BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 826|
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THIRD READING
Bill No: SB 826
Author: Leno (D)
Amended: 5/3/11
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM : 6-0, 04/13/11
AYES: Lieu, Wyland, DeSaulnier, Leno, Padilla, Yee
NO VOTE RECORDED: Runner
SENATE APPROPRIATIONS COMMITTEE : 6-2, 05/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SUBJECT : Workers compensation: data reporting
requirement:
Administrative penalties
SOURCE : Small Business California
DIGEST : This bill requires the Administrative Director
(AD) of the Division of Workers Compensation to assess an
administrative penalty against a claims administrator for a
violation of data reporting requirements. This bill
requires the AD to promulgate a schedule of penalties
providing for an assessment of no more than $5,000 against
a claims administrator in any single year, calculated by
violation type and excluding threshold rates of violations.
This bill requires the AD to publish an annual report
disclosing the compliance rates of claims administrators
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and would authorize the AD to publish the identity of
claims administrators for this purpose.
ANALYSIS : Existing law establishes a workers'
compensation system, administered by the AD, to compensate
an employee for injuries sustained in the course of his or
her employment. Existing law requires the administrative
director to develop a cost-efficient workers' compensation
information system and requires the AD to adopt regulations
specifying the data elements to be collected by electronic
data interchange.
Existing law establishes the Workers' Compensation
Administration Revolving Fund in the State Treasury. Money
in the fund may be expended by the Department of Industrial
Relations, upon appropriation by the Legislature, for the
administration of the workers' compensation program, except
as provided, and for the Return-to-Work Program.
Existing law provides that a person who, or public or
private entity that, is not a party to a claim for workers'
compensation benefits may not obtain individually
identifiable information, as defined, that is obtained or
maintained by the division on that claim, except as
specified.
This bill requires the AD of the Division of Workers'
Compensation to assess an administrative penalty against a
claims administrator for a violation of data reporting
requirements. This bill requires the AD to promulgate a
schedule of penalties providing for an assessment of no
more than $5,000 against a claims administrator in any
single year, calculated by violation type and excluding
threshold rates of violations. This bill requires the AD
to publish an annual report disclosing the compliance rates
of claims administrators and authorizes the AD to publish
the identity of claims administrators for this purpose.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
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Major Provisions 2011-12 2012-13
2013-14 Fund
Administrative penalty Estimated
$12.5 to $1,250 annually Special*
(revenue)
Report Minor, absorbable
costsSpecial*
Information system Likely minor,
absorbable costs Special*
revisions
* Workers' Compensation Administration Revolving Fund
SUPPORT : (Verified 5/27/11)
Small Business California (source)
California Applicant Attorneys Association
California Labor Federation
California Nurses Association
ARGUMENTS IN SUPPORT : According to the author's office:
If an employee becomes sick or injured on the job or
from the nature of his/her work, the employer is
required to cover the workers' compensation benefits
for the sustained injury or illness. Furthermore, all
worker compensation claims are required by law to be
reported to the Workers' Compensation Information
System (WCIS). The data gathered by WCIS are used to
analyze the efficiency of the system and highlight
areas for improvement.
The data are required to be reported by claims
administrators, which may be insurers, self-insured
employers, or third party administrators.
Although reporting claim information is required by
law, the Division of Workers' Compensation (DWC)
currently has no authority to compel violators to
comply.
There are no penalties for failure to report or for
filing an incomplete report. As a result, the DWC is
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not able to enforce the reporting requirement. The
Commission on Health and Safety and Workers'
Compensation (CHSWC) indicates that anywhere from ten
to twenty-five percent of required reports to WCIS are
incomplete or not filed at all.
In order to increase WCIS reporting compliance, this
bill will establish a penalty structure of not more
than $100 for any one violation with a cap of $5,000
per calendar year. The bill also ensures that DWC has
flexibility in distinguishing minor mistakes from more
egregious and deliberate errors or failures to report.
Other states with an electronic reporting requirement
also assess penalties including Texas, which has a
maximum penalty of $25,000 per violation per day.
The penalties in SB 826 are reasonable yet will compel
non-compliant parties to report the much needed and
legally required information to WCIS. In addition,
this bill seeks to level the playing field amongst
compliant and non-compliant employers while assuring
that workers receive adequate workers' compensation
benefits. Penalties received by the DWC will be
deposited into the Workers' Compensation
Administration Revolving Fund.
PQ:nl 5/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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