BILL NUMBER: SB 684	CHAPTERED
	BILL TEXT

	CHAPTER  566
	FILED WITH SECRETARY OF STATE  OCTOBER 7, 2011
	APPROVED BY GOVERNOR  OCTOBER 7, 2011
	PASSED THE SENATE  SEPTEMBER 1, 2011
	PASSED THE ASSEMBLY  AUGUST 31, 2011
	AMENDED IN ASSEMBLY  AUGUST 22, 2011
	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, 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 negotiated before any dispute arises. These provisions would
apply to workers' compensation policies issued or renewed on or after
July 1, 2012.


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 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 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 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 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.