BILL NUMBER: SB 684	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 23, 2011
	AMENDED IN SENATE  MARCH 25, 2011

INTRODUCED BY   Senator Corbett

                        FEBRUARY 18, 2011

   An act to add Section 11658.5 to the Insurance Code, relating to
workers' compensation insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 684, as amended, Corbett. Workers' compensation insurance:
dispute resolution: arbitration clauses.
   Existing law requires that a workers' compensation insurance
policy or endorsement not be issued by an insurer unless the insurer
files a copy of the form or endorsement with a rating organization
and 30 days have expired from the date the form or endorsement is
received by the  commissioner   Insurance
Commissioner  from the rating organization without notice from
the commissioner, unless the commissioner gives written approval of
the form or the endorsement prior to that time.
   This bill would require that any agreement, other than a
settlement agreement resolving a particular dispute, between an
employer  , whose principal place of business is in
California,  and a workers' compensation insurer concerning
resolution of disputes  regarding the policy, endorsements, or
insuring contracts  , including  , but not limited to,
 an arbitration clause arising out of a workers'
compensation policy or endorsement,  be part of a form or
endorsement filed with the rating organization, be provided to the
employer in writing contemporaneously with any written quote that
offers to provide insurance coverage, and contain provisions to
resolve disputes that arise in this state in the California courts
and under California law.   involving an employer whose
California payroll constitutes the majority of the employer's payroll
  for purposes of determining premium under the policy, be
on a separate form and contain specified information, including, but
not limited to, provisions to resolve disputes that arise in this
state in the California courts and under California law.  The
bill would provide, however, that prior to the inception of the
policy, employers and workers' compensation insurance companies may,
after freely negotiating, expressly agree  by signature of the
employer on the separate agreement  to a choice of  law or
 forum other than California. The bill would require that where
 a California state agency   the commissioner
 has been granted the authority to resolve  the dispute,
it   a dispute between the employer and the insurer
regarding rates, classifications, experience rating, or other
insurance issues, the dispute  would not be subject to an
alternative dispute resolution between an employer and workers'
compensation  carrier   insurer  . Failure
to observe those requirements would render any dispute resolution
provision void and unenforceable.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) All California employers subject to the Workers' Compensation
Law are required by law to obtain insurance for their employees.
   (b) Workers' compensation policies and endorsements are highly
regulated and designed primarily to protect the worker and ensure
prompt payment of claims.
   (c) The Legislature has authorized the Insurance Commissioner
(commissioner) to oversee the form and substance of all workers'
compensation insurance policies and endorsements.
   (d) Insurance companies providing workers' compensation policies
and endorsements are required by law to file the policies and
endorsements with the rating organization for transfer to the
commissioner.
   (e) Disputes between employers and insurance companies regarding
workers' compensation plans can arise, and resolution of these
disputes through litigation can be expensive, uncertain, and time
consuming.
   (f) In an effort to save time and costs, and because of the
uncertainty of litigation, workers' compensation carriers and
employers use arbitration to resolve disputes.
   (g) California has a compelling state interest in ensuring that
workers' compensation policies and endorsements are enforced under
California law and not subject to interpretation by other
jurisdictions, and that any dispute resolution proceedings are
conducted within its borders.
   (h) Employers and workers' compensation carriers should be freely
able to negotiate and agree to the terms of arbitration without
undermining the protections afforded to California employers under
California law.
  SEC. 2.  Section 11658.5 is added to the Insurance Code, to read:

   11658.5.  (a) Any agreement, other than a settlement agreement
resolving a particular dispute, between an employer, whose principal
place of business is in California, and a workers' compensation
insurer concerning resolution of disputes, including, but not limited
to, an arbitration clause arising out of a workers' compensation
policy or endorsement shall conform to all of the following:
   (1) It shall be part of a form or endorsement filed with the
rating organization pursuant to Section 11658, and disclosure of the
agreement shall be provided to the employer in writing
contemporaneously with any written quote that offers to provide
insurance coverage.
    11658.5.   (a) Any agreement, other than a
settlement agreement resolving a particular dispute, between an
employer and a workers' compensation insurer concerning resolution of
disputes regarding the policy, endorsements, or insuring contracts,
including an arbitration clause arising out of a workers'
compensation policy or endorsement, involving an employer whose
California payroll constitutes the majority of the employer's payroll
for purposes of determining premium under the policy, shall be on a
separate form and conform to all of the following:  
   (1)  It shall be disclosed to the employer in writing
contemporaneously with any written quote that offers to provide
insurance coverage. 
   (2) It shall contain a choice of law provision that identifies
California law as the law to be used to resolve any dispute that
arises in California.
   (3) It shall contain a forum selection provision that identifies
California as the proper venue for any proceeding regarding a dispute
that arises in California.
   (4) Notwithstanding  paragraph   paragraphs
(2) and  (3), prior to the inception of the policy, employers
and workers' compensation insurance companies may, after freely
negotiating, expressly agree  to a choice of  
by signature of the employer on the separate agreement to a choice of
law or  forum other than California.
   (b) Notwithstanding this section, any dispute  between the
employer and the workers' compensation insurer regarding rates,
classifications, experience rating, or other insurance issues 
for which authority to resolve the dispute has been granted to
 a California state agency   the commissioner
 shall not be subject to alternative dispute resolution between
an employer and a workers' compensation insurer.
   (c) Failure to observe the requirements of this section shall
render any dispute resolution provision void and unenforceable.