BILL NUMBER: AB 411	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Pan

                        FEBRUARY 14, 2011

   An act to amend Section 138.65 of the Labor Code, relating to
workers' compensation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 411, as introduced, Pan. Workers' compensation.
   Existing law establishes a workers' compensation system,
administered by the Administrative Director of the Division of
Workers' Compensation, to compensate an employee for injuries
sustained in the course of his or her employment. Existing law
requires the administrative director, after consultation with the
Insurance Commissioner, to contract with a qualified organization to
study the effects of the 2003 and 2004 legislative reforms on
insurance rates.
   This bill would make a technical, nonsubstantive change in those
provisions.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 138.65 of the Labor Code is amended 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.