time of the alleged violation, the person employs
one or more employees, the civil penalty is one hundred dollars
($100) for each aggrieved employee per pay period for the initial
violation and two hundred dollars ($200) for each aggrieved employee
per pay period for each subsequent violation.
   (3) If the alleged violation is a failure to act by the Labor and
Workplace Development Agency, or any of its departments, divisions,
commissions, boards, agencies, or employees, there shall be no civil
penalty.
   (f) An aggrieved employee may recover the civil penalty described
in subdivision (e) in a civil action filed on behalf of himself or
herself and other current or former employees against whom one or
more of the alleged violations was committed.  Any employee who
prevails in any action shall be entitled to an award of reasonable
attorney's fees and costs.  Nothing in this section shall operate to
limit an employee's right to pursue other remedies available under
state or federal law, either separately or concurrently with an
action taken under this section.
   (g) No action may be maintained under this section by an aggrieved
employee if the agency or any of its departments, divisions,
commissions, boards, agencies, or employees, on the same facts and
theories, cites a person for a violation of the same section or
sections of the Labor Code under which the aggrieved employee is
attempting to recover a civil penalty on behalf of himself or herself
or others or initiates a proceeding pursuant to Section 98.3.
   (h) Except as provided in subdivision (i), civil penalties
recovered by aggrieved employees shall be distributed as follows:  50
percent to the General Fund, 25 percent to the Labor and Workforce
Development Agency for education of employers and employees about
their rights and responsibilities under this code, available for
expenditure upon appropriation by the Legislature, and 25 percent to
the aggrieved employees.
   (i) Civil penalties recovered under paragraph (1) of subdivision
(e) shall be distributed as follows:  50 percent to the General Fund
and 50 percent to the Labor and Workforce Development Agency
available for expenditure upon appropriation by the Legislature.
   (j) Nothing contained in this part is intended to alter or
otherwise affect the exclusive remedy provided by the workers'
compensation provisions of this code for liability against an
employer for the compensation for any injury to or death of an
employee arising out of and in the course of employment.
   (k) This section shall not apply to the recovery of administrative
and civil penalties in connection with the workers' compensation law
as contained in Division 1 (commencing with Section 50) and Division
4 (commencing with Section 3200), including, but not limited to,
Sections 129.5 and 132a.
  SEC. 6.  Section 3201.5 of the Labor Code is amended to read:
   3201.5.  (a) Except as provided in subdivisions (b) and (c), the
Department of Industrial Relations and the courts of this state shall
recognize as valid and binding any provision in a collective
bargaining agreement between a private employer or groups of
employers engaged in construction, construction maintenance, or
activities limited to rock, sand, gravel, cement and asphalt
operations, heavy-duty mechanics, surveying, and construction
inspection and a union that is the recognized or certified exclusive
bargaining representative that establishes any of the following:
   (1) An alternative dispute resolution system governing disputes
between employees and employers or their insurers that supplements or
replaces all or part of those dispute resolution processes contained
in this division, including, but not limited to, mediation and
arbitration.  Any system of arbitration shall provide that the
decision of the arbiter or board of arbitration is subject to review
by the appeals board in the same manner as provided for
reconsideration of a final order, decision, or award made and filed
by a workers' compensation administrative law judge pursuant to the
procedures set forth in Article 1 (commencing with Section 5900) of
Chapter 7 of Part 4 of Division 4, and the court of appeals pursuant
to the procedures set forth in Article 2 (commencing with Section
5950) of Chapter 7 of Part 4 of Division 4, governing orders,
decisions, or awards of the appeals board.  The findings of fact,
award, order, or decision of the arbitrator shall have the same force
and effect as an award, order, or decision of a workers'
compensation administrative law judge.  Any provision for arbitration
established pursuant to this section shall not be subject to
Sections 5270, 5270.5, 5271, 5272, 5273, 5275, and 5277.
   (2) The use of an agreed list of providers of medical treatment
that may be the exclusive source of all medical treatment provided
under this division.
   (3) The use of an agreed, limited list of qualified medical
evaluators and agreed medical evaluators that may be the exclusive
source of qualified medical evaluators and agreed medical evaluators
under this division.
   (4) Joint labor management safety committees.
   (5) A light-duty, modified job or return-to-work program.
   (6) A vocational rehabilitation or retraining program utilizing an
agreed list of providers of rehabilitation services that may be the
exclusive source of providers of rehabilitation services under this
division.
   (b) (1) Nothing in this section shall allow a collective
bargaining agreement that diminishes the entitlement of an employee
to compensation payments for total or partial disability, temporary
disability, vocational rehabilitation, or medical treatment fully
paid by the employer as otherwise provided in this division.  The
portion of any agreement that violates this paragraph shall be
declared null and void.
   (2) The parties may negotiate any aspect of the delivery of
medical benefits and the delivery of disability compensation to
employees of the employer or group of employers that are eligible for
group health benefits and nonoccupational disability benefits
through their employer.
   (c) Subdivision (a) shall apply only to the following:
   (1) An employer developing or projecting an annual workers'
compensation insurance premium, in California, of two hundred fifty
thousand dollars ($250,000) or more, or any employer that paid an
annual workers' compensation insurance premium, in California, of two
hundred fifty thousand dollars ($250,000) in at least one of the
previous three years.
   (2) Groups of employers engaged in a workers' compensation safety
group complying with Sections 11656.6 and 11656.7 of the Insurance
Code, and established pursuant to a joint labor management safety
committee or committees, that develops or projects annual workers'
compensation insurance premiums of two million dollars ($2,000,000)
or more.
   (3) Employers or groups of employers that are self-insured in
compliance with Section 3700 that would have projected annual workers'
compensation costs that meet the requirements of, and that meet the
other requirements of, paragraph (1) in the case of employers, or
paragraph (2) in the case of groups of employers.
   (4) Employers covered by an owner or general contractor provided
wrap-up insurance policy applicable to a single construction site
that develops workers' compensation insurance premiums of two million
dollars ($2,000,000) or more with respect to those employees covered
by that wrap-up insurance policy.
   (d) Employers and labor representatives who meet the eligibility
requirements of this section shall be issued a letter by the
administrative director advising each employer and labor
representative that, based upon the review of all documents and
materials submitted as required by the administrative director, each
has met the eligibility requirements of this section.
   (e) The premium rate for a policy of insurance issued pursuant to
this section shall not be subject to the requirements of Section
11732 or 11732.5 of the Insurance Code.
   (f) No employer may establish or continue a program established
under this section until it has provided the administrative director
with all of the following:
   (1) Upon its original application and whenever it is renegotiated
thereafter, a copy of the collective bargaining agreement and the
approximate number of employees who will be covered thereby.
   (2) Upon its original application and annually thereafter, a valid
and active license where that license is required by law as a
condition of doing business in the state within the industries set
forth in subdivision (a) of Section 3201.5.
   (3) Upon its original application and annually thereafter, a
statement signed under penalty of perjury, that no action has been
taken by any administrative agency or court of the United States to
invalidate the collective bargaining agreement.
   (4) The name, address, and telephone number of the contact person
of the employer.
   (5) Any other information that the administrative director deems
necessary to further the purposes of this section.
   (g) No collective bargaining representative may establish or
continue to participate in a program established under this section
unless all of the following requirements are met:
   (1) Upon its original application and annually thereafter, it has
provided to the administrative director a copy of its most recent
LM-2 or LM-3 filing with the United States Department of Labor, along
with a statement, signed under penalty of perjury, that the document
is a true and correct copy.
   (2) It has provided to the administrative director the name,
address, and telephone number of the contact person or persons of the
collective bargaining representative or representatives.
   (h) Commencing July 1, 1995, and annually thereafter, the Division
of Workers' Compensation shall report to the Director of the
Department of Industrial Relations the number of collective
bargaining agreements received and the number of employees covered by
these agreements.
   (i) By June 30, 1996, and annually thereafter, the Administrative
Director of the Division of Workers' Compensation shall prepare and
notify Members of the Legislature that a report authorized by this
section is available upon request.  The report based upon aggregate
data shall include the following:
   (1) Person hours and payroll covered by agreements filed.
   (2) The number of claims filed.
   (3) The average cost per claim shall be reported by cost
components whenever practicable.
   (4) The number of litigated claims, including the number of claims
submitted to mediation, the appeals board, or the court of appeal.
   (5) The number of contested claims resolved prior to arbitration.

          (6) The projected incurred costs and actual costs of
claims.
   (7) Safety history.
   (8) The number of workers participating in vocational
rehabilitation.
   (9) The number of workers participating in light-duty programs.
   The division shall have the authority to require those employers
and groups of employers listed in subdivision (c) to provide the data
listed above.
   (j) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state.  However, the Division of
Workers' Compensation shall create derivative works pursuant to
subdivisions (h) and (i) based on the collective bargaining
agreements and data.  Those derivative works shall not be
confidential, but shall be public.  On a monthly basis the
administrative director shall make available an updated list of
employers and unions entering into collective bargaining agreements
containing provisions authorized by this section.
  SEC. 7.  Section 3201.7 of the Labor Code is amended to read:
   3201.7.  (a) Except as provided in subdivision (b), the Department
of Industrial Relations and the courts of this state shall recognize
as valid and binding any labor-management agreement that meets all
of the following requirements:
   (1) The labor-management agreement has been negotiated separate
and apart from any collective bargaining agreement covering affected
employees.
   (2) The labor-management agreement is restricted to the
establishment of the terms and conditions necessary to implement this
section.
   (3) The labor-management agreement has been negotiated in
accordance with the authorization of the administrative director
pursuant to subdivision (d), between an employer or groups of
employers and a union that is the recognized or certified exclusive
bargaining representative that establishes any of the following:
   (A) An alternative dispute resolution system governing disputes
between employees and employers or their insurers that supplements or
replaces all or part of those dispute resolution processes contained
in this division, including, but not limited to, mediation and
arbitration.  Any system of arbitration shall provide that the
decision of the arbiter or board of arbitration is subject to review
by the appeals board in the same manner as provided for
reconsideration of a final order, decision, or award made and filed
by a workers' compensation administrative law judge pursuant to the
procedures set forth in Article 1 (commencing with Section 5900) of
Chapter 7 of Part 4 of Division 4, and the court of appeals pursuant
to the procedures set forth in Article 2 (commencing with Section
5950) of Chapter 7 of Part 4 of Division 4, governing orders,
decisions, or awards of the appeals board.  The findings of fact,
award, order, or decision of the arbitrator shall have the same force
and effect as an award, order, or decision of a workers'
compensation administrative law judge.  Any provision for arbitration
established pursuant to this section shall not be subject to
Sections 5270, 5270.5, 5271, 5272, 5273, 5275, and 5277.
   (B) The use of an agreed list of providers of medical treatment
that may be the exclusive source of all medical treatment provided
under this division.
   (C) The use of an agreed, limited list of qualified medical
evaluators and agreed medical evaluators that may be the exclusive
source of qualified medical evaluators and agreed medical evaluators
under this division.
   (D) Joint labor management safety committees.
   (E) A light-duty, modified job, or return-to-work program.
   (F) A vocational rehabilitation or retraining program utilizing an
agreed list of providers of rehabilitation services that may be the
exclusive source of providers of rehabilitation services under this
division.
   (b) (1) Nothing in this section shall allow a labor-management
agreement that diminishes the entitlement of an employee to
compensation payments for total or partial disability, temporary
disability, vocational rehabilitation, or medical treatment fully
paid by the employer as otherwise provided in this division; nor
shall any agreement authorized by this section deny to any employee
the right to representation by counsel at all stages during the
alternative dispute resolution process.  The portion of any agreement
that violates this paragraph shall be declared null and void.
   (2) The parties may negotiate any aspect of the delivery of
medical benefits and the delivery of disability compensation to
employees of the employer or group of employers that are eligible for
group health benefits and nonoccupational disability benefits
through their employer.
   (c) Subdivision (a) shall apply only to the following:
   (1) An employer developing or projecting an annual workers'
compensation insurance premium, in California, of fifty thousand
dollars ($50,000) or more, and employing at least 50 employees, or
any employer that paid an annual workers' compensation insurance
premium, in California, of fifty thousand dollars ($50,000), and
employing at least 50 employees in at least one of the previous three
years.
   (2) Groups of employers engaged in a workers' compensation safety
group complying with Sections 11656.6 and 11656.7 of the Insurance
Code, and established pursuant to a joint labor management safety
committee or committees, that develops or projects annual workers'
compensation insurance premiums of five hundred thousand dollars
($500,000) or more.
   (3) Employers or groups of employers, including cities and
counties, that are self-insured in compliance with Section 3700 that
would have projected annual workers' compensation costs that meet the
requirements of, and that meet the other requirements of, paragraph
(1) in the case of employers, or paragraph (2) in the case of groups
of employers.
   (d) Any recognized or certified exclusive bargaining
representative in an industry not covered by Section 3201.5, may file
a petition with the administrative director seeking permission to
negotiate with an employer or group of employers to enter into a
labor-management agreement pursuant to this section.  The petition
shall specify the bargaining unit or units to be included, the names
of the employers or groups of employers, and shall be accompanied by
proof of the labor union's status as the exclusive bargaining
representative.  The current collective bargaining agreement or
agreements shall be attached to the petition.  The petition shall be
in the form designated by the administrative director.  Upon receipt
of the petition, the administrative director shall promptly verify
the petitioner's status as the exclusive bargaining representative.
If the petition satisfies the requirements set forth in this
subdivision, the administrative director shall issue a letter
advising each employer and labor representative of their eligibility
to enter into negotiations, for a period not to exceed one year, for
the purpose of reaching agreement on a labor-management agreement
pursuant to this section.  The parties may jointly request, and shall
be granted, by the administrative director, an additional one-year
period to negotiate an agreement.
   (e) No employer may establish or continue a program established
under this section until it has provided the administrative director
with all of the following:
   (1) Upon its original application and whenever it is renegotiated
thereafter, a copy of the labor-management agreement and the
approximate number of employees who will be covered thereby.
   (2) Upon its original application and annually thereafter, a
statement signed under penalty of perjury, that no action has been
taken by any administrative agency or court of the United States to
invalidate the labor-management agreement.
   (3) The name, address, and telephone number of the contact person
of the employer.
   (4) Any other information that the administrative director deems
necessary to further the purposes of this section.
   (f) No collective bargaining representative may establish or
continue to participate in a program established under this section
unless all of the following requirements are met:
   (1) Upon its original application and annually thereafter, it has
provided to the administrative director a copy of its most recent
LM-2 or LM-3 filing with the United States Department of Labor, where
such filing is required by law, along with a statement, signed under
penalty of perjury, that the document is a true and correct copy.
   (2) It has provided to the administrative director the name,
address, and telephone number of the contact person or persons of the
collective bargaining representative or representatives.
   (g) Commencing July 1, 2005, and annually thereafter, the Division
of Workers' Compensation shall report to the Director of Industrial
Relations the number of labor-management agreements received and the
number of employees covered by these agreements.
   (h) By June 30, 2006, and annually thereafter, the administrative
director shall prepare and notify Members of the Legislature that a
report authorized by this section is available upon request.  The
report based upon aggregate data shall include the following:
   (1) Person hours and payroll covered by agreements filed.
   (2) The number of claims filed.
   (3) The average cost per claim shall be reported by cost
components whenever practicable.
   (4) The number of litigated claims, including the number of claims
submitted to mediation, the appeals board, or the court of appeal.
   (5) The number of contested claims resolved prior to arbitration.

   (6) The projected incurred costs and actual costs of claims.
   (7) Safety history.
   (8) The number of workers participating in vocational
rehabilitation.
   (9) The number of workers participating in light-duty programs.
   (10) Overall worker satisfaction.
   The division shall have the authority to require employers and
groups of employers participating in labor-management agreements
pursuant to this section to provide the data listed above.
   (i) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state.  However, the Division of
Workers' Compensation shall create derivative works pursuant to
subdivisions (f) and (g) based on the labor-management agreements and
data.  Those derivative works shall not be confidential, but shall
be public.  On a monthly basis, the administrative director shall
make available an updated list of employers and unions entering into
labor-management agreements authorized by this section.
  SEC. 8.  Section 3201.9 of the Labor Code is amended to read:
   3201.9.  (a) On or before June 30, 2004, and biannually
thereafter, the report required in subdivision (i) of Section 3201.5
and subdivision (h) of Section 3201.7 shall include updated loss
experience for all employers and groups of employers participating in
a program established under those sections.  The report shall
include updated data on each item set forth in subdivision (i) of
Section 3201.5 and subdivision (h) of Section 3201.7 for the previous
year for injuries in 2003 and beyond.  Updates for each program
shall be done for the original program year and for subsequent years.
  The insurers, the Department of Insurance, and the rating
organization designated by the Insurance Commissioner pursuant to
Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of
Division 2 of the Insurance Code, shall provide the administrative
director with any information that the administrative director
determines is reasonably necessary to conduct the study.
   (b) Commencing on and after June 30, 2004, the Insurance
Commissioner, or the commissioner's designee, shall prepare for
inclusion in the report required in subdivision (i) of Section 3201.5
and subdivision (h) of Section 3201.7 a review of both of the
following:
   (1) The adequacy of rates charged for these programs, including
the impact of scheduled credits and debits.
   (2) The comparative results for these programs with other programs
not subject to Section 3201.5 or Section 3201.7.
   (c) Upon completion of the report, the administrative director
shall report the findings to the Legislature, the Department of
Insurance, the designated rating organization, and the programs and
insurers participating in the study.
   (d) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state.
  SEC. 9.  Section 3202.5 of the Labor Code is amended to read:
   3202.5.  All parties and lien claimants shall meet the evidentiary
burden of proof on all issues by a preponderance of the evidence in
order that all parties are considered equal before the law.
"Preponderance of the evidence" means  that evidence that, when
weighed with that opposed to it, has more convincing force and the
greater probability of truth.  When weighing the evidence, the test
is not the relative number of witnesses, but the relative convincing
force of the evidence.
  SEC. 10.  Section 3207 of the Labor Code is amended to read:
   3207.  "Compensation" means compensation under this division and
includes every benefit or payment conferred by this division upon an
injured employee, or in the event of his or her death, upon his or
her dependents, without regard to negligence.
  SEC. 11.  Section 3823 of the Labor Code is amended to read:
   3823.  (a) The administrative director shall, in coordination with
the Bureau of Fraudulent Claims of the Department of Insurance, the
Medi-Cal Fraud Task Force, and the Bureau of Medi-Cal Fraud and Elder
Abuse of the Department of Justice, or their successor entities,
adopt protocols, to the extent that these protocols are applicable to
achieve the purpose of subdivision (b), similar to those adopted by
the Department of Insurance concerning medical billing and provider
fraud.
   (b) Any insurer, self-insured employer, third-party administrator,
workers' compensation administrative law judge, audit unit,
attorney, or other person that believes that a fraudulent claim has
been made by any person or entity providing medical care, as
described in Section 4600, shall report the apparent fraudulent claim
in the manner prescribed by subdivision (a).
   (c) No insurer, self-insured employer, third-party administrator,
workers' compensation administrative law judge, audit unit, attorney,
or other person that reports any apparent fraudulent claim under
this section shall be subject to any civil liability in a cause of
action of any kind when the insurer, self-insured employer,
third-party administrator, workers' compensation administrative law
judge, audit unit, attorney, or other person acts in good faith,
without malice, and reasonably believes that the action taken was
warranted by the known facts, obtained by reasonable efforts.
Nothing in this section is intended to, nor does in any manner,
abrogate or lessen the existing common law or statutory privileges
and immunities of any insurer, self-insured employer, third-party
administrator, workers' compensation administrative law judge, audit
unit, attorney, or other person.
  SEC. 12.  Section 4060 of the Labor Code is amended to read:
   4060.  (a) This section shall apply to disputes over the
compensability of any injury.  This section shall not apply where
injury to any part or parts of the body is accepted as compensable by
the employer.
   (b) Neither the employer nor the employee shall be liable for any
comprehensive medical-legal evaluation performed by other than the
treating physician, except as provided in this section.  However,
reports of treating physicians shall be admissible.
   (c) If a medical evaluation is required to determine
compensability at any time after the filing of the claim form, and
the employee is represented by an attorney, a medical evaluation to
determine compensability shall be obtained only by the procedure
provided in Section 4062.2.
   (d) If a medical evaluation is required to determine
compensability at any time after the claim form is filed, and the
employee is not represented by an attorney, the employer shall
provide the employee with notice either that the employer requests a
comprehensive medical evaluation to determine compensability or that
the employer has not accepted liability and the employee may request
a comprehensive medical evaluation to determine compensability.
Either party may request a comprehensive medical evaluation to
determine compensability.  The evaluation shall be obtained only by
the procedure provided in Section 4062.1.
   (e) (1) Each notice required by subdivision (d) shall describe the
administrative procedures available to the injured employee and
advise the employee of his or her right to consult an information and
assistance officer or an attorney.  It shall contain the following
language:
   "Should you decide to be represented by an attorney, you may or
may not receive a larger award, but, unless you are determined to be
ineligible for an award, the attorney's fee will be deducted from any
award you might receive for disability benefits.  The decision to be
represented by an attorney is yours to make, but it is voluntary and
may not be necessary for you to receive your benefits."
   (2) The notice required by subdivision (d) shall be accompanied by
the form prescribed by the administrative director for requesting
the assignment of a panel of qualified medical evaluators.
  SEC. 13.  Section 4061 of the Labor Code is amended to read:
   4061.  (a) Together with the last payment of temporary disability
indemnity, the employer shall, in a form prescribed by the
administrative director pursuant to Section 138.4, provide the
employee one of the following:
   (1) Notice either that no permanent disability indemnity will be
paid because the employer alleges the employee has no permanent
impairment or limitations resulting from the injury or notice of the
amount of permanent disability indemnity determined by the employer
to be payable.  The notice shall include information concerning how
the employee may obtain a formal medical evaluation pursuant to
subdivision (c) or (d) if he or she disagrees with the position taken
by the employer.  The notice shall be accompanied by the form
prescribed by the administrative director for requesting assignment
of a panel of qualified medical evaluators, unless the employee is
represented by an attorney.  If the employer determines permanent
disability indemnity is payable, the employer shall advise the
employee of the amount determined payable and the basis on which the
determination was made and whether there is need for continuing
medical care.
   (2) Notice that permanent disability indemnity may be or is
payable, but that the amount cannot be determined because the
employee's medical condition is not yet permanent and stationary.
The notice shall advise the employee that his or her medical
condition will be monitored until it is permanent and stationary, at
which time the necessary evaluation will be performed to determine
the existence and extent of permanent impairment and limitations for
the purpose of rating permanent disability and to determine the need
for continuing medical care, or at which time the employer will
advise the employee of the amount of permanent disability indemnity
the employer has determined to be payable.  If an employee is
provided notice pursuant to this paragraph and the employer later
takes the position that the employee has no permanent impairment or
limitations resulting from the injury, or later determines permanent
disability indemnity is payable, the employer shall in either event,
within 14 days of the determination to take either position, provide
the employee with the notice specified in paragraph (1).
   (b) Each notice required by subdivision (a) shall describe the
administrative procedures available to the injured employee and
advise the employee of his or her right to consult an information and
assistance officer or an attorney.  It shall contain the following
language:
   "Should you decide to be represented by an attorney, you may or
may not receive a larger award, but, unless you are determined to be
ineligible for an award, the attorney's fee will be deducted from any
award you might receive for disability benefits.  The decision to be
represented by an attorney is yours to make, but it is voluntary and
may not be necessary for you to receive your benefits."
   (c) If the parties do not agree to a permanent disability rating
based on the treating physician's evaluation, and the employee is
represented by an attorney, a medical evaluation to determine
permanent disability shall be obtained as provided in Section 4062.2.

   (d) If the parties do not agree to a permanent disability rating
based on the treating physician's evaluation, and if the employee is
not represented by an attorney, the employer shall immediately
provide the employee with a form prescribed by the medical director
with which to request assignment of a panel of three qualified
medical evaluators.  Either party may request a comprehensive medical
evaluation to determine permanent disability, and the evaluation
shall be obtained only by the procedure provided in Section 4062.1.
   (e) The qualified medical evaluator who has evaluated an
unrepresented employee shall serve the comprehensive medical
evaluation and the summary form on the employee, employer, and the
administrative director.  The unrepresented employee or the employer
may submit the treating physician's evaluation for the calculation of
a permanent disability rating.  Within 20 days of receipt of the
comprehensive medical evaluation, the administrative director shall
calculate the permanent disability rating according to Section 4660
and serve the rating on the employee and employer.
   (f) Any comprehensive medical evaluation concerning an
unrepresented employee which indicates that part or all of an
employee's permanent impairment or limitations may be subject to
apportionment pursuant to Sections 4663  and 4664 shall first be
submitted by the administrative director to a workers' compensation
judge who may refer the report back to the qualified medical
evaluator for correction or clarification if the judge determines the
proposed apportionment is inconsistent with the law.
   (g) Within 30 days of receipt of the rating, if the employee is
unrepresented, the employee or employer may request that the
administrative director reconsider the recommended rating or obtain
additional information from the treating physician or medical
evaluator to address issues not addressed or not completely addressed
in the original comprehensive medical evaluation or not prepared in
accord with the procedures promulgated under paragraph (2) or (3) of
subdivision (j) of Section 139.2.  This request shall be in writing,
shall specify the reasons the rating should be reconsidered, and
shall be served on the other party.  If the administrative director
finds the comprehensive medical evaluation is not complete or not in
compliance with the required procedures, the administrative director
shall return the report to the treating physician or qualified
medical evaluator for appropriate action as the administrative
director instructs.  Upon receipt of the treating physician's or
qualified medical evaluator's final comprehensive medical evaluation
and summary form, the administrative director shall recalculate the
permanent disability rating according to Section 4660 and serve the
rating, the comprehensive medical evaluation, and the summary form on
the employee and employer.
   (h) (1) If a comprehensive medical evaluation from the treating
physician or an agreed medical evaluator or a qualified medical
evaluator selected from a three-member panel resolves any issue so as
to require an employer to provide compensation, the employer shall
commence the payment of compensation or promptly commence proceedings
before the appeals board to resolve the dispute.
   (2) If the employee and employer agree to a stipulated findings
and award as provided under Section 5702 or to compromise and release
the claim under Chapter 2 (commencing with Section 5000) of Part 3,
or if the employee wishes to commute the award under Chapter 3
(commencing with Section 5100) of Part 3, the appeals board shall
first determine whether the agreement or commutation is in the best
interests of the employee and whether the proper procedures have been
followed in determining the permanent disability rating.  The
administrative director shall promulgate a form to notify the
employee, at the time of service of any rating under this section, of
the options specified in this subdivision, the potential advantages
and disadvantages of each option, and the procedure for disputing the
rating.
   (i) No issue relating to the existence or extent of permanent
impairment and limitations resulting from the injury may be the
subject of a declaration of readiness to proceed unless there has
first been a medical evaluation by a treating physician or an agreed
or qualified medical evaluator.  With the exception of an evaluation
or evaluations prepared by the treating physician or physicians, no
evaluation of permanent impairment and limitations resulting from the
injury shall be obtained, except in accordance with Section 4062.1
or 4062.2.  Evaluations obtained in violation of this prohibition
shall not be admissible in any proceeding before the appeals board.
  SEC. 14.  Section 4062 of the Labor Code is amended to read:
   4062.  (a) If either the employee or employer objects to a medical
determination made by the treating physician concerning any medical
issues not covered by Section 4060 or 4061 and not subject to Section
4610, the objecting party shall notify the other party in writing of
the objection within 20 days of receipt of the report if the
employee is represented by an attorney or within 30 days of receipt
of the report if the employee is not represented by an attorney.
Employer objections to the treating physician's recommendation for
spinal surgery shall be subject to subdivision (b), and after denial
of the physician's recommendation, in accordance with Section 4610.
If the employee objects to a decision made pursuant to Section 4610
to modify, delay, or deny a treatment recommendation, the employee
shall notify the employer of the objection in writing within 20 days
of receipt of that decision.  These time limits may be extended for
good cause or by mutual agreement.  If the employee is represented by
an attorney,                                           a medical
evaluation to determine the disputed medical issue shall be obtained
as provided in Section 4062.2, and no other medical evaluation shall
be obtained.  If the employee is not represented by an attorney, the
employer shall immediately provide the employee with a form
prescribed by the medical director with which to request assignment
of a panel of three qualified medical evaluators, the evaluation
shall be obtained as provided in Section 4062.1, and no other medical
evaluation shall be obtained.
   (b) The employer may object to a report of the treating physician
recommending that spinal surgery be performed within 10 days of the
receipt of the report.  If the employee is represented by an
attorney, the parties shall seek agreement with the other party on a
California licensed board-certified or board-eligible orthopedic
surgeon or neurosurgeon to prepare a second opinion report resolving
the disputed surgical recommendation.  If no agreement is reached
within 10 days, or if the employee is not represented by an attorney,
an orthopedic surgeon or neurosurgeon shall be randomly selected by
the administrative director to prepare a second opinion report
resolving the disputed surgical recommendation.  Examinations shall
be scheduled on an expedited basis.  The second opinion report shall
be served on the parties within 45 days of receipt of the treating
physician's report.  If the second opinion report recommends surgery,
the employer shall authorize the surgery.  If the second opinion
report does not recommend surgery, the employer shall file a
declaration of readiness to proceed.  The employer shall not be
liable for medical treatment costs for the disputed surgical
procedure, whether through a lien filed with the appeals board or as
a self-procured medical expense, or for periods of temporary
disability resulting from the surgery, if the disputed surgical
procedure is performed prior to the completion of the second opinion
process required by this subdivision.
   (c) The second opinion physician shall not have any material
professional, familial, or financial affiliation, as determined by
the administrative director, with any of the following:
   (1) The employer, his or her workers' compensation insurer,
third-party claims administrator, or other entity contracted to
provide utilization review services pursuant to Section 4610.
   (2) Any officer, director, or employee of the employer's health
care provider, workers' compensation insurer, or third-party claims
administrator.
   (3) A physician, the physician's medical group, or the independent
practice association involved in the health care service in dispute.

   (4) The facility or institution at which either the proposed
health care service, or the alternative service, if any, recommended
by the employer's health care provider, workers' compensation
insurer, or third-party claims administrator, would be provided.
   (5) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed by the employee or his or her
treating physician whose treatment is under review, or the
alternative therapy, if any, recommended by the employer or other
entity.
   (6) The employee or the employee's immediate family.
  SEC. 15.  Section 4062.01 of the Labor Code is repealed.
  SEC. 16.  Section 4062.1 of the Labor Code is amended to read:
   4062.1.  (a) If an employee is not represented by an attorney, the
employer shall not seek agreement with the employee on an agreed
medical evaluator, nor shall an agreed medical evaluator prepare the
formal medical evaluation on any issues in dispute.
   (b) If either party requests a medical evaluation pursuant to
Section 4060, 4061, or 4062, either party may submit the form
prescribed by the administrative director requesting the medical
director to assign a panel of three qualified medical evaluators in
accordance with Section 139.2.  However, the employer may not submit
the form unless the employee has not submitted the form within 10
days after the employer has furnished the form to the employee and
requested the employee to submit the form.  The party submitting the
request form shall designate the specialty of the physicians that
will be assigned to the panel.
   (c) Within 10 days of the issuance of a panel of qualified medical
evaluators, the employee shall select a physician from the panel to
prepare a medical evaluation, the employee shall schedule the
appointment, and the employee shall inform the employer of the
selection and the appointment.  If the employee does not inform the
employer of the selection within 10 days of the assignment of a panel
of qualified medical evaluators, then the employer may select the
physician from the panel to prepare a medical evaluation.  If the
employee informs the employer of the selection within 10 days of the
assignment of the panel but has not made the appointment, or if the
employer selects the physician pursuant to this subdivision, then the
employer shall arrange the appointment.  Upon receipt of written
notice of the appointment arrangements from the employee, or upon
giving the employee notice of an appointment arranged by the
employer, the employer shall furnish payment of estimated travel
expense.
   (d) The evaluator shall give the employee, at the appointment, a
brief opportunity to ask questions concerning the evaluation process
and the evaluator's background.  The unrepresented employee shall
then participate in the evaluation as requested by the evaluator
unless the employee has good cause to discontinue the evaluation.
For purposes of this subdivision, "good cause" shall include evidence
that the evaluator is biased against the employee because of his or
her race, sex, national origin, religion, or sexual preference or
evidence that the evaluator has requested the employee to submit to
an unnecessary medical examination or procedure.  If the
unrepresented employee declines to proceed with the evaluation, he or
she shall have the right to a new panel of three qualified medical
evaluators from which to select one to prepare a comprehensive
medical evaluation.  If the appeals board subsequently determines
that the employee did not have good cause to not proceed with the
evaluation, the cost of the evaluation shall be deducted from any
award the employee obtains.
   (e) If an employee has received a comprehensive medical-legal
evaluation under this section, and he or she later becomes
represented by an attorney, he or she shall not be entitled to an
additional evaluation.
  SEC. 17.  Section 4062.2 of the Labor Code is repealed.
  SEC. 18.  Section 4062.2 is added to the Labor Code, to read:
   4062.2.  (a) Whenever a comprehensive medical evaluation is
required to resolve any dispute arising out of an injury or a claimed
injury occurring on or after January 1, 2005, and the employee is
represented by an attorney, the evaluation shall be obtained only as
provided in this section.
   (b) If either party requests a medical evaluation pursuant to
Section 4060, 4061, or 4062, either party may commence the selection
process for an agreed medical evaluator by making a written request
naming at least one proposed physician to be the evaluator.  The
parties shall seek agreement with the other party on the physician,
who need not be a qualified medical evaluator, to prepare a report
resolving the disputed issue.  If no agreement is reached within 10
days of the first written proposal that names a proposed agreed
medical evaluator, or any additional time not to exceed 20 days
agreed to by the parties, either party may request the assignment of
a three-member panel of qualified medical evaluators to conduct a
comprehensive medical evaluation.  The party submitting the request
shall designate the specialty of the medical evaluator, the specialty
of the medical evaluator requested by the other party if it has been
made known to the party submitting the request, and the specialty of
the treating physician.  The party submitting the request form shall
serve a copy of the request form on the other party.
   (c) Within 10 days of assignment of the panel by the
administrative director, the parties shall confer and attempt to
agree upon an agreed medical evaluator selected from the panel.  If
the parties have not agreed on a medical evaluator from the panel by
the 10th day after assignment of the panel, each party may then
strike one name from the panel.  The remaining qualified medical
evaluator shall serve as the medical evaluator.  If a party fails to
exercise the right to strike a name from the panel within three
working days of gaining the right to do so, the other party may
select any physician who remains on the panel to serve as the medical
evaluator.  The administrative director may prescribe the form, the
manner, or both, by which the parties shall conduct the selection
process.
   (d) The represented employee shall be responsible for arranging
the appointment for the examination, but upon his or her failure to
inform the employer of the appointment within 10 days after the
medical evaluator has been selected, the employer may arrange the
appointment and notify the employee of the arrangements.
   (e) If an employee has received a comprehensive medical-legal
evaluation under this section, and he or she later ceases to be
represented, he or she shall not be entitled to an additional
evaluation.
  SEC. 19.  Section 4062.3 is added to the Labor Code, to read:
   4062.3.  (a) Any party may provide to the qualified medical
evaluator selected from a panel any of the following information:
   (1) Records prepared or maintained by the employee's treating
physician or physicians.
   (2) Medical and nonmedical records relevant to determination of
the medical issue.
   (b) Information that a party proposes to provide to the qualified
medical evaluator selected from a panel shall be served on the
opposing party 20 days before the information is provided to the
evaluator.  If the opposing party objects to consideration of
nonmedical records within 10 days thereafter, the records shall not
be provided to the evaluator.  Either party may use discovery to
establish the accuracy or authenticity of nonmedical records prior to
the evaluation.
   (c) If an agreed medical evaluator is selected, as part of their
agreement on an evaluator, the parties shall agree on what
information is to be provided to the agreed medical evaluator.
   (d) In any formal medical evaluation, the agreed or qualified
medical evaluator shall identify the following:
   (1) All information received from the parties.
   (2) All information reviewed in preparation of the report.
   (3) All information relied upon in the formulation of his or her
opinion.
   (e) All communications with an agreed medical evaluator or a
qualified medical evaluator selected from a panel before a medical
evaluation shall be in writing and shall be served on the opposing
party 20 days in advance of the evaluation.  Any subsequent
communication with the medical evaluator shall be in writing and
shall be served on the opposing party when sent to the medical
evaluator.
   (f) Ex parte communication with an agreed medical evaluator or a
qualified medical evaluator selected from a panel is prohibited.  If
a party communicates with the agreed medical evaluator or the
qualified medical evaluator in violation of subdivision (e), the
aggrieved party may elect to terminate the medical evaluation and
seek a new evaluation from another qualified medical evaluator to be
selected according to Section 4062.1 or 4062.2, as applicable, or
proceed with the initial evaluation.
   (g) The party making the communication prohibited by this section
shall be subject to being charged with contempt before the appeals
board and shall be liable for the costs incurred by the aggrieved
party as a result of the prohibited communication, including the cost
of the medical evaluation, additional discovery costs, and attorney'
s fees for related discovery.
   (h) Subdivisions (e) and (f) shall not apply to oral or written
communications by the employee or, if the employee is deceased, the
employee's dependent, in the course of the examination or at the
request of the evaluator in connection with the examination.
   (i) Upon completing a determination of the disputed medical issue,
the medical evaluator shall summarize the medical findings on a form
prescribed by the administrative director and shall serve the formal
medical evaluation and the summary form on the employee and the
employer.  The medical evaluation shall address all contested medical
issues arising from all injuries reported on one or more claim forms
prior to the date of the employee's initial appointment with the
medical evaluator.
   (j) If, after a medical evaluation is prepared, the employer or
the employee subsequently objects to any new medical issue, the
parties, to the extent possible, shall utilize the same medical
evaluator who prepared the previous evaluation to resolve the medical
dispute.
   (k) No disputed medical issue specified in subdivision (a) may be
the subject of declaration of readiness to proceed unless there has
first been an evaluation by the treating physician or an agreed or
qualified medical evaluator.
  SEC. 20.  Section 4062.5 of the Labor Code is amended to read:
   4062.5.  If a qualified medical evaluator selected from a panel
fails to complete the formal medical evaluation within the timeframes
established by the administrative director pursuant to paragraph (1)
of subdivision (j) of Section 139.2, a new evaluation may be
obtained upon the request of either party, as provided in Sections
4062.1 or 4062.2.  Neither the employee nor the employer shall have
any liability for payment for the formal medical evaluation which was
not completed within the required timeframes unless the employee or
employer, on forms prescribed by the administrative director, each
waive the right to a new evaluation and elects to accept the original
evaluation even though it was not completed within the required
timeframes.
  SEC. 21.  Section 4062.8 is added to the Labor Code, to read:
   4062.8.  The administrative director shall develop, not later than
January 1, 2004, and periodically revise as necessary thereafter,
educational materials to be used to provide treating physicians, as
described in Section 3209.3, or other providers, as described in
Section 3209.5, with information and training in basic concepts of
workers' compensation, the role of the treating physician, the
conduct of permanent and stationary evaluations, and report writing,
as appropriate.
  SEC. 22.  Section 4062.9 of the Labor Code is repealed.
  SEC. 23.  Section 4600 of the Labor Code is amended to read:
   4600.  (a) Medical, surgical, chiropractic, acupuncture, and
hospital treatment, including nursing, medicines, medical and
surgical supplies, crutches, and apparatus, including orthotic and
prosthetic devices and services, that is reasonably required to cure
or relieve the injured worker from the effects of his or her injury
shall be provided by the employer.  In the case of his or her neglect
or refusal reasonably to do so, the employer is liable for the
reasonable expense incurred by or on behalf of the employee in
providing treatment.
   (b) As used in this division and notwithstanding any other
provision of law, medical treatment that is reasonably required to
cure or relieve the injured worker from the effects of his or her
injury means treatment that is based upon the guidelines adopted by
the administrative director pursuant to Section 5307.27 or, prior to
the adoption of those guidelines, the updated American College of
Occupational and Environmental Medicine's Occupational Medicine
Practice Guidelines.
   (c) Unless the employer or the employer's insurer has established
a medical provider network as provided for in Section 4616, after 30
days from the date the injury is reported, the employee may be
treated by a physician of his or her own choice or at a facility of
his or her own choice within a reasonable geographic area.
   (d) (1) If an employee has notified his or her employer in writing
prior to the date of injury that he or she has a personal physician,
the employee shall have the right to be treated by that physician
from the date of injury if either of the following conditions exist:

   (A) The employer provides nonoccupational group health coverage in
a health care service plan, licensed pursuant to Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code.
   (B) The employer provides nonoccupational health coverage in a
group health plan or a group health insurance policy as described in
Section 4616.7.
   (2) For purposes of paragraph (1), a personal physician shall meet
all of the following conditions:
   (A) The physician is the employee's regular physician and surgeon,
licensed pursuant to Chapter 5 (commencing with Section 2000) of
Division 2 of the Business and Professions Code.
   (B) The physician is the employee's primary care physician and has
previously directed the medical treatment of the employee, and who
retains the employee's medical records, including his or her medical
history.
   (C) The physician agrees to be predesignated.
   (3) If the employer provides nonoccupational health care pursuant
to Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code, and the employer is notified pursuant to
paragraph (1), all medical treatment, utilization review of medical
treatment, access to medical treatment, and other medical treatment
issues shall be governed by Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code.  Disputes
regarding the provision of medical treatment shall be resolved
pursuant to Article 5.55 (commencing with Section 1374.30) of Chapter
2.2 of Division 2 of the Health and Safety Code.
   (4) If the employer provides nonoccupational health care, as
described in Section 4616.7, all medical treatment, utilization
review of medical treatment, access to medical treatment, and other
medical treatment issues shall be governed by the applicable
provisions of the Insurance Code.
   (5) The insurer may require prior authorization of any
nonemergency treatment or diagnostic service and may conduct
reasonably necessary utilization review pursuant to Section 4610.
   (6) The maximum percentage of all employees who are covered under
paragraph (1) that may be predesignated at any time in the state is 7
percent.
   (7) If any court finds that any portion of this subdivision is
invalid or in violation of any state or federal law, then this
subdivision shall be inoperative.
   (8) The division shall conduct an evaluation of this program and
present its findings to the Governor and the Legislature on or before
March 1, 2006.
   (9) This subdivision shall remain in effect only until April 30,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before April 30, 2007, deletes or extends
that date.
   (e) (1) When at the request of the employer, the employer's
insurer, the administrative director, the appeals board, or a workers'
compensation administrative law judge, the employee submits to
examination by a physician, he or she shall be entitled to receive,
in addition to all other benefits herein provided, all reasonable
expenses of transportation, meals, and lodging incident to reporting
for the examination, together with one day of temporary disability
indemnity for each day of wages lost in submitting to the
examination.
   (2) Regardless of the date of injury, "reasonable expenses of
transportation" includes mileage fees from the employee's home to the
place of the examination and back at the rate of twenty-one cents
($0.21) a mile or the mileage rate adopted by the Director of the
Department of Personnel Administration pursuant to Section 19820 of
the Government Code, whichever is higher, plus any bridge tolls.  The
mileage and tolls shall be paid to the employee at the time he or
she is given notification of the time and place of the examination.
   (f) When at the request of the employer, the employer's insurer,
the administrative director, the appeals board, or a workers'
compensation administrative law judge, an employee submits to
examination by a physician and the employee does not proficiently
speak or understand the English language, he or she shall be entitled
to the services of a qualified interpreter in accordance with
conditions and a fee schedule prescribed by the administrative
director.  These services shall be provided by the employer.  For
purposes of this section, "qualified interpreter" means a language
interpreter certified, or deemed certified, pursuant to Article 8
(commencing with Section 11435.05) of Chapter 4.5 of Part 1 of
Division 3 of Title 2 of, or Section 68566 of, the Government Code.

  SEC. 24.  Section 4603.2 of the Labor Code is amended to read:
   4603.2.  (a) Upon selecting a physician pursuant to Section 4600,
the employee or physician shall forthwith notify the employer of the
name and address of the physician.  The physician shall submit a
report to the employer within five working days from the date of the
initial examination and shall submit periodic reports at intervals
that may be prescribed by rules and regulations adopted by the
administrative director.
   (b) (1) Except as provided in subdivision (d) of Section 4603.4,
or under contracts authorized under Section 5307.11, payment for
medical treatment provided or authorized by the treating physician
selected by the employee or designated by the employer shall be made
at reasonable maximum amounts in the official medical fee schedule,
pursuant to Section 5307.1, in effect on the date of service.
Payments shall be made by the employer within 45 working days after
receipt of each separate, itemization of medical services provided,
together with any required reports and any written authorization for
services that may have been received by the physician.  If the
itemization or a portion thereof is contested, denied, or considered
incomplete, the physician shall be notified, in writing, that the
itemization is contested, denied, or considered incomplete, within 30
working days after receipt of the itemization by the employer.  A
notice that an itemization is incomplete shall state all additional
information required to make a decision.  Any properly documented
list of services provided not paid at the rates then in effect under
Section 5307.1 within the 45-working-day period shall be increased by
15 percent, together with interest at the same rate as judgments in
civil actions retroactive to the date of receipt of the itemization,
unless the employer does both of the following:
   (A) Pays the provider at the rates in effect within the
45-working-day period.
   (B) Advises, in the manner prescribed by the administrative
director, the physician, or another provider of the items being
contested, the reasons for contesting these items, and the remedies
available to the physician or the other provider if he or she
disagrees.  In the case of an itemization that includes services
provided by a hospital, outpatient surgery center, or independent
diagnostic facility, advice that a request has been made for an audit
of the itemization shall satisfy the requirements of this paragraph.

   If an employer contests all or part of an itemization, any amount
determined payable by the appeals board shall carry interest from the
date the amount was due until it is paid.  If any contested
itemization is determined payable by the appeals board, the defendant
shall be ordered to reimburse the provider for any filing fees paid
pursuant to Section 4903.05.
   An employer's liability to a physician or another provider under
this section for delayed payments shall not affect its liability to
an employee under Section 5814 or any other provision of this
division.
   (2) Notwithstanding paragraph (1), if the employer is a
governmental entity, payment for medical treatment provided or
authorized by the treating physician selected by the employee or
designated by the employer shall be made within 60 working days after
receipt of each separate itemization, together with any required
reports and any written authorization for services that may have been
received by the physician.
   (c) Any interest or increase in compensation paid by an insurer
pursuant to this section shall be treated in the same manner as an
increase in compensation under subdivision (d) of Section 4650 for
the purposes of any classification of risks and premium rates, and
any system of merit rating approved or issued pursuant to Article 2
(commencing with Section 11730) of Chapter 3 of Part 3 of Division 2
of the Insurance Code.
   (d) (1) Whenever an employer or insurer employs an individual or
contracts with an entity to conduct a review of an itemization
submitted by a physician or medical provider, the employer or insurer
shall make available to that individual or entity all documentation
submitted together with that itemization by the physician or medical
provider.  When an individual or entity conducting a itemization
review determines that additional information or documentation is
necessary to review the itemization, the individual or entity shall
contact the claims administrator or insurer to obtain the necessary
information or documentation that was submitted by the physician or
medical provider pursuant to subdivision (b).
   (2) An individual or entity reviewing an itemization of service
submitted by a physician or medical provider shall not alter the
procedure codes listed or recommend reduction of the amount of the
payment unless the documentation submitted by the physician or
medical provider with the itemization of service has been reviewed by
that individual or entity.  If the reviewer does not recommend
payment for services as itemized by the physician or medical
provider, the explanation of review shall provide the physician or
medical provider with a specific explanation as to why the reviewer
altered the procedure code or changed other parts of the itemization
and the specific deficiency in the itemization or documentation that
caused the reviewer to conclude that the altered procedure code or
amount recommended for payment more accurately represents the service
performed.
   (3) The appeals board shall have jurisdiction over disputes
arising out of this subdivision pursuant to Section 5304.
  SEC. 25.  Section 4604.5 of the Labor Code is amended to read:
          4604.5.  (a) Upon adoption by the administrative director
of a medical treatment utilization schedule pursuant to Section
5307.27, the recommended guidelines set forth in the schedule shall
be presumptively correct on the issue of extent and scope of medical
treatment.  The presumption is rebuttable and may be controverted by
a preponderance of the scientific medical evidence establishing that
a variance from the guidelines is reasonably required to cure or
relieve the injured worker from the effects of his or her injury.
The presumption created is one affecting the burden of proof.
   (b) The recommended guidelines set forth in the schedule adopted
pursuant to subdivision (a) shall reflect practices  that are
evidence and scientifically based, nationally recognized, and
peer-reviewed.  The guidelines shall be designed to assist providers
by offering an analytical framework for the evaluation and treatment
of injured workers, and shall constitute care in accordance with
Section 4600 for all injured workers diagnosed with industrial
conditions.
   (c) Three months after the publication date of the updated
American College of Occupational and Environmental Medicine's
Occupational Medicine Practice Guidelines, and continuing until the
effective date of a medical treatment utilization schedule, pursuant
to Section 5307.27, the recommended guidelines set forth in the
American College of Occupational and Environmental Medicine's
Occupational Medicine Practice Guidelines shall be presumptively
correct on the issue of extent and scope of medical treatment,
regardless of date of injury.  The presumption is rebuttable and may
be controverted by a preponderance of the evidence establishing that
a variance from the guidelines is reasonably required to cure and
relieve the employee from the effects of his or her injury, in
accordance with Section 4600.  The presumption created is one
affecting the burden of proof.
   (d) (1) Notwithstanding the medical treatment utilization schedule
or the guidelines set forth in the American College of Occupational
and Environmental Medicine's Occupational Medicine Practice
Guidelines, for injuries occurring on and after January 1, 2004, an
employee shall be entitled to no more than 24 chiropractic, 24
occupational therapy, and 24 physical therapy visits per industrial
injury.
   (2) This subdivision shall not apply when an employer authorizes,
in writing, additional visits to a health care practitioner for
physical medicine services.
   (e) For all injuries not covered by the American College of
Occupational and Environmental Medicine's Occupational Medicine
Practice Guidelines or official utilization schedule after adoption
pursuant to Section 5307.27, authorized treatment shall be in
accordance with other evidence based medical treatment guidelines
generally recognized by the national medical community and that are
scientifically based.
  SEC. 27.  Article 2.3 (commencing with Section 4616) is added to
Chapter 2 of Part 2 of Division 4 of the Labor Code, to read:

      Article 2.3.  Medical Provider Networks

   4616.  (a) (1) On or after January 1, 2005, an insurer or employer
may establish or modify a medical provider network for the provision
of medical treatment to injured employees.  The network shall
include physicians primarily engaged in the treatment of occupational
injuries and physicians primarily engaged in the treatment of
nonoccupational injuries.  The goal shall be at least 25 percent of
physicians primarily engaged in the treatment of nonoccupational
injuries.  The administrative director shall encourage the
integration of occupational and nonoccupational providers.  The
number of physicians in the medical provider network shall be
sufficient to enable treatment for injuries or conditions to be
provided in a timely manner.  The provider network shall include an
adequate number and type of physicians, as described in Section
3209.3, or other providers, as described in Section 3209.5, to treat
common injuries experienced by injured employees based on the type of
occupation or industry in which the employee is engaged, and the
geographic area where the employees are employed.
   (2) Medical treatment for injuries shall be readily available at
reasonable times to all employees.  To the extent feasible, all
medical treatment for injuries shall be readily accessible to all
employees.  With respect to availability and accessibility of
treatment, the administrative director shall consider the needs of
rural areas, specifically those in which health facilities are
located at least 30 miles apart.
   (b) The employer or insurer shall submit a plan for the medical
provider network to the administrative director for approval.  The
administrative director shall approve the plan if he or she
determines that the plan meets the requirements of this section.  If
the administrative director does not act on the plan within 60 days
of submitting the plan, it shall be deemed approved.
   (c) Physician compensation may not be structured in order to
achieve the goal of reducing, delaying, or denying medical treatment
or restricting access to medical treatment.
   (d) If the employer or insurer meets the requirements of this
section, the administrative director may not withhold approval or
disapprove an employer's or insurer's medical provider network based
solely on the selection of providers.  In developing a medical
provider network, an employer or insurer shall have the exclusive
right to determine the members of their network.
   (e) All treatment provided shall be provided in accordance with
the medical treatment utilization schedule established pursuant to
Section 5307.27 or the American College of Occupational Medicine's
Occupational Medicine Practice Guidelines, as appropriate.
   (f) No person other than a licensed physician who is competent to
evaluate the specific clinical issues involved in the medical
treatment services, when these services are within the scope of the
physician's practice, may modify, delay, or deny requests for
authorization of medical treatment.
   (g) On or before November 1, 2004, the administrative director, in
consultation with the Department of Managed Health Care, shall adopt
regulations implementing this article.  The administrative director
shall develop regulations that establish procedures for purposes of
making medical provider network modifications.
   4616.1.  (a) An insurer or employer that offers a medical provider
network under this division and that uses economic profiling shall
file with the administrative director a description of any policies
and procedures related to economic profiling utilized by the insurer
or employer.  The filing shall describe how these policies and
procedures are used in utilization review, peer review, incentive and
penalty programs, and in provider retention and termination
decisions.  The insurer or employer shall provide a copy of the
filing to an individual physician, provider, medical group, or
individual practice association.
   (b) The administrative director shall make each insurer's or
employer's filing available to the public upon request.  The
administrative director may not publicly disclose any information
submitted pursuant to this section that is determined by the
administrative director to be confidential pursuant to state or
federal law.
   (c) For the purposes of this article, "economic profiling" shall
mean any evaluation of a particular physician, provider, medical
group, or individual practice association based in whole or in part
on the economic costs or utilization of services associated with
medical care provided or authorized by the physician, provider,
medical group, or individual practice association.
   4616.2.  (a) An insurer or employer that arranges for care for
injured employees through a medical provider network shall file a
written continuity of care policy with the administrative director.
   (b) If approved by the administrative director, the provisions of
the written continuity of care policy shall replace all prior
continuity of care policies.  The insurer or employer shall file a
revision of the continuity of care policy with the administrative
director if it makes a material change to the policy.
   (c) The insurer or employer shall provide to all employees
entering the workers' compensation system notice of its written
continuity of care policy and information regarding the process for
an employee to request a review under the policy and shall provide,
upon request, a copy of the written policy to an employee.
   (d) (1) An insurer or employer that offers a medical provider
network shall, at the request of an injured employee, provide the
completion of treatment as set forth in this section by a terminated
provider.
   (2) The completion of treatment shall be provided by a terminated
provider to an injured employee who, at the time of the contract's
termination, was receiving services from that provider for one of the
conditions described in paragraph (3).
   (3) The insurer or employer shall provide for the completion of
treatment for the following conditions subject to coverage through
the workers' compensation system:
   (A) An acute condition.  An acute condition is a medical condition
that involves a sudden onset of symptoms due to an illness, injury,
or other medical problem that requires prompt medical attention and
that has a limited duration.  Completion of treatment shall be
provided for the duration of the acute condition.
   (B) A serious chronic condition.  A serious chronic condition is a
medical condition due to a disease, illness, or other medical
problem or medical disorder that is serious in nature and that
persists without full cure or worsens over an extended period of time
or requires ongoing treatment to maintain remission or prevent
deterioration.  Completion of treatment shall be provided for a
period of time necessary to complete a course of treatment and to
arrange for a safe transfer to another provider, as determined by the
insurer or employer in consultation with the injured employee and
the terminated provider and consistent with good professional
practice.  Completion of treatment under this paragraph shall not
exceed 12 months from the contract termination date.
   (C) A terminal illness.  A terminal illness is an incurable or
irreversible condition that has a high probability of causing death
within one year or less.  Completion of treatment shall be provided
for the duration of a terminal illness.
   (D) Performance of a surgery or other procedure that is authorized
by the insurer or employer as part of a documented course of
treatment and has been recommended and documented by the provider to
occur within 180 days of the contract's termination date.
   (4) (A) The insurer or employer may require the terminated
provider whose services are continued beyond the contract termination
date pursuant to this section to agree in writing to be subject to
the same contractual terms and conditions that were imposed upon the
provider prior to termination.  If the terminated provider does not
agree to comply or does not comply with these contractual terms and
conditions, the insurer or employer is not required to continue the
provider's services beyond the contract termination date.
   (B) Unless otherwise agreed by the terminated provider and the
insurer or employer, the services rendered pursuant to this section
shall be compensated at rates and methods of payment similar to those
used by the insurer or employer for currently contracting providers
providing similar services who are practicing in the same or a
similar geographic area as the terminated provider.  The insurer or
provider is not required to continue the services of a terminated
provider if the provider does not accept the payment rates provided
for in this paragraph.
   (5) An insurer or employer shall ensure that the requirements of
this section are met.
   (6) This section shall not require an insurer or employer to
provide for completion of treatment by a provider whose contract with
the insurer or employer has been terminated or not renewed for
reasons relating to a medical disciplinary cause or reason, as
defined in paragraph (6) of subdivision (a) of Section 805 of the
Business and Profession Code, or fraud or other criminal activity.
   (7) Nothing in this section shall preclude an insurer or employer
from providing continuity of care beyond the requirements of this
section.
   (e) The insurer or employer may require the terminated provider
whose services are continued beyond the contract termination date
pursuant to this section to agree in writing to be subject to the
same contractual terms and conditions that were imposed upon the
provider prior to termination.  If the terminated provider does not
agree to comply or does not comply with these contractual terms and
conditions, the insurer or employer is not required to continue the
provider's services beyond the contract termination date.
   4616.3.  (a) When the injured employee notifies the employer of
the injury or files a claim for workers' compensation with the
employer, the employer shall arrange an initial medical evaluation
and begin treatment as required by Section 4600.
   (b) The employer shall notify the employee of his or her right to
be treated by a physician of his or her choice after the first visit
from the medical provider network established pursuant to this
article, and the method by which the list of participating providers
may be accessed by the employee.
   (c) If an injured employee disputes either the diagnosis or the
treatment prescribed by the treating physician, the employee may seek
the opinion of another physician in the medical provider network.
If the injured employee disputes the diagnosis or treatment
prescribed by the second physician, the employee may seek the opinion
of a third physician in the medical provider network.
   (d) (1) Selection by the injured employee of a treating physician
and any subsequent physicians shall be based on the physician's
specialty or recognized expertise in treating the particular injury
or condition in question.
   (2) Treatment by a specialist who is not a member of the medical
provider network may be permitted on a case-by-case basis if the
medical provider network does not contain a physician who can provide
the approved treatment and the treatment is approved by the employer
or the insurer.
   4616.4.  (a) (1) The administrative director shall contract with
individual physicians, as described in paragraph (2), or an
independent medical review organization to perform independent
medical reviews pursuant to this section.
   (2) Only physicians licensed pursuant to Chapter 5 (commencing
with Section 2000) of the Business and Professions Code may be
independent medical reviewers.
   (3) The administrative director shall ensure that the independent
medical reviewers or those within the review organization shall do
all of the following:
   (A) Be appropriately credentialed and privileged.
   (B) Ensure that the reviews provided by the medical professionals
are timely, clear, and credible, and that reviews are monitored for
quality on an ongoing basis.
   (C) Ensure that the method of selecting medical professionals for
individual cases achieves a fair and impartial panel of medical
professionals who are qualified to render recommendations regarding
the clinical conditions consistent with the medical utilization
schedule established pursuant to Section 5307.27, or the American
College of Occupational and Environmental Medicine's Occupational
Medicine Practice Guidelines.
   (D) Ensure that confidentiality of medical records and the review
materials, consistent with the requirements of this section and
applicable state and federal law.
   (E) Ensure the independence of the medical professionals retained
to perform the reviews through conflict-of-interest policies and
prohibitions, and ensure adequate screening for conflicts of
interest.
   (4) Medical professionals selected by the administrative director
or the independent medical review organizations to review medical
treatment decisions shall be physicians, as specified in paragraph
(2) of subdivision (a), who meet the following minimum requirements:

   (A) The medical professional shall be a clinician knowledgeable in
the treatment of the employee's medical condition, knowledgeable
about the proposed treatment, and familiar with guidelines and
protocols in the area of treatment under review.
   (B) Notwithstanding any other provision of law, the medical
professional shall hold a nonrestricted license in any state of the
United States, and for physicians, a current certification by a
recognized American medical specialty board in the area or areas
appropriate to the condition or treatment under review.
   (C) The medical professional shall have no history of disciplinary
action or sanctions, including, but not limited to, loss of staff
privileges or participation restrictions taken or pending by any
hospital, government, or regulatory body.
   (b) If, after the third physician's opinion, the treatment or
diagnostic service remains disputed, the injured employee may request
independent medical review regarding the disputed treatment or
diagnostic service still in dispute after the third physician's
opinion in accordance with Section 4616.3.  The standard to be
utilized for independent medical review is identical to that
contained in the medical treatment utilization schedule established
in Section 5307.27, or the American College of Occupational and
Environmental Medicine's Occupational Medicine Practice Guidelines,
as appropriate.
   (c) Applications for independent medical review shall be submitted
to the administrative director on a one-page form provided by the
administrative director entitled "Independent Medical Review
Application."  The form shall contain a signed release from the
injured employee, or a person authorized pursuant to law to act on
behalf of the injured employee, authorizing the release of medical
and treatment information.  The injured employee may provide any
relevant material or documentation with the application.  The
administrative director or the independent medical review
organization shall assign the independent medical reviewer.
   (d) Following receipt of the application for independent medical
review, the employer or insurer shall provide the independent medical
reviewer, assigned pursuant to subdivision (c), with all information
that was considered in relation to the disputed treatment or
diagnostic service, including both of the following:
   (1) A copy of all correspondence from, and received by, any
treating physician who provided a treatment or diagnostic service to
the injured employee in connection with the injury.
   (2) A complete and legible copy of all medical records and other
information used by the physicians in making a decision regarding the
disputed treatment or diagnostic service.
   (e) Upon receipt of information and documents related to the
application for independent medical review, the independent medical
reviewer shall conduct a physical examination of the injured employee
at the employee's discretion.  The reviewer may order any diagnostic
tests necessary to make his or her determination regarding medical
treatment.  Utilizing the medical treatment utilization schedule
established pursuant to Section 5307.27, or the American College of
Occupational and Environmental Medicine's Occupational Medicine
Practice Guidelines, as appropriate, and taking into account any
reports and information provided, the reviewer shall determine
whether the disputed health care service was consistent with Section
5307.27 or the American College of Occupational and Environmental
Medicine's Occupational Medicine Practice Guidelines based on the
specific medical needs of the injured employee.
   (f) The independent medical reviewer shall issue a report to the
administrative director, in writing, and in layperson's terms to the
maximum extent practicable, containing his or her analysis and
determination whether the disputed health care service was consistent
with the medical treatment utilization schedule established pursuant
to Section 5307.27, or the American College of Occupational and
Environmental Medicine's Occupational Medicine Practice Guidelines,
as appropriate, within 30 days of the examination of the injured
employee, or within less time as prescribed by the administrative
director.  If the disputed health care service has not been provided
and the independent medical reviewer certifies in writing that an
imminent and serious threat to the health of the injured employee may
exist, including, but not limited to, serious pain, the potential
loss of life, limb, or major bodily function, or the immediate and
serious deterioration of the injured employee, the report shall be
expedited and rendered within three days of the examination by the
independent medical reviewer.  Subject to the approval of the
administrative director, the deadlines for analyses and
determinations involving both regular and expedited reviews may be
extended by the administrative director for up to three days in
extraordinary circumstances or for good cause.
   (g) The independent medical reviewer's analysis shall cite the
injured employee's medical condition, the relevant documents in the
record, and the relevant findings associated with the documents or
any other information submitted to the reviewer in order to support
the determination.
   (h) The administrative director shall immediately adopt the
determination of the independent medical reviewer, and shall promptly
issue a written decision to the parties.
   (i) If the determination of the independent medical reviewer finds
that the disputed treatment or diagnostic service is consistent with
Section 5307.27 or the American College of Occupational and
Environmental Medicine's Occupational Medicine Practice Guidelines,
the injured employee may seek the disputed treatment or diagnostic
service from a physician of his or her choice from within or outside
the medical provider network.  Treatment outside the medical provider
network shall be provided consistent with Section 5307.27 or the
American College of Occupational and Environmental Medicine's
Occupational Practice Guidelines.  The employer shall be liable for
the cost of any approved medical treatment in accordance with Section
5307.1 or 5307.11.
   4616.5.  For purposes of this article, "employer" means a
self-insured employer, joint powers authority, or the state.
   4616.6.  No additional examinations shall be ordered by the
appeals board and no other reports shall be admissable to resolve any
controversy arising out of this article.
   4616.7.  (a) A health care organization certified pursuant to
Section 4600.5 shall be deemed approved pursuant to this article if
it meets the percentage required for physicians primarily engaged in
nonoccupational medicine specified in subdivision (a) of Section 4616
and all the other requirements of this article are met, as
determined by the administrative director.
   (b) A health care service plan, licensed pursuant to Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code, shall be deemed approved for purposes of this article if it
has a reasonable number of physicians with competency in occupational
medicine, as determined by the administrative director.
   (c) A group disability insurance policy, as defined in subdivision
(b) of Section 106 of the Insurance Code, that covers hospital,
surgical, and medical care expenses shall be deemed approved for
purposes of this article if it has a reasonable number of physicians
with competency in occupational medicine, as determined by the
administrative director.  For the purposes of this section, a group
disability insurance policy shall not include Medicare supplement,
vision-only, dental-only, and Champus-supplement insurance.  For
purposes of this section, a group disability insurance policy shall
not include hospital indemnity, accident-only, and specified disease
insurance that pays benefits on a fixed benefit, cash-payment-only
basis.
   (d) Any Taft-Hartley health and welfare fund shall be deemed
approved for purposes of this article if it has a reasonable number
of physicians with competency in occupational medicine, as determined
by the administrative director.
  SEC. 28.  Section 4650 of the Labor Code is amended to read:
   4650.  (a) If an injury causes temporary disability, the first
payment of temporary disability indemnity shall be made not later
than 14 days after knowledge of the injury and disability, on which
date all indemnity then due shall be paid, unless liability for the
injury is earlier denied.
   (b) If the injury causes permanent disability, the first payment
shall be made within 14 days after the date of last payment of
temporary disability indemnity.  When the last payment of temporary
disability indemnity has been made pursuant to subdivision (c) of
Section 4656, and regardless of whether the extent of permanent
disability can be determined at that date, the employer nevertheless
shall commence the timely payment required by this subdivision and
shall continue to make these payments until the employer's reasonable
estimate of permanent disability indemnity due has been paid, and if
the amount of permanent disability indemnity due has been
determined, until that amount has been paid.
   (c) Payment of temporary or permanent disability indemnity
subsequent to the first payment shall be made as due every two weeks
on the day designated with the first payment.
   (d) If any indemnity payment is not made timely as required by
this section, the amount of the late payment shall be increased 10
percent and shall be paid, without application, to the employee,
unless the employer continues the employee's wages under a salary
continuation plan, as defined in subdivision (g).  No increase shall
apply to any payment due prior to or within 14 days after the date
the claim form was submitted to the employer under Section 5401.  No
increase shall apply when, within the 14-day period specified under
subdivision (a), the employer is unable to determine whether
temporary disability indemnity payments are owed and advises the
employee, in the manner prescribed in rules and regulations adopted
pursuant to Section 138.4, why payments cannot be made within the
14-day period, what additional information is required to make the
decision whether temporary disability indemnity payments are owed,
and when the employer expects to have the information required to
make the decision.
                                                             (e) If
the employer is insured for its obligation to provide compensation,
the employer shall be obligated to reimburse the insurer for the
amount of increase in indemnity payments, made pursuant to
subdivision (d), if the late payment which gives rise to the increase
in indemnity payments, is due less than seven days after the insurer
receives the completed claim form from the employer.  Except as
specified in this subdivision, an employer shall not be obligated to
reimburse an insurer nor shall an insurer be permitted to seek
reimbursement, directly or indirectly, for the amount of increase in
indemnity payments specified in this section.
   (f) If an employer is obligated under subdivision (e) to reimburse
the insurer for the amount of increase in indemnity payments, the
insurer shall notify the employer in writing, within 30 days of the
payment, that the employer is obligated to reimburse the insurer and
shall bill and collect the amount of the payment no later than at
final audit.  However, the insurer shall not be obligated to collect,
and the employer shall not be obligated to reimburse, amounts paid
pursuant to subdivision (d) unless the aggregate total paid in a
policy year exceeds one hundred dollars ($100).  The employer shall
have 60 days, following notice of the obligation to reimburse, to
appeal the decision of the insurer to the Department of Insurance.
The notice of the obligation to reimburse shall specify that the
employer has the right to appeal the decision of the insurer as
provided in this subdivision.
   (g) For purposes of this section, "salary continuation plan" means
a plan that meets both of the following requirements:
   (1) The plan is paid for by the employer pursuant to statute,
collective bargaining agreement, memorandum of understanding, or
established employer policy.
   (2) The plan provides the employee on his or her regular payday
with salary not less than the employee is entitled to receive
pursuant to statute, collective bargaining agreement, memorandum of
understanding, or established employer policy and not less than the
employee would otherwise receive in indemnity payments.
  SEC. 29.  Section 4656 of the Labor Code is amended to read:
   4656.  (a) Aggregate disability payments for a single injury
occurring prior to January 1, 1979, causing temporary disability
shall not extend for more than 240 compensable weeks within a period
of five years from the date of the injury.
   (b) Aggregate disability payments for a single injury occurring on
or after January 1, 1979, and prior to the effective date of
subdivision (c), causing temporary partial disability shall not
extend for more than 240 compensable weeks within a period of five
years from the date of the injury.
   (c) (1) Aggregate disability payments for a single injury
occurring on or after the effective date of this subdivision, causing
temporary disability shall not extend for more than 104 compensable
weeks within a period of two years from the date of commencement of
temporary disability payment.
   (2) Notwithstanding paragraph (1), for an employee who suffers
from the following injuries or conditions, aggregate disability
payments for a single injury occurring on or after the effective date
of this subdivision, causing temporary disability shall not extend
for more than 240 compensable weeks within a period of five years
from the date of the injury:
   (A) Acute and chronic hepatitis B.
   (B) Acute and chronic hepatitis C.
   (C) Amputations.
   (D) Severe burns.
   (E) Human immunodeficiency virus (HIV).
   (F) High-velocity eye injuries.
   (G) Chemical burns to the eyes.
   (H) Pulmonary fibrosis.
   (I) Chronic lung disease.
  SEC. 30.  Section 4658 of the Labor Code is amended to read:
   4658.  (a) For injuries occurring prior to January 1, 1992, if the
injury causes permanent disability, the percentage of disability to
total disability shall be determined, and the disability payment
computed and allowed, according to paragraph (1).  However, in no
event shall the disability payment allowed be less than the
disability payment computed according to paragraph (2).
   (1)


                                        Column 2--Number of weeks
                                         for which two-thirds of
     Column 1--Range                     average weekly earnings
     of percentage                      allowed for each 1 percent
     of permanent                        of permanent disability
     disability incurred:                within percentage range:
       Under 10 .......................              3
       10-19.75 .......................              4
       20-29.75 .......................              5
       30-49.75 .......................              6
       50-69.75 .......................              7
       70-99.75 .......................              8

   The number of weeks for which payments shall be allowed set forth
in column 2 above based upon the percentage of permanent disability
set forth in column 1 above shall be cumulative, and the number of
benefit weeks shall increase with the severity of the disability.
The following schedule is illustrative of the computation of the
number of benefit weeks:


       Column 1--
       Percentage                           Column 2--
       of permanent                         Cumulative
       disability                           number of
       incurred:                           benefit weeks:
            5 ..........................        15.00
           10 ..........................        30.25
           15 ..........................        50.25
           20 ..........................        70.50
           25 ..........................        95.50
           30 ..........................       120.75
           35 ..........................       150.75
           40 ..........................       180.75
           45 ..........................       210.75
           50 ..........................       241.00
           55 ..........................       276.00
           60 ..........................       311.00
           65 ..........................       346.00
           70 ..........................       381.25
           75 ..........................       421.25
           80 ..........................       461.25
           85 ..........................       501.25
           90 ..........................       541.25
           95 ..........................       581.25
          100 ..........................      for life

   (2) Two-thirds of the average weekly earnings for four weeks for
each 1 percent of disability, where, for the purposes of this
subdivision, the average weekly earnings shall be taken at not more
than seventy-eight dollars and seventy-five cents ($78.75).
   (b) This subdivision shall apply to injuries occurring on or after
January 1, 1992.  If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed, according to paragraph
(1).  However, in no event shall the disability payment allowed be
less than the disability payment computed according to paragraph (2).

   (1)


                                        Column 2--Number of weeks
                                         for which two-thirds of
     Column 1--Range                     average weekly earnings
     of percentage                      allowed for each 1 percent
     of permanent                        of permanent disability
     disability incurred:                within percentage range:
       Under 10 .......................              3
       10-19.75 .......................              4
       20-24.75 .......................              5
       25-29.75 .......................              6
       30-49.75 .......................              7
       50-69.75 .......................              8
       70-99.75 .......................              9

   The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
   (2) Two-thirds of the average weekly earnings for four weeks for
each 1 percent of disability, where, for the purposes of this
subdivision, the average weekly earnings shall be taken at not more
than seventy-eight dollars and seventy-five cents ($78.75).
   (c) This subdivision shall apply to injuries occurring on or after
January 1, 2004.  If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed as follows:


                                        Column 2--Number of weeks
                                         for which two-thirds of
     Column 1--Range                     average weekly earnings
     of percentage                      allowed for each 1 percent
     of permanent                        of permanent disability
     disability incurred:                within percentage range:
       Under 10 .......................              4
       10-19.75 .......................              5
       20-24.75 .......................              5
       25-29.75 .......................              6
       30-49.75 .......................              7
       50-69.75 .......................              8
       70-99.75 .......................              9

   The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
   (d) (1) This subdivision shall apply to injuries occurring on or
after the effective date of the revised permanent disability schedule
adopted by the administrative director pursuant to Section 4660.  If
the injury causes permanent disability, the percentage of disability
to total disability shall be determined, and the basic disability
payment computed as follows:


                                        Column 2--Number of weeks
                                         for which two-thirds of
     Column 1--Range                     average weekly earnings
     of percentage                      allowed for each 1 percent
     of permanent                        of permanent disability
     disability incurred:                within percentage range:
       0.25-9.75 ......................              3
       10-14.75 .......................              4
       15-24.75 .......................              5
       25-29.75 .......................              6
       30-49.75 .......................              7
       50-69.75 .......................              8
       70-99.75 .......................             16

   The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
   (2) If, within 60 days of a disability becoming permanent and
stationary, an employer does not offer the injured employee regular
work, modified work, or alternative work, in the form and manner
prescribed by the administrative director, for a period of at least
12 months, each disability payment remaining to be paid to the
injured employee from the date of the end of the 60-day period shall
be paid in accordance with paragraph (1) and increased by 15 percent.
  This paragraph shall not apply to an employer that employs fewer
than 50 employees.
   (3) (A) If, within 60 days of a disability becoming permanent and
stationary, an employer offers the injured employee regular work,
modified work, or alternative work, in the form and manner prescribed
by the administrative director, for a period of at least 12 months,
and regardless of whether the injured employee accepts or rejects the
offer, each disability payment remaining to be paid to the injured
employee from the date the offer was made shall be paid in accordance
with paragraph (1) and decreased by 15 percent.
   (B) If the regular work, modified work, or alternative work is
terminated by the employer before the end of the period for which
disability payments are due the injured employee, the amount of each
of the remaining disability payments shall be paid in accordance with
paragraph (1) and increased by 15 percent.  An employee who
voluntarily terminates employment shall not be eligible for payment
under this subparagraph.  This paragraph shall not apply to an
employer that employs fewer than 50 employees.
   (4) For compensable claims arising before April 30, 2004, the
schedule provided in this subdivision shall not apply to the
determination of permanent disabilities when there has been either a
comprehensive medical-legal report or a report by a treating
physician, indicating the existence of permanent disability, or when
the employer is required to provide the notice required by Section
4061 to the injured worker.
  SEC. 31.  Section 4658.1 is added to the Labor Code, to read:
   4658.1.  As used in this article, the following definitions apply:

   (a) "Regular work" means the employee's usual occupation or the
position in which the employee was engaged at the time of injury and
that offers wages and compensation equivalent to those paid to the
employee at the time of injury, and located within a reasonable
commuting distance of the employee's residence at the time of injury.

   (b) "Modified work" means regular work modified so that the
employee has the ability to perform all the functions of the job and
that offers wages and compensation that are at least 85 percent of
those paid to the employee at the time of injury, and located within
a reasonable commuting distance of the employee's residence at the
time of injury.
   (c) "Alternative work" means work that the employee has the
ability to perform, that offers wages and compensation that are at
least 85 percent of those paid to the employee at the time of injury,
and that is located within reasonable commuting distance of the
employee's residence at the time of injury.
   (d) For the purpose of determining whether wages and compensation
are equivalent to those paid at the time of injury, the wages and
compensation for any increase in working hours over the average hours
worked at the time of injury shall not be considered.
   (e) For the purpose of determining whether wages and compensation
are equivalent to those paid at the time of injury, actual wages and
compensation shall be determined without regard to the minimums and
maximums set forth in Chapter 1 (commencing with Section 4451).
   (f) The condition that regular work, modified work, or alternative
work be located within a reasonable distance of the employee's
residence at the time of injury may be waived by the employee.  The
condition shall be deemed to be waived if the employee accepts the
regular work, modified work, or alternative work and does not object
to the location within 20 days of being informed of the right to
object.  The condition shall be conclusively deemed to be satisfied
if the offered work is at the same location and the same shift as the
employment at the time of injury.
  SEC. 32.  Section 4660 of the Labor Code is amended to read:
   4660.  (a) In determining the percentages of permanent disability,
account shall be taken of the nature of the physical injury or
disfigurement, the occupation of the injured employee, and his or her
age at the time of the injury, consideration being given to an
employee's diminished future earning capacity.
   (b) (1) For purposes of this section, the "nature of the physical
injury or disfigurement" shall incorporate the descriptions and
measurements of physical impairments and the corresponding
percentages of impairments published in the American Medical
Association (AMA) Guides to the Evaluation of Permanent Impairment
(5th Edition).
   (2) For purposes of this section, an employee's diminished future
earning capacity shall be a numeric formula based on empirical data
and findings that aggregate the average percentage of long-term loss
of income resulting from each type of injury for similarly situated
employees.  The administrative director shall formulate the adjusted
rating schedule based on empirical data and findings from the
Evaluation of California's Permanent Disability Rating Schedule,
Interim Report (December 2003), prepared by the RAND Institute for
Civil Justice, and upon data from additional empirical studies.
   (c) The administrative director shall amend the schedule for the
determination of the percentage of permanent disability in accordance
with this section at least once every five years. This schedule
shall be available for public inspection and, without formal
introduction in evidence, shall be prima facie evidence of the
percentage of permanent disability to be attributed to each injury
covered by the schedule.
   (d) The schedule shall promote consistency, uniformity, and
objectivity.  The schedule and any amendment thereto or revision
thereof shall apply prospectively and shall apply to and govern only
those permanent disabilities that result from compensable injuries
received or occurring on and after the effective date of the adoption
of the schedule, amendment or revision, as the fact may be.  For
compensable claims arising before January 1, 2005, the schedule as
revised pursuant to changes made in legislation enacted during the
2003-04 Regular and Extraordinary Sessions shall apply to the
determination of permanent disabilities when there has been either no
comprehensive medical-legal report or no report by a treating
physician indicating the existence of permanent disability, or when
the employer is not required to provide the notice required by
Section 4061 to the injured worker.
   (e) On or before January 1, 2005, the administrative director
shall adopt regulations to implement the changes made to this section
by the act that added this subdivision.
  SEC. 33.  Section 4663 of the Labor Code is repealed.
  SEC. 34.  Section 4663 is added to the Labor Code, to read:
   4663.  (a) Apportionment of permanent disability shall be based on
causation.
   (b) Any physician who prepares a report addressing the issue of
permanent disability due to a claimed industrial injury shall in that
report address the issue of causation of the permanent disability.
   (c) In order for a physician's report to be considered complete on
the issue of permanent disability, it must include an apportionment
determination.  A physician shall make an apportionment determination
by finding what approximate percentage of the permanent disability
was caused by the direct result of injury arising out of and
occurring in the course of employment and what approximate percentage
of the permanent disability was caused by other factors both before
and subsequent to the industrial injury, including prior industrial
injuries.  If the physician is unable to include an apportionment
determination in his or her report, the physician shall state the
specific reasons why the physician could not make a determination of
the effect of that prior condition on the permanent disability
arising from the injury.  The physician shall then consult with other
physicians or refer the employee to another physician from whom the
employee is authorized to seek treatment or evaluation in accordance
with this division in order to make the final determination.
   (d) An employee who claims an industrial injury shall, upon
request, disclose all previous permanent disabilities or physical
impairments.
  SEC. 35.  Section 4664 is added to the Labor Code, to read:
   4664.  (a) The employer shall only be liable for the percentage of
permanent disability directly caused by the injury arising out of
and occurring in the course of employment.
   (b) If the applicant has received a prior award of permanent
disability, it shall be conclusively presumed that the prior
permanent disability exists at the time of any subsequent industrial
injury.  This presumption is a presumption affecting the burden of
proof.
   (c) (1) The accumulation of all permanent disability awards issued
with respect to any one region of the body in favor of one
individual employee shall not exceed 100 percent over the employee's
lifetime unless the employee's injury or illness is conclusively
presumed to be total in character pursuant to Section 4662.  As used
in this section, the regions of the body are the following:
   (A) Hearing.
   (B) Vision.
   (C) Mental and behavioral disorders.
   (D) The spine.
   (E) The upper extremities, including the shoulders.
   (F) The lower extremities, including the hip joints.
   (G) The head, face, cardiovascular system, respiratory system, and
all other systems or regions of the body not listed in subparagraphs
(A) to (F), inclusive.
   (2) Nothing in this section shall be construed to permit the
permanent disability rating for each individual injury sustained by
an employee arising from the same industrial accident, when added
together, from exceeding 100 percent.
  SEC. 36.  Section 4706.5 of the Labor Code is amended to read:
   4706.5.  (a) Whenever any fatal injury is suffered by an employee
under circumstances that would entitle the employee to compensation
benefits, but for his or her death, and the employee does not leave
surviving any person entitled to a dependency death benefit, the
employer shall pay a sum to the Department of Industrial Relations
equal to the total dependency death benefit that would be payable to
a surviving spouse with no dependent minor children.
   (b) When the deceased employee leaves no surviving dependent,
personal representative, heir, or other person entitled to the
accrued and unpaid compensation referred to in Section 4700, the
accrued and unpaid compensation shall be paid by the employer to the
Department of Industrial Relations.
   (c) The payments to be made to the Department of Industrial
Relations, as required by subdivisions (a) and (b), shall be
deposited in the General Fund and shall be credited, as a
reimbursement, to any appropriation to the Department of Industrial
Relations for payment of the additional compensation for subsequent
injury provided in Article 5 (commencing with Section 4751), in the
fiscal year in which the Controller's receipt is issued.
   (d) The payments to be made to the Department of Industrial
Relations, as required by subdivision (a), shall be paid to the
department in a lump sum in the manner provided in subdivision (b) of
Section 5101.
   (e) The Department of Industrial Relations shall keep a record of
all payments due the state under this section, and shall take any
steps as may be necessary to collect those amounts.
   (f) Each employer, or the employer's insurance carrier, shall
notify the administrative director, in any form as the administrative
director may prescribe, of each employee death, except when the
employer has actual knowledge or notice that the deceased employee
left a surviving dependent.
   (g) When, after a reasonable search, the employer concludes that
the deceased employee left no one surviving who is entitled to a
dependency death benefit, and concludes that the death was under
circumstances that would entitle the employee to compensation
benefits, the employer may voluntarily make the payment referred to
in subdivision (a).  Payments so made shall be construed as payments
made pursuant to an appeals board findings and award.  Thereafter, if
the appeals board finds that the deceased employee did in fact leave
a person surviving who is entitled to a dependency death benefit,
upon that finding, all payments referred to in subdivision (a) that
have been made shall be forthwith returned to the employer, or if
insured, to the employer's workers' compensation carrier that
indemnified the employer for the loss.
  SEC. 37.  Section 4750 of the Labor Code is repealed.
  SEC. 38.  Section 4750.5 of the Labor Code is repealed.
  SEC. 39.  Section 4903.05 of the Labor Code is amended to read:
   4903.05.  (a) A filing fee of one hundred dollars ($100) shall be
charged for each initial lien filed by providers, or on behalf of
providers, pursuant to subdivision (b) of Section 4903.
   (b) No filing fee shall be required for liens filed by the
Veterans Administration, the Medi-Cal program, or public hospitals.
   (c) The filing fee shall be collected by the court administrator.
All fees shall be deposited in the Workers' Compensation
Administration Revolving Fund.  Any fees collected from providers
that have not been redistributed to providers pursuant to paragraph
(2) of subdivision (b) of Section 4603.2, shall be used to offset the
amount of fees assessed on employers under Section 62.5.
   (d) The court administrator shall adopt reasonable rules and
regulations governing the procedures for the collection of the filing
fee.
  SEC. 40.  Section 5402 of the Labor Code is amended to read:
   5402.  (a) Knowledge of an injury, obtained from any source, on
the part of an employer, his or her managing agent, superintendent,
foreman, or other person in authority, or knowledge of the assertion
of a claim of injury sufficient to afford opportunity to the employer
to make an investigation into the facts, is equivalent to service
under Section 5400.
   (b) If liability is not rejected within 90 days after the date the
claim form is filed under Section 5401, the injury shall be presumed
compensable under this division.  The presumption of this
subdivision is rebuttable only by evidence discovered subsequent to
the 90-day period.
   (c) Within one working day after an employee files a claim form
under Section 5401, the employer shall authorize the provision of all
treatment, consistent with Section 5307.27 or the American College
of Occupational and Environmental Medicine's Occupational Medicine
Practice Guidelines, for the alleged injury and shall continue to
provide the treatment until the date that liability for the claim is
accepted or rejected.  Until the date the claim is accepted or
rejected, liability for medical treatment shall be limited to ten
thousand dollars ($10,000).
   (d) Treatment provided under subdivision (c) shall not give rise
to a presumption of liability on the part of the employer.
                       SEC. 41.  Section 5703 of the Labor Code is
amended to read:
   5703.  The appeals board may receive as evidence either at or
subsequent to a hearing, and use as proof of any fact in dispute, the
following matters, in addition to sworn testimony presented in open
hearing:
   (a) Reports of attending or examining physicians.
   (1) Statements concerning any bill for services are admissible
only if made under penalty of perjury that they are true and correct
to the best knowledge of the physician.
   (2) In addition, reports are admissible under this subdivision
only if the physician has further stated in the body of the report
that there has not been a violation of Section 139.3 and that the
contents of the report are true and correct to the best knowledge of
the physician.  The statement shall be made under penalty of perjury.

   (b) Reports of special investigators appointed by the appeals
board or a workers' compensation judge to investigate and report upon
any scientific or medical question.
   (c) Reports of employers, containing copies of timesheets, book
accounts, reports, and other records properly authenticated.
   (d) Properly authenticated copies of hospital records of the case
of the injured employee.
   (e) All publications of the Division of  Workers' Compensation.
   (f) All official publications of the State of California and
United States governments.
   (g) Excerpts from expert testimony received by the appeals board
upon similar issues of scientific fact in other cases and the prior
decisions of the appeals board upon similar issues.
   (h) Relevant portions of medical treatment protocols published by
medical specialty societies.  To be admissible, the party offering
such a protocol or portion of a protocol shall concurrently enter
into evidence information regarding how the protocol was developed,
and to what extent the protocol is evidence-based, peer-reviewed, and
nationally recognized.  If a party offers into evidence a portion of
a treatment protocol, any other party may offer into evidence
additional portions of the protocol.  The party offering a protocol,
or portion thereof, into evidence shall either make a printed copy of
the full protocol available for review and copying, or shall provide
an Internet address at which the entire protocol may be accessed
without charge.
   (i) The medical treatment utilization schedule in effect pursuant
to Section 5307.27 or the guidelines in effect pursuant to Section
4604.5.
  SEC. 42.  Section 5814 of the Labor Code is amended to read:
   5814.  (a) When payment of compensation has been unreasonably
delayed or refused, either prior to or subsequent to the issuance of
an award, the full amount of the order, decision, or award shall be
increased by 10 percent.  Multiple increases shall not be awarded for
repeated delays in making a series of payments due for the same type
or specie of benefit unless there has been a legally significant
event between the delay and the subsequent delay in payments of the
same type or specie of benefits.  The question of delay and the
reasonableness of the cause therefor shall be determined by the
appeals board in accordance with the facts.  This delay or refusal
shall constitute good cause under Section 5803 to rescind, alter, or
amend the order, decision, or award for the purpose of making the
increase provided for herein.
   (b) This section shall become inoperative on June 1, 2004, and, as
of January 1, 2005, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2005, deletes or
extends the dates on which it becomes inoperative and is repealed.

  SEC. 43.  Section 5814 is added to the Labor Code, to read:
   5814.  (a) When payment of compensation has been unreasonably
delayed or refused, either prior to or subsequent to the issuance of
an award, the amount of the payment unreasonably delayed or refused
shall be increased up to 25 percent or up to ten thousand dollars
($10,000), whichever is less.  In any proceeding under this section,
the appeals board shall use its discretion to accomplish a fair
balance and substantial justice between the parties.
   (b) If a potential violation of this section is discovered by the
employer prior to an employee claiming a penalty under this section,
the employer, within 90 days of the date of the discovery, may pay a
self-imposed penalty in the amount of 10 percent of the amount of the
payment unreasonably delayed or refused, along with the amount of
the payment delayed or refused.  This self-imposed penalty shall be
in lieu of the penalty in subdivision (a).
   (c) Upon the approval of a compromise and release, findings and
awards, or stipulations and orders by the appeals board, it shall be
conclusively presumed that any accrued claims for penalty have been
resolved, regardless of whether a petition for penalty has been
filed, unless the claim for penalty is expressly excluded by the
terms of the order or award.  Upon the submission of any issue for
determination at a regular trial hearing, it shall be conclusively
presumed that any accrued claim for penalty in connection with the
benefit at issue has been resolved, regardless of whether a petition
for penalty has been filed, unless the issue of penalty is also
submitted or is expressly excluded in the statement of issues being
submitted.
   (d) The payment of any increased award pursuant to subdivision (a)
shall be reduced by any amount paid under subdivision (d) of Section
4650 on the same unreasonably delayed or refused benefit payment.
   (e) No unreasonable delay in the provision of medical treatment
shall be found when the treatment has been authorized by the employer
in a timely manner and the only dispute concerns payment of a
billing submitted by a physician or medical provider as provided in
Section 4603.2.
   (f) Nothing in this section shall be construed to create a civil
cause of action.
   (g) Notwithstanding any other provision of law, no action may be
brought to recover penalties that may be awarded under this section
more than two years from the date the payment of compensation was
due.
   (h) This section shall apply to all injuries, without regard to
whether the injury occurs before, on, or after the operative date of
this section.
   (i) This section shall become operative on June 1, 2004.
  SEC. 44.  Section 5814.6 is added to the Labor Code, to read:
   5814.6.  (a) Any employer or insurer that knowingly violates
Section 5814 with a frequency that indicates a general business
practice is liable for administrative penalties of not to exceed four
hundred thousand dollars ($400,000).  Penalty payments shall be
imposed by the administrative director and deposited into the
Return-to-Work Fund established pursuant to Section 139.48.
   (b) The administrative director may impose a penalty under either
this section or subdivision (e) of Section 129.5.
   (c) This section shall become operative on June 1, 2004.
  SEC. 45.  Section 6401.7 of the Labor Code is amended to read:
   6401.7.  (a) Every employer shall establish, implement, and
maintain an effective injury prevention program.  The program shall
be written, except as provided in subdivision (e), and shall include,
but not be limited to, the following elements:
   (1) Identification of the person or persons responsible for
implementing the program.
   (2) The employer's system for identifying and evaluating workplace
hazards, including scheduled periodic inspections to identify unsafe
conditions and work practices.
   (3) The employer's methods and procedures for correcting unsafe or
unhealthy conditions and work practices in a timely manner.
   (4) An occupational health and safety training program designed to
instruct employees in general safe and healthy work practices and to
provide specific instruction with respect to hazards specific to
each employee's job assignment.
   (5) The employer's system for communicating with employees on
occupational health and safety matters, including provisions designed
to encourage employees to inform the employer of hazards at the
worksite without fear of reprisal.
   (6) The employer's system for ensuring that employees comply with
safe and healthy work practices, which may include disciplinary
action.
   (b) The employer shall correct unsafe and unhealthy conditions and
work practices in a timely manner based on the severity of the
hazard.
   (c) The employer shall train all employees when the training
program is first established, all new employees, and all employees
given a new job assignment, and shall train employees whenever new
substances, processes, procedures, or equipment are introduced to the
workplace and represent a new hazard, and whenever the employer
receives notification of a new or previously unrecognized hazard.
Beginning January 1, 1994, an employer in the construction industry
who is required to be licensed under Chapter 9 (commencing with
Section 7000) of Division 3 of the Business and Professions Code may
use employee training provided to the employer's employees under a
construction industry occupational safety and health training program
approved by the division to comply with the requirements of
subdivision (a) relating to employee training, and shall only be
required to provide training on hazards specific to an employee's job
duties.
   (d) The employer shall keep appropriate records of steps taken to
implement and maintain the program.  Beginning January 1, 1994, an
employer in the construction industry who is required to be licensed
under Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code may use records relating to employee
training provided to the employer in connection with an occupational
safety and health training program approved by the division to comply
with the requirements of this subdivision, and shall only be
required to keep records of those steps taken to implement and
maintain the program with respect to hazards specific to an employee'
s job duties.
   (e) (1) The standards board shall adopt a standard setting forth
the employer's duties under this section, on or before January 1,
1991, consistent with the requirements specified in subdivisions (a),
(b), (c), and (d).  The standards board, in adopting the standard,
shall include substantial compliance criteria for use in evaluating
an employer's injury prevention program.  The board may adopt less
stringent criteria for employers with few employees and for employers
in industries with insignificant occupational safety or health
hazards.
   (2) Notwithstanding subdivision (a), for employers with fewer than
20 employees who are in industries that are not on a designated list
of high hazard industries and who have a workers' compensation
experience modification rate of 1.1 or less, and for any employers
with fewer than 20 employees who are in industries that are on a
designated list of low hazard industries, the board shall adopt a
standard setting forth the employer's duties under this section
consistent with the requirements specified in subdivisions (a), (b),
and (c), except that the standard shall only require written
documentation to the extent of documenting the person or persons
responsible for implementing the program pursuant to paragraph (1) of
subdivision (a), keeping a record of periodic inspections pursuant
to paragraph (2) of subdivision (a), and keeping a record of employee
training pursuant to paragraph (4) of subdivision (a).  To any
extent beyond the specifications of this subdivision, the standard
shall not require the employer to keep the records specified in
subdivision (d).
   (3) The division shall establish a list of high hazard industries
using the methods prescribed in Section 6314.1 for identifying and
targeting employers in high hazard industries.  For purposes of this
subdivision, the "designated list of high hazard industries" shall be
the list established pursuant to this paragraph.
   For the purpose of implementing this subdivision, the Department
of Industrial Relations shall periodically review, and as necessary
revise, the list.
   (4) For the purpose of implementing this subdivision, the
Department of Industrial Relations shall also establish a list of low
hazard industries, and shall periodically review, and as necessary
revise, that list.
   (f) The standard adopted pursuant to subdivision (e) shall
specifically permit employer and employee occupational safety and
health committees to be included in the employer's injury prevention
program.  The board shall establish criteria for use in evaluating
employer and employee occupational safety and health committees.  The
criteria shall include minimum duties, including the following:
   (1) Review of the employer's (A) periodic, scheduled worksite
inspections, (B) investigation of causes of incidents resulting in
injury, illness, or exposure to hazardous substances, and (C)
investigation of any alleged hazardous condition brought to the
attention of any committee member.  When determined necessary by the
committee, the committee may conduct its own inspections and
investigations.
   (2) Upon request from the division, verification of abatement
action taken by the employer as specified in division citations.
   If an employer's occupational safety and health committee meets
the criteria established by the board, it shall be presumed to be in
substantial compliance with paragraph (5) of subdivision (a).
   (g) The division shall adopt regulations specifying the procedures
for selecting employee representatives for employer-employee
occupational health and safety committees when these procedures are
not specified in an applicable collective bargaining agreement.  No
employee or employee organization shall be held liable for any act or
omission in connection with a health and safety committee.
   (h) The employer's injury prevention program, as required by this
section, shall cover all of the employer's employees and all other
workers who the employer controls or directs and directly supervises
on the job to the extent these workers are exposed to worksite and
job assignment specific hazards.  Nothing in this subdivision shall
affect the obligations of a contractor or other employer that
controls or directs and directly supervises its own employees on the
job.
   (i) When a contractor supplies its employee to a state agency
employer on a temporary basis, the state agency employer may assess a
fee upon the contractor to reimburse the state agency for the
additional costs, if any, of including the contract employee within
the state agency's injury prevention program.
   (j) (1) The division shall prepare a Model Injury and Illness
Prevention Program for Non-High-Hazard Employment, and shall make
copies of the model program prepared pursuant to this subdivision
available to employers, upon request, for posting in the workplace.
An employer who adopts and implements the model program prepared by
the division pursuant to this paragraph in good faith shall not be
assessed a civil penalty for the first citation for a violation of
this section issued after the employer's adoption and implementation
of the model program.
   (2) For purposes of this subdivision, the division shall establish
a list of non-high-hazard industries in California.  These
industries, identified by their Standard Industrial Classification
Codes, as published by the United States Office of Management and
Budget in the Manual of Standard Industrial Classification Codes,
1987 Edition, are apparel and accessory stores (Code 56), eating and
drinking places (Code 58), miscellaneous retail (Code 59), finance,
insurance, and real estate (Codes 60-67), personal services (Code
72), business services (Code 73), motion pictures (Code 78) except
motion picture production and allied services (Code 781), legal
services (Code 81), educational services (Code 82), social services
(Code 83), museums, art galleries, and botanical and zoological
gardens (Code 84), membership organizations (Code 86), engineering,
accounting, research, management, and related services (Code 87),
private households (Code 88), and miscellaneous services (Code 89).
To further identify industries that may be included on the list, the
division shall also consider data from a rating organization, as
defined in Section 11750.1 of the Insurance Code, the Division of
Labor Statistics and Research, and all other appropriate information.
  The list shall be established by June 30, 1994, and shall be
reviewed, and as necessary revised, biennially.
   (3) The division shall prepare a Model Injury and Illness
Prevention Program for Employers in Industries with Intermittent
Employment, and shall determine which industries have historically
utilized seasonal or intermittent employees.  An employer in an
industry determined by the division to have historically utilized
seasonal or intermittent employees shall be deemed to have complied
with the requirements of subdivision (a) with respect to a written
injury prevention program if the employer adopts the model program
prepared by the division pursuant to this paragraph and complies with
any instructions relating thereto.
   (k) With respect to any county, city, city and county, or
district, or any public or quasi-public corporation or public agency
therein, including any public entity, other than a state agency, that
is a member of, or created by, a joint powers agreement, subdivision
(d) shall not apply.
   (l) Every workers' compensation insurer shall conduct a review,
including a written report as specified below, of the injury and
illness prevention program (IIPP) of each of its insureds with an
experience modification of 2.0 or greater within six months of the
commencement of the initial insurance policy term.  The review shall
determine whether the insured has implemented all of the required
components of the IIPP, and evaluate their effectiveness.  The
training component of the IIPP shall be evaluated to determine
whether training is provided to line employees, supervisors, and
upper level management, and effectively imparts the information and
skills each of these groups needs to ensure that all of the insured's
specific health and safety issues are fully addressed by the
insured.  The reviewer shall prepare a detailed written report
specifying the findings of the review and all recommended changes
deemed necessary to make the IIPP effective.  The reviewer shall be
or work under the direction of a licensed California professional
engineer, certified safety professional, or a certified industrial
hygienist.
  SEC. 46.  The repeal of the personal physician's or chiropractor's
presumption of correctness contained in Section 4062.9 of the Labor
Code made by this act shall apply to all cases, regardless of the
date of injury, but shall not constitute good cause to reopen or
rescind, alter, or amend any existing order, decision, or award of
the Workers' Compensation Appeals Board.
  SEC. 47.  The amendment, addition, or repeal of, any provision of
law made by this act shall apply prospectively from the date of
enactment of this act, regardless of the date of injury, unless
otherwise specified, but shall not constitute good cause to reopen or
rescind, alter, or amend any existing order, decision, or award of
the Workers' Compensation Appeals Board.
  SEC. 48.  The provisions of this act are severable.  If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
  SEC. 49.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to provide relief to the state from the effects of the
current workers' compensation crisis at the earliest possible time,
it is necessary for this act to take effect immediately.