BILL NUMBER: SB 684	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JULY 1, 2011
	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 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 an insurer that intends to use a dispute
resolution or arbitration agreement to resolve disputes arising in
California out of a workers' compensation insurance policy or
endorsement issued to a California employer, as defined, to disclose
to the employer, contemporaneously with any written quote that offers
to provide insurance coverage, that choice of law and choice of
venue may be a jurisdiction other than California and that these
terms are negotiable between the insurer and the employer. The bill
would require that the employer sign the disclosure, as evidence of
receipt, when the employer accepts the offer of coverage. The bill
would authorize the dispute resolution or arbitration agreement to be
negotiated before any dispute arises. These provisions would apply
to workers' compensation policies issued or renewed on or after July
1, 2012.  
   This bill would require that 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, 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 the commissioner has
been granted the authority to resolve 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 insurer. Failure to observe those requirements would
render any dispute resolution provision void and unenforceable.

   Vote: majority. Appropriation: no. Fiscal committee:  yes
  no  . 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 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 paragraphs (2) and (3), 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.
   (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 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.

    11658.5.   (a) (1) An insurer that intends to use a
dispute resolution or arbitration agreement to resolve disputes
arising in California out of a workers' compensation insurance policy
or endorsement issued to a California employer shall disclose to the
employer, contemporaneously with any written quote that offers to
provide insurance coverage, that choice of law and choice of venue
may be a jurisdiction other than California and that these terms are
negotiable between the insurer and the employer. The disclosure shall
be signed by the employer as evidence of receipt where the employer
accepts the offer of coverage from that insurer.
   (2) After compliance with paragraph (1), a dispute resolution or
arbitration agreement may be negotiated by the insurer and the
employer before any dispute arises.
   (b) Nothing in this section, is intended to interfere with any
authority granted to the Insurance Commissioner under current law.
   (c) Failure by the insurer to observe the requirements of
subdivision (a) shall result in a default to California as the choice
of law and venue for resolution of disputes arising in California.
   (d) For purposes of this section, a "California employer" means an
employer whose principal place of business is in California and
whose California payroll constitutes the majority of the employer's
payroll for purposes of determining premium under the policy.
   (e) This section shall apply to workers' compensation policies
issued or renewed on or after July 1, 2012.