BILL ANALYSIS
AB 801
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 801 (Duvall) - As Introduced: February 26, 2009
SUBJECT : Workers' Compensation Information System
SUMMARY : Authorizes the Department of Insurance to access
information from the Workers' Compensation Information System
for purposes of investigating and prosecuting insurance fraud.
EXISTING LAW:
1)Requires the Administrative Director of the Division of
Workers' Compensation (AD) to establish, in consultation with
the Insurance Commissioner (IC) and the Workers' Compensation
Insurance Rating Bureau (WCIRB), a cost-efficient Workers'
Compensation Information System (WCIS).
2)Requires the AD to adopt regulations that specify the
information to be collected by the WCIS.
3)Defines "individually identifiable information" relating to a
workers' compensation claim as any information that is linked
to a uniquely identifiable employee, employer, claims
administrator, or other person or entity, and prohibits access
to this information by anyone who is not a party to the claim,
and not expressly authorized to have access.
4)Specifies the governmental agencies that shall have access to
the individually identifiable information about workers'
compensation claims, and the purposes for which the agencies
may use the information. These agencies and purposes include:
a) The AD, for purposes of creating and operating the WCIS.
b) The Department of Health Services, for purposes of
operating a program on occupational health and disease
prevention.
c) The Division of Workers' Compensation, the Division of
Occupational Safety and Health, and the Division of Labor
Statistics and Research, and researchers employed by the
Commission on Health and Safety and Workers' Compensation
AB 801
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(CHSWC), as necessary to carry out their duties, and as
limited by regulations adopted by the AD that protect the
confidentiality of the information.
d) Others, as authorized by regulations adopted by the AD,
for purposes of bona fide statistical research.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose. Based on recommendations made by CHSWC, and an
Advisory Task Force on Insurance Fraud established by the
Department of Insurance, the author introduced this bill to
provide the Department of Insurance fraud insurance
investigators access to WCIS data. Access to this data will
allow the use of sophisticated electronic search techniques
that can identify patterns of behavior that suggest insurance
fraud.
2)Department of Insurance role in the workers' compensation
system. The workers' compensation system is administered by
the Division of Workers' Compensation within the Department of
Industrial Relations. The Division's administration includes
the dispute adjudicatory system, the disability rating system,
the audit functions with respect to the insurance companies
and self-insured entities that pay workers' compensation
claims, and the regulation of employers that opt to provide
workers' compensation benefits through either individual or
group self-insurance mechanisms. The Department of Insurance,
on the other hand, has only two basic functions in the
workers' compensation system: 1) through the Department's
designated statistical agent, the WCIRB, it administers the
rating system with which insurance companies must comply, and
2) it is responsible for insurance fraud investigation and
referral to prosecuting agencies.
3)Support. Supporters argue that the bill is needed to enhance
the IC's fraud prevention role by providing access to data
that can be used with sophisticated data mining techniques to
identify fraud. Since it is well-accepted that fraud costs
are a significant issue in the workers' compensation system,
it makes sense to provide the primary anti-fraud investigating
agency with the best tools to carry out its mission.
AB 801
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4)Opposition . The opposition argues that the creation of the
WCIS was controversial, and the competing interests were
carefully balanced. The information at issue is highly
sensitive "personally identifiable information" that was
accumulated only for specific purposes, which do not include
fraud detection. Opponents argue that the database was
created for policy analysis purposes, not for harvesting
individually identifiable information. Further, opponents
argue that there are other ways that these patterns can be
electronically evaluated without recourse to the database
containing personal information on each workers' compensation
claimant.
REGISTERED SUPPORT / OPPOSITION :
Support
Small Business California
California District Attorneys Association
Opposition
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
California Applicants' Attorneys Association
California Federation of Labor
California Nurses Association/National Nurses Organizing
Committee
California State Employees Association (CSEA)
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086