BILL ANALYSIS
SENATE COMMITTEE ON BANKING, FINANCE,
AND INSURANCE
Senator Ronald Calderon, Chair
AB 483 (Buchanan) Hearing Date: June 17, 2009
As Amended: June 10, 2009
Fiscal: Yes
Urgency: No
SUMMARY Would require a workers' compensation rating
organization to establish and update an Internet web site
pursuant to regulations adopted by the Insurance Commissioner
(IC) for the purpose of allowing any person to determine whether
an employer is insured for workers' compensation, as specified;
would require the IC to adopt regulations to implement this
provision by January 1, 2011, including a method by which an
employer may dispute the accuracy of the information displayed
on the Web site; would require the Web site to be updated to
reflect policy information as soon as reasonably feasible, as
prescribed by the IC; and would require the Web site to be
operational no later than 180 days after the effective date of
regulations adopted by the IC.
DIGEST
Existing law
1. Requires employers to secure the payment of workers'
compensation, including medical treatment, for injuries arising
out of, or in the course of, employment;
2. Allows a private employer to obtain a certificate to
self-insure for payment of workers' compensation by meeting
specified requirements and filing with the Director of
Industrial Relations;
3. Declares that the actions of employers who fraudulently fail to
secure the payment of workers' compensation as required by law
harms employees, causes unfair competition for honest employers,
and increases costs to taxpayers;
4. Requires a rating organization, as defined, to maintain records
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related to losses reported by member insurance companies about
policyholder losses, data, statistics, or other information in a
manner prescribed by the Insurance Commissioner (IC);
5. Requires every insurer to be a member of a rating organization;
6. Authorizes the IC to promulgate reasonable rules and
statistical plans to be used by insurers to record and report
their loss and expense experience;
7. Specifies that the IC shall designate a rating organization to
act as his/her statistical agent to gather and compile
experience statistics for all insurers in the state;
8. Requires the rating organization designated by the IC to serve
as the DOI's statistical agent, the Workers Compensation
Insurance Rating Bureau (WCIRB), to provide to the DIR, upon
request, any information in its possession or reasonably
attainable that would assist the DIR in identifying employers
who fail to secure adequate workers' compensation insurance;
9. Directs the Division of Labor Standards Enforcement (DLSE) to
utilize data from the Uninsured Employers Benefits Trust Fund,
the Employment Development Department (EDD), the rating
organization designated by the IC, and any other sources, to
identify uninsured employers and contact them, and if no valid
reason for lack of insurance is provided, inspect them on a
priority basis;
10. Requires the WCIRB to provide to the DIR, upon request, any
information in its possession or reasonably attainable that
would assist the DIR in identifying employers who fail to secure
adequate workers' comp insurance.
This bill
1. Would require a licensed rating organization, pursuant to
regulations adopted by the IC after hearing and notice, to
establish and maintain an Internet Web site for the purpose
of allowing any person to determine whether an employer is
insured for workers' compensation;
2. Would require the IC to adopt regulations to implement this
section by January 1, 2011, and include a method by which an
employer may dispute the accuracy of the information
displayed on the Web site;
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3. Would require the Web site to be operational no later than
180 days after the effective date of regulations adopted by
the IC, and to do the following:
a. Permit a query for coverage information on an
employer using the employer's name, address, or other
identifying information as may be provided by regulations
adopted by the IC;
b. Provide the name of the workers' compensation
insurer or insurers for the employer on the date of the
query according to the most recent data available to the
rating organization, and provide a contact address for
the insurer or a link to the insurer's information on the
DOI Web site;
c. Be accessible for inquiries without charge;
d. Contain a hypertext link to the Department of
Industrial Relations' web site for the purpose of
locating employers who may be self-insured;
e. Include any disclaimers the IC may prescribe;
f. Be updated to reflect policy information as soon as
reasonably feasible, as prescribed by the IC;
4. Would specify that the rating organization would not be
required to disclose any confidential information, as
confidential is defined by the IC;
5. Would specify that the rating organization, its members,
and employees, when acting within the scope of employment,
could not be held liable for injury or damages caused, or
alleged to have been caused, directly, or indirectly, by the
disclosure of information pursuant to this section, or for
the accuracy or completeness of any information disclosed,
as specified;
6. Would not limit any authority a rating organization would
otherwise have to disclose information contained in its
records to others;
7. Would specify that this provision shall not be construed to
create liability except as provided, nor as a legislative
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recognition that, except for the enactment of this section,
a liability would exist.
COMMENTS
1. Purpose of the bill To increase access to workers'
compensation data, and specifically the insurance status of
employers, by making this information easily accessible via
the Internet.
2. Background . This bill was heard in this Committee in two prior
years. AB 483 places responsibility on the IC to adopt
regulations governing the Web site's operations prior to
implementation, including regulations to ensure accurate
employer identification, and a system for employers to challenge
inaccurate information. The bill requires the IC to adopt
regulations prior to the Web site becoming effective, but no
later than January 1, 2011, and provide a 180 day time period
following enactment of regulations for the Web site to become
operational. It requires the Web site to be updated as
reasonably feasible, as defined by the IC, rather than daily,
reflecting practical operational concerns.
3. In an effort to meet the objection of the Governor in the
veto of last year's AB 507 which was identical to this bill
as introduced, AB 483 has been amended to add a requirement
that the website include the date that the site was last
updated. The latest amendments to AB 483 appear to be a
reasonable attempt to institute a commercially feasible
method for putting the public users of the site on notice
concerning the date of its most recent update while striking
a balance that will keep site administration costs and
burdens within reasonable bounds.
4. At present, California has one rating organization, a
nonprofit located in San Francisco, the WCIRB. The WCIRB is
the designated workers' compensation statistical agent for
the state. In 2008, the WCIRB informed this committee that
it receives information about loss histories and insurance
status from insurance companies and employers on a routine
basis. The WCIRB receives policy information, both
electronically and in paper format, from insurers and enters
the policy information in its statewide database. According
to the WCIRB, insurers, by regulation, have up to 60 days
from a policy's inception date to report the policy to the
WCIRB.
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According to the WCIRB, there are instances where coverage may
be in effect, but because the insurer in the normal course of
business may not have reported it to the WCIRB yet, or the WCIRB
has not yet reviewed and accepted the policy, it may not be
available for posting to the Web site. Once the WCIRB receives
and processes the policy information, it has the capacity to
post that information to a Web site within one business day.
The database maintained by the WCIRB relies on insurers to
provide accurate information. In addition, the information
supplied by the WCIRB in 2008 indicated that the insurance
policy can be entered under up to 25 named insured entities
(employers) but only one address.
Currently, to obtain information from the WCIRB about an
employer's insurance coverage, one must be a party to a workers'
compensation claim, submit a request in writing or by email and
pay an $8 fee, and wait for a written response. This can take
up to 30 days.
Self-insured employers are already publicly disclosed on the web
site of the Office of Self Insured Plans within the Department
of industrial Relations. Some businesses, however, may not
appear on the WCRIB or self-insured employer databases for
legitimate and legal reasons, such as a sole proprietorship, or
a business that has gone out of business or had no payroll.
Information provided by the author indicates that Florida and
Mississippi provide public access to verify coverage on their
web sites, and a number of other states are taking steps in this
direction.
5. Support . According to the author, public access to workers'
compensation data protects employers from broker fraud, protects
workers from employers without workers' compensation coverage,
and protects insured employers from competitive disadvantages
from uninsured employers. Additionally, taxpayers save money by
reducing the need of injured workers to use other public
programs.
The California Labor Federation supports AB 483 because creation
of a searchable database would allow employees to identify their
employer's insurance company and enable them to file an injury
claim directly with the insurer. It also would allow a
prospective employee to confirm that an employer has coverage
before accepting a position. Medical providers could use the
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database to identify the insurance company of an employer and
know where to send their bills for payment. According to the
Labor Federation, more than 20 states have online proof of
workers' compensation coverage databases in use.
6. Opposition None Received
7. Questions None
8. Suggested Amendments None
9. Prior Legislation In 2005-2006, AB 1883 (De La Torre) was
approved and vetoed by the Governor. In 2008, AB 507 (De La
Torre) was drafted to address the concerns in the Governor's
veto message for AB 1883. In 2008, notwithstanding terming
it a "laudable goal", the Governor vetoed AB 507
10. Veto Messages After offering extensive criticisms of the
2006 bill, in 2008 the veto message affirmed the value of
the proposed website but expressed concern over the
potential that persons accessing the site could not obtain
policy effective dates nor information regarding when the
data on the site was updated. The latest amendments to AB
483 are an attempt to find a commercially reasonable method
for putting the public users of the site on notice
concerning the date of its most recent update while striking
a balance that will keep site administration costs and
burdens within reasonable bounds.
Veto of AB 1883 of 2006
I am returning Assembly Bill 1883 without my signature.
This measure would require a workers compensation insurance
proof-of-coverage website be established by an independent
rating organization. Though I do not question the importance of
ensuring public access to information on workers compensation
coverage, I am concerned that this bill, as written, will have
little positive effect on the fight against workers compensation
fraud and could actually generate more confusion than good.
The parties most likely to use this new website already have
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sufficient access to information on workers compensation
coverage. For instance, enforcement agencies already have direct
access to the rating organizations records and individuals have
the ability to check for workers compensation insurance through
the rating organization or the Department of Insurance.
Unfortunately, this bill has too many gaps to merit signing.
For instance, the website would not address the numerous
employers that are self-insured or covered through a joint
powers authority. In addition, many employers, such as some
family businesses, are legally exempt from the requirement to
obtain coverage. This bill would give the public the
misperception that these employers are violating the law.
Furthermore, due to the inherent delays in processing payments
for compensation insurance and recording the data, the online
website could fail to provide the most accurate indicator of
whether an employer has purchased compensation.
California employers already pay assessments of over $30 million
annually to fight workers compensation fraud. This bill would
increase those costs for a program that, as proposed, would do
little to deter fraud. I will work with the Legislature to look
at how the recent reforms have impacted non-compliance,
determine how best to target those employers committing fraud,
and then develop programs that do not force additional costs on
law-abiding employers.
Veto of AB 507 of 2008
I am returning Assembly Bill 507 without my signature.
This bill would establish an Internet website to enable any
person to identify whether or not an employer is insured for
workers' compensation. This is a laudable goal. However, I am
concerned that the website would not be required to post the
effective dates of coverage of a policy, thereby significantly
diminishing the value of the information. More importantly, the
bill does not contain any specified timing in which the
information must be updated, potentially leading to inaccurate
information on the website.
For these reasons, I am returning this bill without my
signature.
AB 483, Page 8
POSITIONS
Support
California Labor Federation (Sponsor)
AFSCME - AFL-CIO
California Applicant Attorneys' Association
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Federation of Teachers
California Nurses Association
California Professional Firefighters
California School Employees Association
California Teamsters Public Affairs Council
Department of Insurance
Engineers and Scientists of California
Insurance Brokers and Agents of the West
Professional and Technical Engineers, Local 21
State Building and Construction Trades Council
Strategic Committee of Public Employees, Laborer's International
Union of North America
United Food and Commercial Workers Union, Western States Council
United Transportation Union, California State Legislative Board
UNITE HERE
Oppose
None Received
Consultant: Kenneth Cooley (916) 651-4102