BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 826 (Leno) Hearing Date: 5/26/2011 Amended: 5/3/2011 Consultant: Bob Franzoia Policy Vote: L&IR 6-0 _________________________________________________________________ ____ BILL SUMMARY: SB 826 would require the Administrative Director (AD) of the Division of Workers' Compensation (division) to assess an administrative penalty against a claims administrator for a violation of data reporting requirements. This bill would require 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 would require the AD to publish an annual report disclosing the compliance rates of claims administrators and would authorize the AD to publish the identity of claims administrators for this purpose. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Administrative penalty Estimated $12.5 to $1,250 annuallySpecial* (revenue) Report Minor, absorbable costs Special* Information system Likely minor, absorbable costs Special* revisions * Workers' Compensation Administration Revolving Fund _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. The effectiveness of the administrative penalty in incentivizing compliance with date reporting requirements is unknown. For some claims administrators (which are comprised of insurers, self-insured/self-administered employers, and third party administrators), paying a penalty of $5,000 may be more cost effective than the staff and time needed to fully meet the requirements. If 25 to 250 claims administrator are assessed the maximum penalty annually, revenue would be $12,500 to $1,250,000. (A maximum penalty of $5,000 represents 50 penalties of $100.) Costs to the division to adopt regulations and to report are estimated to be minor and absorbable. SB 826 (Leno) Page 3