BILL NUMBER: SB 684	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JULY 13, 2011
	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  or forum  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  freely and voluntarily 
negotiated before any dispute arises. These provisions would apply to
workers' compensation policies issued or renewed on or after July 1,
2012.
   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.  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  may freely and
voluntarily use types of dispute resolution, including 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
  voluntarily agree to the terms of dispute resolution,
including 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) (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
 or forum  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  freely and voluntarily 
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   forum  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.