BILL NUMBER: SB 863	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 31, 2012
	PASSED THE ASSEMBLY  AUGUST 31, 2012
	AMENDED IN ASSEMBLY  AUGUST 30, 2012
	AMENDED IN ASSEMBLY  AUGUST 27, 2012
	AMENDED IN ASSEMBLY  AUGUST 24, 2012
	AMENDED IN ASSEMBLY  JUNE 6, 2011
	AMENDED IN SENATE  APRIL 14, 2011
	AMENDED IN SENATE  MARCH 22, 2011

INTRODUCED BY   Senator De León
   (Principal coauthor: Assembly Member Solorio)

                        FEBRUARY 18, 2011

   An act to amend Sections 11435.30 and 11435.35 of the Government
Code, and to amend Sections 62.5, 139.2, 3201.5, 3201.7, 3700.1,
3701, 3701.3, 3701.5, 3701.7, 3701.8, 3702, 3702.2, 3702.5, 3702.8,
3702.10, 3742, 3744, 3745, 3746, 4061, 4062, 4062.2, 4062.3, 4063,
4064, 4453, 4600, 4603.2, 4603.4, 4604, 4604.5, 4605, 4610, 4610.1,
4616, 4616.1, 4616.2, 4616.3, 4616.7, 4620, 4622, 4650, 4658, 4658.5,
4658.6, 4660, 4701, 4903, 4903.1, 4903.4, 4903.5, 4903.6, 4904,
4905, 4907, 5307.1, 5307.7, 5402, 5502, 5703, 5710, and 5811 of, to
add Sections 139.32, 139.48,139.5, 3701.9, 4603.3, 4603.6, 4610.5,
4610.6, 4658.7, 4660.1, 4903.05, 4903.06, 4903.07, 4903.8, 5307.8,
and 5307.9 to, to add and repeal Section 3702.4 of, and to repeal
Sections 4066 and 5318 of, the Labor Code, relating to workers'
compensation, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 863, De León. Workers' compensation.
   Existing law establishes a workers' compensation system,
administered by the Administrative Director of the Division of
Workers' Compensation, to compensate an employee for injuries
sustained in the course of his or her employment.
   (1) Existing law establishes certain requirements relating to
qualified medical evaluators who perform the evaluation of
medical-legal issues.
   This bill would modify the requirements of a qualified medical
evaluator with respect to doctors of chiropractic, and would prohibit
a qualified medical evaluator from conducting qualified medical
evaluations at more than 10 locations.
   (2) Existing law provides that it is unlawful for a physician to
refer a person for specified medical goods or services, whether for
treatment or medical-legal purposes, if the physician or his or her
immediate family has a financial interest with the person or in the
entity that receives the referral, except as specified.
   This bill would additionally prohibit, except as specified, an
interested party, as defined, from referring a person for certain
services relating to workers' compensation provided by another
entity, if the interested party has a financial interest in the other
entity, as defined. The bill would provide that a violation of these
provisions is a misdemeanor, and would authorize civil penalties of
up to $15,000 for each offense. By creating a new crime, this bill
would impose a state-mandated local program.
   (3) Existing law establishes the Workers' Compensation
Administration Revolving Fund for the administration of the workers'
compensation program, and other specified purposes.
   This bill would establish in the Department of Industrial
Relations a return-to-work program, to be funded by non-General Fund
revenues of one hundred twenty million dollars $120,000,000 that the
bill would annually appropriate from the Workers' Compensation
Administration Revolving Fund.
   (4) Existing law requires the Department of Industrial Relations
and the courts of this state, except as provided, to recognize as
valid and binding any labor-management agreement that meets certain
requirements. Existing law applies this recognition only in relation
to employers that meet specified requirements.
   This bill would add the State of California to the list of
authorized employers for these purposes.
   (5) Existing law authorizes an employer to secure the payment of
workers' compensation by securing from the Director of Industrial
Relations a certificate of consent to self-insure either as an
individual employer or as one employer in a group of employers upon
furnishing proof satisfactory to the director of the ability to
self-insure and to pay any compensation that may become due to
employees.
   This bill would change the amount of a prescribed security deposit
required of private self-insured employers, would delete a related
audit requirement, and would, commencing January 1, 2013, prohibit a
certificate of consent to self-insure from being issued to specified
employers.
   This bill would require public self-insured employers to provide
certain information to the director, and would require the Commission
on Health and Safety and Workers' Compensation to conduct an
examination of the public self-insured program, and to publish a
preliminary and final report on its Internet Web site, as specified.
   Existing law requires that the cost of administration of the
public self-insured program be a General Fund item.
   This bill would instead require that the cost be borne by the
Workers' Compensation Administration Revolving Fund.
   Existing law establishes the Self-Insurers' Security Fund for
purposes related to the payment of the workers' compensation
obligations of self-insurers.
   This bill would revise the composition of the board of trustees of
the Self-Insurers' Security Fund, would revise duties of the
Self-Insurers' Security Fund, and would make related changes.
   (6) Existing law establishes certain procedures that govern the
determination of an employee's eligibility for permanent disability
indemnity commencing with the final payment of the employee's
temporary disability indemnity.
   This bill would revise and recast these provisions.
   (7) Existing law establishes procedures for the resolution of
disputes regarding the compensability of an injury. Existing law
prescribes certain requirements relating to recommendations regarding
spinal surgery.
   This bill would delete the provisions relating to spinal surgery.
   Existing law prescribes a specified procedure that governs dispute
resolution relating to injuries occurring on or after January 1,
2005, when the employee is represented by an attorney. This procedure
includes various requirements relating to the selection of agreed
medical evaluators.
   This bill would revise and recast these provisions.
   (8) Existing law provides certain methods for determining workers'
compensation benefits payable to a worker or his or her dependents
for purposes of temporary disability, permanent total disability,
permanent partial disability, and in case of death.
   This bill would revise the method for determining benefits for
purposes of permanent partial disability for injuries occurring on or
after January 1, 2013, and on or after January 1, 2014.
   This bill would provide, prior to an award of permanent disability
indemnity, that no permanent disability indemnity payment be
required if the employer has offered the employee a position that
pays at least 85% of the wages and compensation paid to the employee
at the time of injury, or if the employee is employed in a position
that pays at least 100% of the wages and compensation paid to the
employee at the time of injury, as specified.
   This bill would revise the method for determining benefits for
purposes of permanent disability for injuries occurring on or after
January 1, 2013.
   This bill would revise the amount of the award for burial
expenses.
   Existing law, for injuries that cause permanent partial disability
and occur on or after January 1, 2004, provides supplemental job
displacement benefits in the form of a nontransferable voucher for
education-related retraining or skill enhancement for an injured
employee who does not return to work for the employer within 60 days
of the termination of temporary disability, in accordance with a
prescribed schedule based on the percentage of an injured employee's
disability. Existing law provides an exception for employers who meet
specified criteria.
   This bill would provide that the above provisions shall apply to
injuries occurring on or after January 1, 2004, and before January 1,
2013.
   This bill would provide, for injuries that cause permanent partial
disability and occur on or after January 1, 2013, for a supplemental
job displacement benefit in the form of a voucher for up to $6,000
to cover various education-related retraining and skill enhancement
expenses, as specified, which would expire 2 years after the date the
voucher is furnished to the employee or 5 years after the date of
injury, whichever is later. The bill would exempt employers who make
an offer of employment, as specified, from providing vouchers.
   Existing law requires that, in determining the percentages of
permanent disability, account be taken of the nature of the injury,
the occupation of the injured employee, and his or her age at the
time of the injury, and requires that specified factors be considered
in determining an employee's diminished earning capacity for these
purposes.
   This bill would provide that the above provisions shall apply to
injuries occurring before January 1, 2013. This bill would, for
injuries occurring on or after January 1, 2013, revise the factors to
be considered in determining impairment and disability ratings for
these purposes.
   (9) Existing law requires an employer to provide all medical
services reasonably required to cure or relieve the injured worker
from the effects of the injury.
   This bill would limit the provision of home health care services
as medical treatment to specified circumstances.
   (10) Existing law generally provides for the reimbursement of
medical providers for services rendered in connection with the
treatment of a worker's injury.
   This bill would revise and recast these provisions, and would
establish certain procedures to govern billing procedures and
disputes.
   (11) Existing law requires every employer to establish a medical
treatment utilization review process, in compliance with specified
requirements, either directly or through its insurer or an entity
with which the employer or insurer contracts for these services.
   This bill would require the administrative director to contract
with one or more independent medical review organizations and one or
more independent bill review organizations to conduct reviews in
accordance with specified criteria. The bill would require that the
independent review organizations retained to conduct reviews meet
specified criteria and comply with specified requirements. The bill
would require that final determinations made pursuant to the
independent bill review and independent medical review processes be
presumed to be correct and be set aside only as specified.
   The independent medical review process established by the bill
would be used to resolve disputes over a utilization review decision
for injuries occurring on or after January 1, 2013, and for any
decision that is communicated to the requesting physician on or after
July 1, 2013, regardless of the date of injury. The bill would
require an independent medical review organization to conduct the
review in accordance with specified provisions, and would limit this
review to an examination of the medical necessity of the disputed
medical treatment. The bill would prohibit an employer from engaging
in any conduct that delays the medical review process, and would
authorize the administrative director to levy certain administrative
penalties in connection with this prohibition, to be deposited in the
Workers' Compensation Administration Revolving Fund. The bill would
require that the costs of independent medical review and the
administration of the independent medical review system be borne by
employers through a fee system established by the administrative
director.
   (12) Existing law authorizes an insurer or employer to establish
or modify a medical provider network for the provision of medical
treatment to injured employees.
   This bill, commencing January 1, 2014, would require that a
treating physician be included in the network only if the physician
or authorized employee of the physician gives a separate written
acknowledgment that the physician is a member of the network, and
would require every medical provider network to include one or more
persons employed as medical access assistants to help an injured
employee find an available physician and assist employees in
scheduling appointments.
   Existing law requires an employer or insurer to submit a plan for
the medical provider network to the administrative director for
approval.
   This bill, commencing January 1, 2014, would require that existing
approved plans be deemed approved for a period of 4 years from the
most recent application or modification approval date. The bill would
authorize any person contending that a medical provider network is
not validly constituted to petition the administrative director to
suspend or revoke the approval of the medical provider network. The
bill would authorize the administrative director to adopt regulations
establishing a schedule of administrative penalties, not to exceed
$5,000 per violation, or probation, or both, in lieu of revocation or
suspension.
   (13) Existing law requires an employer to pay medical-legal
expenses for which the employer is liable in accordance with
specified provisions.
   This bill would establish a secondary review process to govern
billing disputes relating to medical-legal expenses.
   (14) Existing law authorizes the Workers' Compensation Appeals
Board to determine and allow specified expenses as liens against any
sum to be paid as compensation.
   This bill would revise procedures relating to liens, including
requiring that any payment of a lien for the reasonable expenses
incurred by an injured employee be made only to the person who was
entitled to payment for the expenses at the time the expenses were
incurred, and not to an assignee, except as specified. The bill would
require that certain documentation relating to a lien filing include
certain declarations made under penalty of perjury. By expanding the
crime of perjury, this bill would impose a state-mandated local
program. This bill would require that all liens filed on or after
January 1, 2013, for certain expenses, be subject to a filing fee,
and that all liens and costs that were filed as liens, filed before
January 1, 2013, for certain expenses, be subject to an activation
fee, except as specified. The bill would dismiss by operation of law
on January 1, 2014, all liens and costs filed as liens for which the
filing fee or activation fee is not paid. This bill would require
that all fees collected pursuant to these provisions be deposited in
the Workers' Compensation Administration Revolving Fund. This bill
would provide for the reimbursement of a lien filing fee or lien
activation fee under specified circumstances.
   This bill would make related changes with respect to liens.
   (15) Existing law requires the administrative director, after
public hearings, to adopt and revise periodically an official medical
fee schedule that establishes reasonable maximum fees paid for
medical services, other than physician services, and other prescribed
goods and services in accordance with specified requirements.
   This bill would require the administrative director, after public
hearings, to adopt and review periodically an official medical fee
schedule based on the resource-based relative value scale for
physician services and nonphysician practitioner services, as defined
by the administrative director, in accordance with specified
requirements. The bill would require, commencing January 1, 2014, and
until the time the administrative director has adopted an official
medical fee schedule in accordance with the resource-based relative
value scale, that the maximum reasonable fees for physician services
and nonphysician practitioner services be in accordance with the
fee-related structure and rules of the Medicare payment system for
physician services, and that the fees include specified conversion
factors.
   This bill would require the administrative director, on or before
July 1, 2013, to adopt, after public hearings, a schedule for payment
of home health care services that are not otherwise covered, as
specified.
   This bill would require the administrative director, on or before
December 31, 2013, in consultation with the Commission on Health and
Safety and Workers' Compensation, to adopt, after public hearings, a
schedule of reasonable maximum fees payable for copy and related
services.
   (16) Existing law authorizes the appeals board to receive as
evidence and use as proof of any fact in dispute various reports and
publications.
   This bill would add reports of vocational experts, as specified.
   (17) Existing law provides for the reimbursement of specified
expenses for a deponent in connection with a deposition requested by
the employer or insurer.
   This bill would require the employer to pay for the services of a
language interpreter if interpretation services are required because
the injured employee or deponent does not proficiently speak or
understand the English language.
   (18) Existing law requires the State Personnel Board to establish,
maintain, administer, and publish annually an updated list of
certified administrative hearing interpreters and medical examination
interpreters it has determined meet certain minimum standards.
   This bill would also authorize the administrative director or an
independent organization designated by the administrative director to
establish, maintain, administer, and publish annually an updated
list of certified administrative hearing interpreters who, based on
testing by an independent organization designated by the
administrative director, have been determined to meet certain minimum
standards, for purposes of certain workers' compensation proceedings
and medical examinations. This bill would require a reasonable fee
to be collected from each interpreter seeking certification, to cover
the reasonable regulatory costs of administering the program.
   (19) This bill would delete certain reporting requirements, delete
obsolete provisions, and make conforming and clarifying changes.
   (20) This bill would incorporate additional changes in Section
4903.1 of the Labor Code proposed by SB 1105 that would become
operative only if SB 1105 and this bill are both chaptered and become
effective on or before January 1, 2013, and this bill is chaptered
last.
    (21) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Appropriation: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) That Section 4 of Article XIV of the California Constitution
authorizes the creation of a workers' compensation system that
includes adequate provision for the comfort, health and safety, and
general welfare of workers and their dependents to relieve them of
the consequences of any work-related injury or death, irrespective of
the fault of any party and requires the administration of the
workers' compensation system to accomplish substantial justice in all
cases expeditiously, inexpensively, and without encumbrance of any
character, all of which matters are expressly declared to be the
social public policy of this state.
   (b) That the current system of determining permanent disability
has become excessively litigious, time consuming, procedurally
burdensome and unpredictable, and that the provisions of this act
will produce the necessary uniformity, consistency, and objectivity
of outcomes, in accordance with the constitutional mandate to
accomplish substantial justice in all cases expeditiously,
inexpensively, and without encumbrance of any character, and that in
enacting subdivision (c) of Section 4660.1 of the Labor Code, the
Legislature intends to eliminate questionable claims of disability
when alleged to be caused by a disabling physical injury arising out
of and in the course of employment while guaranteeing medical
treatment as required by Division 4 (commencing with Section 3200) of
the Labor Code.
   (c) That in enacting this act, it is not the intent of the
Legislature to overrule the holding in Milpitas Unified School
District v. Workers Comp. Appeals Bd. (Guzman) (2010) 187 Cal.App.4th
808.
   (d) That the current system of resolving disputes over the medical
necessity of requested treatment is costly, time consuming, and does
not uniformly result in the provision of treatment that adheres to
the highest standards of evidence-based medicine, adversely affecting
the health and safety of workers injured in the course of
employment.
   (e) That having medical professionals ultimately determine the
necessity of requested treatment furthers the social policy of this
state in reference to using evidence-based medicine to provide
injured workers with the highest quality of medical care and that the
provision of the act establishing independent medical review are
necessary to implement that policy.
    (f) That the performance of independent medical review is a
service of such a special and unique nature that it must be
contracted pursuant to paragraph (3) of subdivision (b) of Section
19130 of the Government Code, and that independent medical review is
a new state function pursuant to paragraph (2) of subdivision (b) of
Section 19130 of the Government Code that will be more expeditious,
more economical, and more scientifically sound than the existing
function of medical necessity determinations performed by qualified
medical evaluators appointed pursuant to Section 139.2 of the Labor
Code. The existing process of appointing qualified medical evaluators
to examine patients and resolve treatment disputes is costly and
time-consuming, and it prolongs disputes and causes delays in medical
treatment for injured workers. Additionally, the process of
selection of qualified medical evaluators can bias the outcomes.
Timely and medically sound determinations of disputes over
appropriate medical treatment require the independent and unbiased
medical expertise of specialists that are not available through the
civil service system.
   (g) That the establishment of independent medical review and
provision for limited appeal of decisions resulting from independent
medical review are a necessary exercise of the Legislature's plenary
power to provide for the settlement of any disputes arising under the
workers' compensation laws of this state and to control the manner
of review of such decisions.
    (h) That the performance of independent bill review is a service
of such a special and unique nature that it must be contracted
pursuant to paragraph (3) of subdivision (b) of Section 19130 of the
Government Code, and that independent bill review is a new state
function pursuant to paragraph (2) of subdivision (b) of Section
19130 of the Government Code. Existing law provides no method of
medical billing dispute resolution short of litigation. Existing law
does not provide for medical billing and payment experts to resolve
billing disputes, and billing issues are frequently submitted to
workers' compensation judges without the benefit of independent and
unbiased findings on these issues. Medical billing and payment
systems are a field of technical and specialized expertise, requiring
services that are not available through the civil service system.
The need for independent and unbiased findings and determinations
requires that this new function be contracted pursuant to subdivision
(b) of Section 19130 of the Government Code.
  SEC. 2.  Section 11435.30 of the Government Code is amended to
read:
   11435.30.  (a) The State Personnel Board shall establish,
maintain, administer, and publish annually an updated list of
certified administrative hearing interpreters it has determined meet
the minimum standards in interpreting skills and linguistic abilities
in languages designated pursuant to Section 11435.40. Any
interpreter so listed may be examined by each employing agency to
determine the interpreter's knowledge of the employing agency's
technical program terminology and procedures.
   (b) Court interpreters certified pursuant to Section 68562, and
interpreters listed on the State Personnel Board's recommended lists
of court and administrative hearing interpreters prior to July 1,
1993, shall be deemed certified for purposes of this section.
   (c) (1) In addition to the certification procedure provided
pursuant to subdivision (a), the Administrative Director of the
Division of Workers' Compensation may establish, maintain,
administer, and publish annually an updated list of certified
administrative hearing interpreters who, based on testing by an
independent organization designated by the administrative director,
have been determined to meet the minimum standards in interpreting
skills and linguistic abilities in languages designated pursuant to
Section 11435.40, for purposes of administrative hearings conducted
pursuant to proceedings of the Workers' Compensation Appeals Board.
The independent testing organization shall have no financial interest
in the training of interpreters or in the employment of interpreters
for administrative hearings.
   (2) (A) A fee, as determined by the administrative director, shall
be collected from each interpreter seeking certification. The fee
shall not exceed the reasonable regulatory costs of administering the
testing and certification program and of publishing the list of
certified administrative hearing interpreters on the Division of
Workers' Compensation' Internet Web site.
   (B)  The Legislature finds and declares that the services
described in this section are of such a special and unique nature
that they may be contracted out pursuant to paragraph (3) of
subdivision (b) of Section 19130. The Legislature further finds and
declares that the services described in this section are a new state
function pursuant to paragraph (2) of subdivision (b) of Section
19130.
  SEC. 3.  Section 11435.35 of the Government Code is amended to
read:
   11435.35.  (a) The State Personnel Board shall establish,
maintain, administer, and publish annually, an updated list of
certified medical examination interpreters it has determined meet the
minimum standards in interpreting skills and linguistic abilities in
languages designated pursuant to Section 11435.40.
   (b) Court interpreters certified pursuant to Section 68562 and
administrative hearing interpreters certified pursuant to Section
11435.30 shall be deemed certified for purposes of this section.
   (c) (1) In addition to the certification procedure provided
pursuant to subdivision (a), the Administrative Director of the
Division of Workers' Compensation may establish, maintain,
administer, and publish annually an updated list of certified medical
examination interpreters who, based on testing by an independent
organization designated by the administrative director, have been
determined to meet the minimum standards in interpreting skills and
linguistic abilities in languages designated pursuant to Section
11435.40, for purposes of medical examinations conducted pursuant to
proceedings of the Workers' Compensation Appeals Board, and medical
examinations conducted pursuant to Division 4 (commencing with
Section 3200) of the Labor Code. The independent testing organization
shall have no financial interest in the training of interpreters or
in the employment of interpreters for administrative hearings.
   (2) (A) A fee, as determined by the administrative director, shall
be collected from each interpreter seeking certification. The fee
shall not exceed the reasonable regulatory costs of administering the
testing and certification program and of publishing the list of
certified medical examination interpreters on the Division of Workers'
Compensation's Internet Web site.
   (B)  The Legislature finds and declares that the services
described in this section are of such a special and unique nature
that they may be contracted out pursuant to paragraph (3) of
subdivision (b) of Section 19130. The Legislature further finds and
declares that the services described in this section are a new state
function pursuant to paragraph (2) of subdivision (b) of Section
19130.
  SEC. 4.  Section 62.5 of the Labor Code is amended to read:
   62.5.  (a) (1) The Workers' Compensation Administration Revolving
Fund is hereby created as a special account in the State Treasury.
Money in the fund may be expended by the department, upon
appropriation by the Legislature, for all of the following purposes,
and may not be used or borrowed for any other purpose:
   (A) For the administration of the workers' compensation program
set forth in this division and Division 4 (commencing with Section
3200), other than the activities financed pursuant to paragraph (2)
of subdivision (a) of Section 3702.5.
   (B) For the Return-to-Work Program set forth in Section 139.48.
   (C) For the enforcement of the insurance coverage program
established and maintained by the Labor Commissioner pursuant to
Section 90.3.
   (2) The fund shall consist of surcharges made pursuant to
paragraph (1) of subdivision (f).
   (b) (1) The Uninsured Employers Benefits Trust Fund is hereby
created as a special trust fund account in the State Treasury, of
which the director is trustee, and its sources of funds are as
provided in paragraph (1) of subdivision (f). Notwithstanding Section
13340 of the Government Code, the fund is continuously appropriated
for the payment of nonadministrative expenses of the workers'
compensation program for workers injured while employed by uninsured
employers in accordance with Article 2 (commencing with Section 3710)
of Chapter 4 of Part 1 of Division 4, and shall not be used for any
other purpose. All moneys collected shall be retained in the trust
fund until paid as benefits to workers injured while employed by
uninsured employers. Nonadministrative expenses include audits and
reports of services prepared pursuant to subdivision (b) of Section
3716.1. The surcharge amount for this fund shall be stated
separately.
   (2) Notwithstanding any other provision of law, all references to
the Uninsured Employers Fund shall mean the Uninsured Employers
Benefits Trust Fund.
   (3) Notwithstanding paragraph (1), in the event that budgetary
restrictions or impasse prevent the timely payment of administrative
expenses from the Workers' Compensation Administration Revolving
Fund, those expenses shall be advanced from the Uninsured Employers
Benefits Trust Fund. Expense advances made pursuant to this paragraph
shall be reimbursed in full to the Uninsured Employers Benefits
Trust Fund upon enactment of the annual Budget Act.
   (4) Any moneys from penalties collected pursuant to Section 3722
as a result of the insurance coverage program established under
Section 90.3 shall be deposited in the State Treasury to the credit
of the Workers' Compensation Administration Revolving Fund created
under this section, to cover expenses incurred by the director under
the insurance coverage program. The amount of any penalties in excess
of payment of administrative expenses incurred by the director for
the insurance coverage program established under Section 90.3 shall
be deposited in the State Treasury to the credit of the Uninsured
Employers Benefits Trust Fund for nonadministrative expenses, as
prescribed in paragraph (1), and notwithstanding paragraph (1), shall
only be available upon appropriation by the Legislature.
   (c) (1) The Subsequent Injuries Benefits Trust Fund is hereby
created as a special trust fund account in the State Treasury, of
which the director is trustee, and its sources of funds are as
provided in paragraph (1) of subdivision (f). Notwithstanding Section
13340 of the Government Code, the fund is continuously appropriated
for the nonadministrative expenses of the workers' compensation
program for workers who have suffered serious injury and who are
suffering from previous and serious permanent disabilities or
physical impairments, in accordance with Article 5 (commencing with
Section 4751) of Chapter 2 of Part 2 of Division 4, and Section 4 of
Article XIV of the California Constitution, and shall not be used for
any other purpose. All moneys collected shall be retained in the
trust fund until paid as benefits to workers who have suffered
serious injury and who are suffering from previous and serious
permanent disabilities or physical impairments. Nonadministrative
expenses include audits and reports of services pursuant to
subdivision (c) of Section 4755. The surcharge amount for this fund
shall be stated separately.
   (2) Notwithstanding any other law, all references to the
Subsequent Injuries Fund shall mean the Subsequent Injuries Benefits
Trust Fund.
   (3) Notwithstanding paragraph (1), in the event that budgetary
restrictions or impasse prevent the timely payment of administrative
expenses from the Workers' Compensation Administration Revolving
Fund, those expenses shall be advanced from the Subsequent Injuries
Benefits Trust Fund. Expense advances made pursuant to this paragraph
shall be reimbursed in full to the Subsequent Injuries Benefits
Trust Fund upon enactment of the annual Budget Act.
   (d) The Occupational Safety and Health Fund is hereby created as a
special account in the State Treasury. Moneys in the account may be
expended by the department, upon appropriation by the Legislature,
for support of the Division of Occupational Safety and Health, the
Occupational Safety and Health Standards Board, and the Occupational
Safety and Health Appeals Board, and the activities these entities
perform as set forth in this division, and Division 5 (commencing
with Section 6300).
   (e) The Labor Enforcement and Compliance Fund is hereby created as
a special account in the State Treasury. Moneys in the fund may be
expended by the department, upon appropriation by the Legislature,
for the support of the activities that the Division of Labor
Standards Enforcement performs pursuant to this division and Division
2 (commencing with Section 200), Division 3 (commencing with Section
2700), and Division 4 (commencing with Section 3200). The fund shall
consist of surcharges imposed pursuant to paragraph (3) of
subdivision (f).
   (f) (1) Separate surcharges shall be levied by the director upon
all employers, as defined in Section 3300, for purposes of deposit in
the Workers' Compensation Administration Revolving Fund, the
Uninsured Employers Benefits Trust Fund, the Subsequent Injuries
Benefits Trust Fund, and the Occupational Safety and Health Fund. The
total amount of the surcharges shall be allocated between
self-insured employers and insured employers in proportion to payroll
respectively paid in the most recent year for which payroll
information is available. The director shall adopt reasonable
regulations governing the manner of collection of the surcharges. The
regulations shall require the surcharges to be paid by self-insurers
to be expressed as a percentage of indemnity paid during the most
recent year for which information is available, and the surcharges to
be paid by insured employers to be expressed as a percentage of
premium. In no event shall the surcharges paid by insured employers
be considered a premium for computation of a gross premium tax or
agents' commission. In no event shall the total amount of the
surcharges paid by insured and self-insured employers exceed the
amounts reasonably necessary to carry out the purposes of this
section.
   (2) The surcharge levied by the director for the Occupational
Safety and Health Fund, pursuant to paragraph (1), shall not generate
revenues in excess of fifty-two million dollars ($52,000,000) on and
after the 2009-10 fiscal year, adjusted for each fiscal year as
appropriate to reconcile any over/under assessments from previous
fiscal years pursuant to Sections 15606 and 15609 of Title 8 of the
California Code of Regulations, and may increase by not more than the
state-local government deflator each year thereafter through July 1,
2013, and, as appropriate, to reconcile any over/under assessments
from previous fiscal years. For the 2013-14 fiscal year, the
surcharge level shall return to the level in place on June 30, 2009,
adjusted for inflation based on the state-local government deflator.
   (3) A separate surcharge shall be levied by the director upon all
employers, as defined in Section 3300, for purposes of deposit in the
Labor Enforcement and Compliance Fund. The total amount of the
surcharges shall be allocated between employers in proportion to
payroll respectively paid in the most recent year for which payroll
information is available. The director shall adopt reasonable
regulations governing the manner of collection of the surcharges. In
no event shall the total amount of the surcharges paid by employers
exceed the amounts reasonably necessary to carry out the purposes of
this section.
   (4) The surcharge levied by the director for the Labor Enforcement
and Compliance Fund shall not exceed thirty-seven million dollars
($37,000,000) in the 2009-10 fiscal year, adjusted as appropriate to
reconcile any over/under assessments from previous fiscal years, and
shall not be adjusted each year thereafter by more than the
state-local government deflator, and, as appropriate, to reconcile
any over/under assessments from previous fiscal years pursuant to
Sections 15606 and 15609 of Title 8 of the California Code of
Regulations.
   (5) The regulations adopted pursuant to paragraph (1) to (4),
inclusive, shall be exempt from the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
   (g) On and after July 1, 2013, subdivision (e) and paragraphs (2)
to (4), inclusive, of subdivision (f) are inoperative, unless a later
enacted statute, that is enacted before July 1, 2013, deletes or
extends that date.
  SEC. 5.  Section 139.2 of the Labor Code is amended to read:
   139.2.  (a) The administrative director shall appoint qualified
medical evaluators in each of the respective specialties as required
for the evaluation of medical-legal issues. The appointments shall be
for two-year terms.
   (b) The administrative director shall appoint or reappoint as a
qualified medical evaluator a physician, as defined in Section
3209.3, who is licensed to practice in this state and who
demonstrates that he or she meets the requirements in paragraphs (1),
(2), (6), and (7), and, if the physician is a medical doctor, doctor
of osteopathy, doctor of chiropractic, or a psychologist, that he or
she also meets the applicable requirements in paragraph (3), (4), or
(5).
   (1) Prior to his or her appointment as a qualified medical
evaluator, passes an examination written and administered by the
administrative director for the purpose of demonstrating competence
in evaluating medical-legal issues in the workers' compensation
system. Physicians shall not be required to pass an additional
examination as a condition of reappointment. A physician seeking
appointment as a qualified medical evaluator on or after January 1,
2001, shall also complete prior to appointment, a course on
disability evaluation report writing approved by the administrative
director. The administrative director shall specify the curriculum to
be covered by disability evaluation report writing courses, which
shall include, but is not limited to, 12 or more hours of
instruction.
   (2) Devotes at least one-third of total practice time to providing
direct medical treatment, or has served as an agreed medical
evaluator on eight or more occasions in the 12 months prior to
applying to be appointed as a qualified medical evaluator.
   (3) Is a medical doctor or doctor of osteopathy and meets one of
the following requirements:
   (A) Is board certified in a specialty by a board recognized by the
administrative director and either the Medical Board of California
or the Osteopathic Medical Board of California.
   (B) Has successfully completed a residency training program
accredited by the American College of Graduate Medical Education or
the osteopathic equivalent.
   (C) Was an active qualified medical evaluator on June 30, 2000.
   (D) Has qualifications that the administrative director and either
the Medical Board of California or the Osteopathic Medical Board of
California, as appropriate, both deem to be equivalent to board
certification in a specialty.
   (4) Is a doctor of chiropractic and has been certified in
California workers' compensation evaluation by a provider recognized
by the administrative director. The certification program shall
include instruction on disability evaluation report writing that
meets the standards set forth in paragraph (1).
   (5) Is a psychologist and meets one of the following requirements:

   (A) Is board certified in clinical psychology by a board
recognized by the administrative director.
   (B) Holds a doctoral degree in psychology, or a doctoral degree
deemed equivalent for licensure by the Board of Psychology pursuant
to Section 2914 of the Business and Professions Code, from a
university or professional school recognized by the administrative
director and has not less than five years' postdoctoral experience in
the diagnosis and treatment of emotional and mental disorders.
   (C) Has not less than five years' postdoctoral experience in the
diagnosis and treatment of emotional and mental disorders, and has
served as an agreed medical evaluator on eight or more occasions
prior to January 1, 1990.
   (6) Does not have a conflict of interest as determined under the
regulations adopted by the administrative director pursuant to
subdivision (o).
   (7) Meets any additional medical or professional standards adopted
pursuant to paragraph (6) of subdivision (j).
   (c) The administrative director shall adopt standards for
appointment of physicians who are retired or who hold teaching
positions who are exceptionally well qualified to serve as a
qualified medical evaluator even though they do not otherwise qualify
under paragraph (2) of subdivision (b). In no event shall a
physician whose full-time practice is limited to the forensic
evaluation of disability be appointed as a qualified medical
evaluator under this subdivision.
   (d) The qualified medical evaluator, upon request, shall be
reappointed if he or she meets the qualifications of subdivision (b)
and meets all of the following criteria:
   (1) Is in compliance with all applicable regulations and
evaluation guidelines adopted by the administrative director.
   (2) Has not had more than five of his or her evaluations that were
considered by a workers' compensation administrative law judge at a
contested hearing rejected by the workers' compensation
administrative law judge or the appeals board pursuant to this
section during the most recent two-year period during which the
physician served as a qualified medical evaluator. If the workers'
compensation administrative law judge or the appeals board rejects
the qualified medical evaluator's report on the basis that it fails
to meet the minimum standards for those reports established by the
administrative director or the appeals board, the workers'
compensation administrative law judge or the appeals board, as the
case may be, shall make a specific finding to that effect, and shall
give notice to the medical evaluator and to the administrative
director. Any rejection shall not be counted as one of the five
qualifying rejections until the specific finding has become final and
time for appeal has expired.
   (3) Has completed within the previous 24 months at least 12 hours
of continuing education in impairment evaluation or workers'
compensation-related medical dispute evaluation approved by the
administrative director.
   (4) Has not been terminated, suspended, placed on probation, or
otherwise disciplined by the administrative director during his or
her most recent term as a qualified medical evaluator.
   If the evaluator does not meet any one of these criteria, the
administrative director may in his or her discretion reappoint or
deny reappointment according to regulations adopted by the
administrative director. In no event may a physician who does not
currently meet the requirements for initial appointment or who has
been terminated under subdivision (e) because his or her license has
been revoked or terminated by the licensing authority be reappointed.

   (e) The administrative director may, in his or her discretion,
suspend or terminate a qualified medical evaluator during his or her
term of appointment without a hearing as provided under subdivision
(k) or (  l  ) whenever either of the following conditions
occurs:
   (1) The evaluator's license to practice in California has been
suspended by the relevant licensing authority so as to preclude
practice, or has been revoked or terminated by the licensing
authority.
   (2) The evaluator has failed to timely pay the fee required by the
administrative director pursuant to subdivision (n).
   (f) The administrative director shall furnish a physician, upon
request, with a written statement of its reasons for termination of,
or for denying appointment or reappointment as, a qualified medical
evaluator. Upon receipt of a specific response to the statement of
reasons, the administrative director shall review his or
                                       her decision not to appoint or
reappoint the physician or to terminate the physician and shall
notify the physician of its final decision within 60 days after
receipt of the physician's response.
   (g) The administrative director shall establish agreements with
qualified medical evaluators to assure the expeditious evaluation of
cases assigned to them for comprehensive medical evaluations.
   (h) (1) When requested by an employee or employer pursuant to
Section 4062.1, the medical director appointed pursuant to Section
122 shall assign three-member panels of qualified medical evaluators
within five working days after receiving a request for a panel.
Preference in assigning panels shall be given to cases in which the
employee is not represented. If a panel is not assigned within 20
working days, the employee shall have the right to obtain a medical
evaluation from any qualified medical evaluator of his or her choice
within a reasonable geographic area. The medical director shall use a
random selection method for assigning panels of qualified medical
evaluators. The medical director shall select evaluators who are
specialists of the type requested by the employee. The medical
director shall advise the employee that he or she should consult with
his or her treating physician prior to deciding which type of
specialist to request.
   (2) The administrative director shall promulgate a form that shall
notify the employee of the physicians selected for his or her panel
after a request has been made pursuant to Section 4062.1 or 4062.2.
The form shall include, for each physician on the panel, the
physician's name, address, telephone number, specialty, number of
years in practice, and a brief description of his or her education
and training, and shall advise the employee that he or she is
entitled to receive transportation expenses and temporary disability
for each day necessary for the examination. The form shall also state
in a clear and conspicuous location and type: "You have the right to
consult with an information and assistance officer at no cost to you
prior to selecting the doctor to prepare your evaluation, or you may
consult with an attorney. If your claim eventually goes to court,
the workers' compensation administrative law judge will consider the
evaluation prepared by the doctor you select to decide your claim."
   (3) When compiling the list of evaluators from which to select
randomly, the medical director shall include all qualified medical
evaluators who meet all of the following criteria:
   (A) He or she does not have a conflict of interest in the case, as
defined by regulations adopted pursuant to subdivision (o).
   (B) He or she is certified by the administrative director to
evaluate in an appropriate specialty and at locations within the
general geographic area of the employee's residence. An evaluator
shall not conduct qualified medical evaluations at more than 10
locations.
   (C) He or she has not been suspended or terminated as a qualified
medical evaluator for failure to pay the fee required by the
administrative director pursuant to subdivision (n) or for any other
reason.
   (4) When the medical director determines that an employee has
requested an evaluation by a type of specialist that is appropriate
for the employee's injury, but there are not enough qualified medical
evaluators of that type within the general geographic area of the
employee's residence to establish a three-member panel, the medical
director shall include sufficient qualified medical evaluators from
other geographic areas and the employer shall pay all necessary
travel costs incurred in the event the employee selects an evaluator
from another geographic area.
   (i) The medical director appointed pursuant to Section 122 shall
continuously review the quality of comprehensive medical evaluations
and reports prepared by agreed and qualified medical evaluators and
the timeliness with which evaluation reports are prepared and
submitted. The review shall include, but not be limited to, a review
of a random sample of reports submitted to the division, and a review
of all reports alleged to be inaccurate or incomplete by a party to
a case for which the evaluation was prepared. The medical director
shall submit to the administrative director an annual report
summarizing the results of the continuous review of medical
evaluations and reports prepared by agreed and qualified medical
evaluators and make recommendations for the improvement of the system
of medical evaluations and determinations.
   (j) After public hearing pursuant to Section 5307.3, the
administrative director shall adopt regulations concerning the
following issues:
   (1) (A) Standards governing the timeframes within which medical
evaluations shall be prepared and submitted by agreed and qualified
medical evaluators. Except as provided in this subdivision, the
timeframe for initial medical evaluations to be prepared and
submitted shall be no more than 30 days after the evaluator has seen
the employee or otherwise commenced the medical evaluation procedure.
The administrative director shall develop regulations governing the
provision of extensions of the 30-day period in both of the following
cases:
   (i) When the evaluator has not received test results or consulting
physician's evaluations in time to meet the 30-day deadline.
   (ii) To extend the 30-day period by not more than 15 days when the
failure to meet the 30-day deadline was for good cause.
   (B) For purposes of subparagraph (A), "good cause" means any of
the following:
   (i) Medical emergencies of the evaluator or evaluator's family.
   (ii) Death in the evaluator's family.
   (iii) Natural disasters or other community catastrophes that
interrupt the operation of the evaluator's business.
   (C) The administrative director shall develop timeframes governing
availability of qualified medical evaluators for unrepresented
employees under Sections 4061 and 4062. These timeframes shall give
the employee the right to the addition of a new evaluator to his or
her panel, selected at random, for each evaluator not available to
see the employee within a specified period of time, but shall also
permit the employee to waive this right for a specified period of
time thereafter.
   (2) Procedures to be followed by all physicians in evaluating the
existence and extent of permanent impairment and limitations
resulting from an injury in a manner consistent with Section 4660.
   (3) Procedures governing the determination of any disputed medical
treatment issues in a manner consistent with Section 5307.27.
   (4) Procedures to be used in determining the compensability of
psychiatric injury. The procedures shall be in accordance with
Section 3208.3 and shall require that the diagnosis of a mental
disorder be expressed using the terminology and criteria of the
American Psychiatric Association's Diagnostic and Statistical Manual
of Mental Disorders, Third Edition-Revised, or the terminology and
diagnostic criteria of other psychiatric diagnostic manuals generally
approved and accepted nationally by practitioners in the field of
psychiatric medicine.
   (5) Guidelines for the range of time normally required to perform
the following:
   (A) A medical-legal evaluation that has not been defined and
valued pursuant to Section 5307.6. The guidelines shall establish
minimum times for patient contact in the conduct of the evaluations,
and shall be consistent with regulations adopted pursuant to Section
5307.6.
   (B) Any treatment procedures that have not been defined and valued
pursuant to Section 5307.1.
   (C) Any other evaluation procedure requested by the Insurance
Commissioner, or deemed appropriate by the administrative director.
   (6) Any additional medical or professional standards that a
medical evaluator shall meet as a condition of appointment,
reappointment, or maintenance in the status of a medical evaluator.
   (k) Except as provided in this subdivision, the administrative
director may, in his or her discretion, suspend or terminate the
privilege of a physician to serve as a qualified medical evaluator if
the administrative director, after hearing pursuant to subdivision (
 l  ), determines, based on substantial evidence, that a
qualified medical evaluator:
   (1) Has violated any material statutory or administrative duty.
   (2) Has failed to follow the medical procedures or qualifications
established pursuant to paragraph (2), (3), (4), or (5) of
subdivision (j).
   (3) Has failed to comply with the timeframe standards established
pursuant to subdivision (j).
   (4) Has failed to meet the requirements of subdivision (b) or (c).

   (5) Has prepared medical-legal evaluations that fail to meet the
minimum standards for those reports established by the administrative
director or the appeals board.
   (6) Has made material misrepresentations or false statements in an
application for appointment or reappointment as a qualified medical
evaluator.
   No hearing shall be required prior to the suspension or
termination of a physician's privilege to serve as a qualified
medical evaluator when the physician has done either of the
following:
   (A) Failed to timely pay the fee required pursuant to subdivision
(n).
   (B) Had his or her license to practice in California suspended by
the relevant licensing authority so as to preclude practice, or had
the license revoked or terminated by the licensing authority.
   (  l  ) The administrative director shall cite the
qualified medical evaluator for a violation listed in subdivision (k)
and shall set a hearing on the alleged violation within 30 days of
service of the citation on the qualified medical evaluator. In
addition to the authority to terminate or suspend the qualified
medical evaluator upon finding a violation listed in subdivision (k),
the administrative director may, in his or her discretion, place a
qualified medical evaluator on probation subject to appropriate
conditions, including ordering continuing education or training. The
administrative director shall report to the appropriate licensing
board the name of any qualified medical evaluator who is disciplined
pursuant to this subdivision.
   (m) The administrative director shall terminate from the list of
medical evaluators any physician where licensure has been terminated
by the relevant licensing board, or who has been convicted of a
misdemeanor or felony related to the conduct of his or her medical
practice, or of a crime of moral turpitude. The administrative
director shall suspend or terminate as a medical evaluator any
physician who has been suspended or placed on probation by the
relevant licensing board. If a physician is suspended or terminated
as a qualified medical evaluator under this subdivision, a report
prepared by the physician that is not complete, signed, and furnished
to one or more of the parties prior to the date of conviction or
action of the licensing board, whichever is earlier, shall not be
admissible in any proceeding before the appeals board nor shall there
be any liability for payment for the report and any expense incurred
by the physician in connection with the report.
   (n) Each qualified medical evaluator shall pay a fee, as
determined by the administrative director, for appointment or
reappointment. These fees shall be based on a sliding scale as
established by the administrative director. All revenues from fees
paid under this subdivision shall be deposited into the Workers'
Compensation Administration Revolving Fund and are available for
expenditure upon appropriation by the Legislature, and shall not be
used by any other department or agency or for any purpose other than
administration of the programs the Division of Workers' Compensation
related to the provision of medical treatment to injured employees.
   (o) An evaluator may not request or accept any compensation or
other thing of value from any source that does or could create a
conflict with his or her duties as an evaluator under this code. The
administrative director, after consultation with the Commission on
Health and Safety and Workers' Compensation, shall adopt regulations
to implement this subdivision.
  SEC. 6.  Section 139.32 is added to the Labor Code, to read:
   139.32.  (a) For the purpose of this section, the following
definitions apply:
   (1) "Financial interest in another entity" means, subject to
subdivision (h), either of the following:
   (A) Any type of ownership, interest, debt, loan, lease,
compensation, remuneration, discount, rebate, refund, dividend,
distribution, subsidy, or other form of direct or indirect payment,
whether in money or otherwise, between the interested party and the
other entity to which the employee is referred for services.
   (B) An agreement, debt instrument, or lease or rental agreement
between the interested party and the other entity that provides
compensation based upon, in whole or in part, the volume or value of
the services provided as a result of referrals.
   (2) "Interested party" means any of the following:
   (A) An injured employee.
   (B) The employer of an injured employee, and, if the employer is
insured, its insurer.
   (C) A claims administrator, which includes, but is not limited to,
a self-administered workers' compensation insurer, a
self-administered self-insured employer, a self-administered joint
powers authority, a self-administered legally uninsured employer, a
third-party claims administrator for an insurer, a self-insured
employer, a joint powers authority, or a legally uninsured employer
or a subsidiary of a claims administrator.
   (D) An attorney-at-law or law firm that is representing or
advising an employee regarding a claim for compensation under
Division 4 (commencing with Section 3200).
   (E) A representative or agent of an interested party, including
either of the following:
   (i) An employee of an interested party.
   (ii) Any individual acting on behalf of an interested party,
including the immediate family of the interested party or of an
employee of the interested party. For purposes of this clause,
immediate family includes spouses, children, parents, and spouses of
children.
   (F) A provider of any medical services or products.
   (3) "Services" means, but is not limited to, any of the following:

   (A) A determination regarding an employee's eligibility for
compensation under Division 4 (commencing with Section 3200), that
includes both of the following:
   (i) A determination of a permanent disability rating under Section
4660.
   (ii) An evaluation of an employee's future earnings capacity
resulting from an occupational injury or illness.
   (B) Services to review the itemization of medical services set
forth on a medical bill submitted under Section 4603.2.
   (C) Copy and document reproduction services.
   (D) Interpreter services.
   (E) Medical services, including the provision of any medical
products such as surgical hardware or durable medical equipment.
   (F) Transportation services.
   (G) Services in connection with utilization review pursuant to
Section 4610.
   (b) All interested parties shall disclose any financial interest
in any entity providing services.
   (c) Except as otherwise permitted by law, it is unlawful for an
interested party other than a claims administrator or a network
service provider to refer a person for services provided by another
entity, or to use services provided by another entity, if the other
entity will be paid for those services pursuant to Division 4
(commencing with Section 3200) and the interested party has a
financial interest in the other entity.
   (d) (1) It is unlawful for an interested party to enter into an
arrangement or scheme, such as a cross-referral arrangement, that the
interested party knows, or should know, has a purpose of ensuring
referrals by the interested party to a particular entity that, if the
interested party directly made referrals to that other entity, would
be in violation of this section.
   (2) It is unlawful for an interested party to offer, deliver,
receive, or accept any rebate, refund, commission, preference,
patronage, dividend, discount, or other consideration, whether in the
form of money or otherwise, as compensation or inducement to refer a
person for services.
   (e) A claim for payment shall not be presented by an entity to any
interested party, individual, third-party payer, or other entity for
any services furnished pursuant to a referral prohibited under this
section.
   (f) An insurer, self-insurer, or other payer shall not knowingly
pay a charge or lien for any services resulting from a referral for
services or use of services in violation of this section.
   (g) (1) A violation of this section shall be misdemeanor. If an
interested party is a corporation, any director or officer of the
corporation who knowingly concurs in a violation of this section
shall be guilty of a misdemeanor. The appropriate licensing authority
for any person subject to this section shall review the facts and
circumstances of any conviction pursuant to this section and take
appropriate disciplinary action if the licensee has committed
unprofessional conduct, provided that the appropriate licensing
authority may act on its own discretion independent of the initiation
or completion of a criminal prosecution. Violations of this section
are also subject to civil penalties of up to fifteen thousand dollars
($15,000) for each offense, which may be enforced by the Insurance
Commissioner, Attorney General, or a district attorney.
   (2) For an interested party, a practice of violating this section
shall constitute a general business practice that discharges or
administers compensation obligations in a dishonest manner, which
shall be subject to a civil penalty under subdivision (e) of Section
129.5.
   (3) For an interested party who is an attorney, a violation of
subdivision (b) or (c) shall be referred to the Board of Governors of
the State Bar of California, which shall review the facts and
circumstances of any violation pursuant to subdivision (b) or (c) and
take appropriate disciplinary action if the licensee has committed
unprofessional conduct.
   (4) Any determination regarding an employee's eligibility for
compensation shall be void if that service was provided in violation
of this section.
   (h) The following arrangements between an interested party and
another entity do not constitute a "financial interest in another
entity" for purposes of this section:
   (1) A loan between an interested party and another entity, if the
loan has commercially reasonable terms, bears interest at the prime
rate or a higher rate that does not constitute usury, and is
adequately secured, and the loan terms are not affected by either the
interested party's referral of any employee or the volume of
services provided by the entity that receives the referral.
   (2) A lease of space or equipment between an interested party and
another entity, if the lease is written, has commercially reasonable
terms, has a fixed periodic rent payment, has a term of one year or
more, and the lease payments are not affected by either the
interested party's referral of any person or the volume of services
provided by the entity that receives the referral.
   (3) An interested party's ownership of the corporate investment
securities of another entity, including shares, bonds, or other debt
instruments that were purchased on terms that are available to the
general public through a licensed securities exchange or NASDAQ.
   (i) The prohibitions described in this section do not apply to any
of the following:
   (1) Services performed by, or determinations of compensation
issues made by, employees of an interested party in the course of
that employment.
   (2) A referral for legal services if that referral is not
prohibited by the Rules of Professional Conduct of the State Bar.
   (3) A physician's referral that is exempted by Section 139.31 from
the prohibitions prescribed by Section 139.3.
  SEC. 6.5.  Section 139.48 is added to the Labor Code, to read:
   139.48.  There shall be in the department a return-to-work program
administered by the director, funded by one hundred twenty million
dollars ($120,000,000) annually derived from non-General Funds of the
Workers' Compensation Administration Revolving Fund, for the purpose
of making supplemental payments to workers whose permanent
disability benefits are disproportionately low in comparison to their
earnings loss. Eligibility for payments and the amount of payments
shall be determined by regulations adopted by the director, based on
findings from studies conducted by the director in consultation with
the Commission on Health and Safety and Workers' Compensation.
Determinations of the director shall be subject to review at the
trial level of the appeals board upon the same grounds as prescribed
for petitions for reconsideration.
  SEC. 7.  Section 139.5 is added to the Labor Code, to read:
   139.5.  (a) (1) The administrative director shall contract with
one or more independent medical review organizations and one or more
independent bill review organizations to conduct reviews pursuant to
Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of
Division 4. The independent review organizations shall be independent
of any workers' compensation insurer or workers' compensation claims
administrator doing business in this state. The administrative
director may establish additional requirements, including
conflict-of-interest standards, consistent with the purposes of
Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of
Division 4, that an organization shall be required to meet in order
to qualify as an independent review organization and to assist the
division in carrying out its responsibilities.
   (2) To enable the independent review program to go into effect for
injuries occurring on or after January 1, 2013, and until the
administrative director establishes contracts as otherwise specified
by this section, independent review organizations under contract with
the Department of Managed Health Care pursuant to Section 1374.32 of
the Health and Safety Code may be designated by the administrative
director to conduct reviews pursuant to Article 2 (commencing with
Section 4600) of Chapter 2 of Part 2 of Division 4. The
administrative director may use an interagency agreement to implement
the independent review process beginning January 1, 2013. The
administrative director may initially contract directly with the same
organizations that are under contract with the Department of Managed
Health Care on substantially the same terms without competitive
bidding until January 1, 2015.
   (b) (1) The independent medical review organizations and the
medical professionals retained to conduct reviews shall be deemed to
be consultants for purposes of this section.
   (2) There shall be no monetary liability on the part of, and no
cause of action shall arise against, any consultant on account of any
communication by that consultant to the administrative director or
any other officer, employee, agent, contractor, or consultant of the
Division of Workers' Compensation, or on account of any communication
by that consultant to any person when that communication is required
by the terms of a contract with the administrative director pursuant
to this section and the consultant does all of the following:
   (A) Acts without malice.
   (B) Makes a reasonable effort to determine the facts of the matter
communicated.
   (C) Acts with a reasonable belief that the communication is
warranted by the facts actually known to the consultant after a
reasonable effort to determine the facts.
   (3) The immunities afforded by this section shall not affect the
availability of any other privilege or immunity which may be afforded
by law. Nothing in this section shall be construed to alter the laws
regarding the confidentiality of medical records.
   (c) (1) An organization contracted to perform independent medical
review or independent bill review shall be required to employ a
medical director who shall be responsible for advising the contractor
on clinical issues. The medical director shall be a physician and
surgeon licensed by the Medical Board of California or the California
Osteopathic Medical Board.
   (2) The independent review organization, any experts it designates
to conduct a review, or any officer, director, or employee of the
independent review organization shall not have any material
professional, familial, or financial affiliation, as determined by
the administrative director, with any of the following:
   (A) The employer, insurer or claims administrator, or utilization
review organization.
   (B) Any officer, director, employee of the employer, or insurer or
claims administrator.
   (C) A physician, the physician's medical group, the physician's
independent practice association, or other provider involved in the
medical treatment in dispute.
   (D) The facility or institution at which either the proposed
health care service, or the alternative service, if any, recommended
by the employer, would be provided.
   (E) The development or manufacture of the principal drug, device,
procedure, or other therapy proposed by the employee whose treatment
is under review, or the alternative therapy, if any, recommended by
the employer.
   (F) The employee or the employee's immediate family, or the
employee's attorney.
   (d) The independent review organizations shall meet all of the
following requirements:
   (1) The organization shall not be an affiliate or a subsidiary of,
nor in any way be owned or controlled by, a workers' compensation
insurer, claims administrator, or a trade association of workers'
compensation insurers or claims administrators. A board member,
director, officer, or employee of the independent review organization
shall not serve as a board member, director, or employee of a
workers' compensation insurer or claims administrator. A board
member, director, or officer of a workers' compensation insurer or
claims administrator or a trade association of workers' compensation
insurers or claims administrators shall not serve as a board member,
director, officer, or employee of an independent review organization.

   (2) The organization shall submit to the division the following
information upon initial application to contract under this section
and, except as otherwise provided, annually thereafter upon any
change to any of the following information:
   (A) The names of all stockholders and owners of more than 5
percent of any stock or options, if a publicly held organization.
   (B) The names of all holders of bonds or notes in excess of one
hundred thousand dollars ($100,000), if any.

    (C) The names of all corporations and organizations that the
independent review organization controls or is affiliated with, and
the nature and extent of any ownership or control, including the
affiliated organization's type of business.
   (D) The names and biographical sketches of all directors,
officers, and executives of the independent review organization, as
well as a statement regarding any past or present relationships the
directors, officers, and executives may have with any employer,
workers' compensation insurer, claims administrator, medical provider
network, managed care organization, provider group, or board or
committee of an employer, workers' compensation insurer, claims
administrator, medical provider network, managed care organization,
or provider group.
   (E) (i) The percentage of revenue the independent review
organization receives from expert reviews, including, but not limited
to, external medical reviews, quality assurance reviews, utilization
reviews, and bill reviews.
   (ii) The names of any workers' compensation insurer, claims
administrator, or provider group for which the independent review
organization provides review services, including, but not limited to,
utilization review, bill review, quality assurance review, and
external medical review. Any change in this information shall be
reported to the department within five business days of the change.
   (F) A description of the review process, including, but not
limited to, the method of selecting expert reviewers and matching the
expert reviewers to specific cases.
   (G) A description of the system the independent medical review
organization uses to identify and recruit medical professionals to
review treatment and treatment recommendation decisions, the number
of medical professionals credentialed, and the types of cases and
areas of expertise that the medical professionals are credentialed to
review.
   (H) A description of how the independent review organization
ensures compliance with the conflict-of-interest requirements of this
section.
   (3) The organization shall demonstrate that it has a quality
assurance mechanism in place that does all of the following:
   (A) Ensures that any medical professionals retained are
appropriately credentialed and privileged.
   (B) Ensures that the reviews provided by the medical professionals
or bill reviewers are timely, clear, and credible, and that reviews
are monitored for quality on an ongoing basis.
   (C) Ensures that the method of selecting medical professionals for
individual cases achieves a fair and impartial panel of medical
professionals who are qualified to render recommendations regarding
the clinical conditions and the medical necessity of treatments or
therapies in question.
   (D) Ensures the confidentiality of medical records and the review
materials, consistent with the requirements of this section and
applicable state and federal law.
   (E) Ensures the independence of the medical professionals or bill
reviewers retained to perform the reviews through
conflict-of-interest policies and prohibitions, and ensures adequate
screening for conflicts of interest, pursuant to paragraph (5).
   (4) Medical professionals selected by independent medical review
organizations to review medical treatment decisions shall be licensed
physicians, as defined by Section 3209.3, in good standing, who meet
the following minimum requirements:
   (A) The physician shall be a clinician knowledgeable in the
treatment of the employee's medical condition, knowledgeable about
the proposed treatment, and familiar with guidelines and protocols in
the area of treatment under review.
   (B) Notwithstanding any other provision of law, the physician
shall hold a nonrestricted license in any state of the United States,
and for physicians and surgeons holding an M.D. or D.O. degree, a
current certification by a recognized American medical specialty
board in the area or areas appropriate to the condition or treatment
under review. The independent medical review organization shall give
preference to the use of a physician licensed in California as the
reviewer.
   (C) The physician shall have no history of disciplinary action or
sanctions, including, but not limited to, loss of staff privileges or
participation restrictions, taken or pending by any hospital,
government, or regulatory body.
   (D) Commencing January 1, 2014, the physician shall not hold an
appointment as a qualified medical evaluator pursuant to Section
139.32.
   (5) Neither the expert reviewer, nor the independent review
organization, shall have any material professional, material
familial, or material financial affiliation with any of the
following:
   (A) The employer, workers' compensation insurer or claims
administrator, or a medical provider network of the insurer or claims
administrator, except that an academic medical center under contract
to the insurer or claims administrator to provide services to
employees may qualify as an independent medical review organization
provided it will not provide the service and provided the center is
not the developer or manufacturer of the proposed treatment.
   (B) Any officer, director, or management employee of the employer
or workers' compensation insurer or claims administrator.
   (C) The physician, the physician's medical group, or the
independent practice association (IPA) proposing the treatment.
   (D) The institution at which the treatment would be provided.
   (E) The development or manufacture of the treatment proposed for
the employee whose condition is under review.
   (F) The employee or the employee's immediate family.
   (6) For purposes of this subdivision, the following terms shall
have the following meanings:
   (A) "Material familial affiliation" means any relationship as a
spouse, child, parent, sibling, spouse's parent, or child's spouse.
   (B) "Material financial affiliation" means any financial interest
of more than 5 percent of total annual revenue or total annual income
of an independent review organization or individual to which this
subdivision applies. "Material financial affiliation" does not
include payment by the employer to the independent review
organization for the services required by the administrative director'
s contract with the independent review organization, nor does
"material financial affiliation" include an expert's participation as
a contracting medical provider where the expert is affiliated with
an academic medical center or a National Cancer Institute-designated
clinical cancer research center.
   (C) "Material professional affiliation" means any
physician-patient relationship, any partnership or employment
relationship, a shareholder or similar ownership interest in a
professional corporation, or any independent contractor arrangement
that constitutes a material financial affiliation with any expert or
any officer or director of the independent review organization.
"Material professional affiliation" does not include affiliations
that are limited to staff privileges at a health facility.
   (e) The division shall provide, upon the request of any interested
person, a copy of all nonproprietary information, as determined by
the administrative director, filed with it by an independent review
organization under contract pursuant to this section. The division
may charge a fee to the interested person for copying the requested
information.
   (f) The Legislature finds and declares that the services described
in this section are of such a special and unique nature that they
must be contracted out pursuant to paragraph (3) of subdivision (b)
of Section 19130 of the Government Code. The Legislature further
finds and declares that the services described in this section are a
new state function pursuant to paragraph (2) of subdivision (b) of
Section 19130 of the Government Code.
  SEC. 8.  Section 3201.5 of the Labor Code is amended to read:
   3201.5.  (a) Except as provided in subdivisions (b) and (c), the
Department of Industrial Relations and the courts of this state shall
recognize as valid and binding any provision in a collective
bargaining agreement between a private employer or groups of
employers engaged in construction, construction maintenance, or
activities limited to rock, sand, gravel, cement and asphalt
operations, heavy-duty mechanics, surveying, and construction
inspection and a union that is the recognized or certified exclusive
bargaining representative that establishes any of the following:
   (1) An alternative dispute resolution system governing disputes
between employees and employers or their insurers that supplements or
replaces all or part of those dispute resolution processes contained
in this division, including, but not limited to, mediation and
arbitration. Any system of arbitration shall provide that the
decision of the arbiter or board of arbitration is subject to review
by the appeals board in the same manner as provided for
reconsideration of a final order, decision, or award made and filed
by a workers' compensation administrative law judge pursuant to the
procedures set forth in Article 1 (commencing with Section 5900) of
Chapter 7 of Part 4 of Division 4, and the court of appeals pursuant
to the procedures set forth in Article 2 (commencing with Section
5950) of Chapter 7 of Part 4 of Division 4, governing orders,
decisions, or awards of the appeals board. The findings of fact,
award, order, or decision of the arbitrator shall have the same force
and effect as an award, order, or decision of a workers'
compensation administrative law judge. Any provision for arbitration
established pursuant to this section shall not be subject to Sections
5270, 5270.5, 5271, 5272, 5273, 5275, and 5277.
   (2) The use of an agreed list of providers of medical treatment
that may be the exclusive source of all medical treatment provided
under this division.
   (3) The use of an agreed, limited list of qualified medical
evaluators and agreed medical evaluators that may be the exclusive
source of qualified medical evaluators and agreed medical evaluators
under this division.
   (4) Joint labor management safety committees.
   (5) A light-duty, modified job or return-to-work program.
   (6) A vocational rehabilitation or retraining program utilizing an
agreed list of providers of rehabilitation services that may be the
exclusive source of providers of rehabilitation services under this
division.
   (b) (1) Nothing in this section shall allow a collective
bargaining agreement that diminishes the entitlement of an employee
to compensation payments for total or partial disability, temporary
disability, vocational rehabilitation, or medical treatment fully
paid by the employer as otherwise provided in this division. The
portion of any agreement that violates this paragraph shall be
declared null and void.
   (2) The parties may negotiate any aspect of the delivery of
medical benefits and the delivery of disability compensation to
employees of the employer or group of employers that are eligible for
group health benefits and nonoccupational disability benefits
through their employer.
   (c) Subdivision (a) shall apply only to the following:
   (1) An employer developing or projecting an annual workers'
compensation insurance premium, in California, of two hundred fifty
thousand dollars ($250,000) or more, or any employer that paid an
annual workers' compensation insurance premium, in California, of two
hundred fifty thousand dollars ($250,000) in at least one of the
previous three years.
   (2) Groups of employers engaged in a workers' compensation safety
group complying with Sections 11656.6 and 11656.7 of the Insurance
Code, and established pursuant to a joint labor management safety
committee or committees, that develops or projects annual workers'
compensation insurance premiums of two million dollars ($2,000,000)
or more.
   (3) Employers or groups of employers that are self-insured in
compliance with Section 3700 that would have projected annual workers'
compensation costs that meet the requirements of, and that meet the
other requirements of, paragraph (1) in the case of employers, or
paragraph (2) in the case of groups of employers.
   (4) Employers covered by an owner or general contractor provided
wrap-up insurance policy applicable to a single construction site
that develops workers' compensation insurance premiums of two million
dollars ($2,000,000) or more with respect to those employees covered
by that wrap-up insurance policy.
   (d) Employers and labor representatives who meet the eligibility
requirements of this section shall be issued a letter by the
administrative director advising each employer and labor
representative that, based upon the review of all documents and
materials submitted as required by the administrative director, each
has met the eligibility requirements of this section.
   (e) The premium rate for a policy of insurance issued pursuant to
this section shall not be subject to the requirements of Section
11732 or 11732.5 of the Insurance Code.
   (f) No employer may establish or continue a program established
under this section until it has provided the administrative director
with all of the following:
   (1) Upon its original application and whenever it is renegotiated
thereafter, a copy of the collective bargaining agreement and the
approximate number of employees who will be covered thereby.
   (2) Upon its original application and annually thereafter, a valid
and active license where that license is required by law as a
condition of doing business in the state within the industries set
forth in subdivision (a) of Section 3201.5.
   (3) Upon its original application and annually thereafter, a
statement signed under penalty of perjury, that no action has been
taken by any administrative agency or court of the United States to
invalidate the collective bargaining agreement.
   (4) The name, address, and telephone number of the contact person
of the employer.
   (5) Any other information that the administrative director deems
necessary to further the purposes of this section.
   (g) No collective bargaining representative may establish or
continue to participate in a program established under this section
unless all of the following requirements are met:
   (1) Upon its original application and annually thereafter, it has
provided to the administrative director a copy of its most recent
LM-2 or LM-3 filing with the United States Department of Labor, along
with a statement, signed under penalty of perjury, that the document
is a true and correct copy.
   (2) It has provided to the administrative director the name,
address, and telephone number of the contact person or persons of the
collective bargaining representative or representatives.
   (h) Commencing July 1, 1995, and annually thereafter, the Division
of Workers' Compensation shall report to the Director of Industrial
Relations the number of collective bargaining agreements received and
the number of employees covered by these agreements.
   (i) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state. However, the Division of
Workers' Compensation shall create derivative works pursuant to
subdivision (h) based on the collective bargaining agreements and
data. Those derivative works shall not be confidential, but shall be
public. On a monthly basis the administrative director shall make
available an updated list of employers and unions entering into
collective bargaining agreements containing provisions authorized by
this section.
  SEC. 9.  Section 3201.7 of the Labor Code is amended to read:
   3201.7.  (a) Except as provided in subdivision (b), the Department
of Industrial Relations and the courts of this state shall recognize
as valid and binding any labor-management agreement that meets all
of the following requirements:
   (1) The labor-management agreement has been negotiated separate
and apart from any collective bargaining agreement covering affected
employees.
   (2) The labor-management agreement is restricted to the
establishment of the terms and conditions necessary to implement this
section.
   (3) The labor-management agreement has been negotiated in
accordance with the authorization of the administrative director
pursuant to subdivision (d), between an employer or groups of
employers and a union that is the recognized or certified exclusive
bargaining representative that establishes any of the following:
   (A) An alternative dispute resolution system governing disputes
between employees and employers or their insurers that supplements or
replaces all or part of those dispute resolution processes contained
in this division, including, but not limited to, mediation and
arbitration. Any system of arbitration shall provide that the
decision of the arbiter or board of arbitration is subject to review
by the appeals board in the same manner as provided for
reconsideration of a final order, decision, or award made and filed
by a workers' compensation administrative law judge pursuant to the
procedures set forth in Article 1 (commencing with Section 5900) of
Chapter 7 of Part 4 of Division 4, and the court of appeals pursuant
to the procedures set forth in Article 2 (commencing with Section
5950) of Chapter 7 of Part 4 of Division 4, governing orders,
decisions, or awards of the appeals board. The findings of fact,
award, order, or decision of the arbitrator shall have the same force
and effect as an award, order, or decision of a workers'
compensation administrative law judge. Any provision for arbitration
established pursuant to this section shall not be subject to Sections
5270, 5270.5, 5271, 5272, 5273, 5275, and 5277.
   (B) The use of an agreed list of providers of medical treatment
that may be the exclusive source of all medical treatment provided
under this division.
   (C) The use of an agreed, limited list of qualified medical
evaluators and agreed medical evaluators that may be the exclusive
source of qualified medical evaluators and agreed medical evaluators
under this division.
   (D) Joint labor management safety committees.
   (E) A light-duty, modified job, or return-to-work program.
   (F) A vocational rehabilitation or retraining program utilizing an
agreed list of providers of rehabilitation services that may be the
exclusive source of providers of rehabilitation services under this
division.
   (b) (1) Nothing in this section shall allow a labor-management
agreement that diminishes the entitlement of an employee to
compensation payments for total or partial disability, temporary
disability, vocational rehabilitation, or medical treatment fully
paid by the employer as otherwise provided in this division; nor
shall any agreement authorized by this section deny to any employee
the right to representation by counsel at all stages during the
alternative dispute resolution process. The portion of any agreement
that violates this paragraph shall be declared null and void.
   (2) The parties may negotiate any aspect of the delivery of
medical benefits and the delivery of disability compensation to
employees of the employer or group of employers that are eligible for
group health benefits and nonoccupational disability benefits
through their employer.
   (c) Subdivision (a) shall apply only to the following:
   (1) An employer developing or projecting an annual workers'
compensation insurance premium, in California, of fifty thousand
dollars ($50,000) or more, and employing at least 50 employees, or
any employer that paid an annual workers' compensation insurance
premium, in California, of fifty thousand dollars ($50,000), and
employing at least 50 employees in at least one of the previous three
years.
   (2) Groups of employers engaged in a workers' compensation safety
group complying with Sections 11656.6 and 11656.7 of the Insurance
Code, and established pursuant to a joint labor management safety
committee or committees, that develops or projects annual workers'
compensation insurance premiums of five hundred thousand dollars
($500,000) or more.
   (3) Employers or groups of employers, including cities and
counties, that are self-insured in compliance with Section 3700 that
would have projected annual workers' compensation costs that meet the
requirements of, and that meet the other requirements of, paragraph
(1) in the case of employers, or paragraph (2) in the case of groups
of employers.
   (4) The State of California.
   (d) Any recognized or certified exclusive bargaining
representative in an industry not covered by Section 3201.5, may file
a petition with the administrative director seeking permission to
negotiate with an employer or group of employers to enter into a
labor-management agreement pursuant to this section. The petition
shall specify the bargaining unit or units to be included, the names
of the employers or groups of employers, and shall be accompanied by
proof of the labor union's status as the exclusive bargaining
representative. The current collective bargaining agreement or
agreements shall be attached to the petition. The petition shall be
in the form designated by the administrative director. Upon receipt
of the petition, the administrative director shall promptly verify
the petitioner's status as the exclusive bargaining representative.
If the petition satisfies the requirements set forth in this
subdivision, the administrative director shall issue a letter
advising each employer and labor representative of their eligibility
to enter into negotiations, for a period not to exceed one year, for
the purpose of reaching agreement on a labor-management agreement
pursuant to this section. The parties may jointly request, and shall
be granted, by the administrative director, an additional one-year
period to negotiate an agreement.
   (e) No employer may establish or continue a program established
under this section until it has provided the administrative director
with all of the following:
   (1) Upon its original application and whenever it is renegotiated
thereafter, a copy of the labor-management agreement and the
approximate number of employees who will be covered thereby.
   (2) Upon its original application and annually thereafter, a
statement signed under penalty of perjury, that no action has been
taken by any administrative agency or court of the United States to
invalidate the labor-management agreement.
   (3) The name, address, and telephone number of the contact person
of the employer.
   (4) Any other information that the administrative director deems
necessary to further the purposes of this section.
   (f) No collective bargaining representative may establish or
continue to participate in a program established under this section
unless all of the following requirements are met:
   (1) Upon its original application and annually thereafter, it has
provided to the administrative director a copy of its most recent
LM-2 or LM-3 filing with the United States Department of Labor, where
such filing is required by law, along with a statement, signed under
penalty of perjury, that the document is a true and correct copy.
   (2) It has provided to the administrative director the name,
address, and telephone number of the contact person or persons of the
collective bargaining representative or representatives.
   (g) Commencing July 1, 2005, and annually thereafter, the Division
of Workers' Compensation shall report to the Director of Industrial
Relations the number of labor-management agreements received and the
number of employees covered by these agreements.
   (h) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state. However, the Division of
Workers' Compensation shall create derivative works pursuant to
subdivision (g) based on the labor-management agreements and data.
Those derivative works shall not be confidential, but shall be
public. On a monthly basis, the administrative director shall make
available an updated list of employers and unions entering into
labor-management agreements authorized by this section.
  SEC. 10.  Section 3700.1 of the Labor Code is amended to read:
   3700.1.  As used in this article:
   (a) "Director" means the Director of Industrial Relations.
   (b) "Private self-insurer" means a private employer which has
secured the payment of compensation pursuant to Section 3701.
   (c) "Trustees" means the Board of Trustees of the Self-Insurers'
Security Fund.
   (d) "Member" means a private self-insurer which participates in
the Self-Insurers' Security Fund.
   (e) "Incurred liabilities for the payment of compensation" means
the sum of an estimate of future compensation, as compensation is
defined by Section 3207, plus an estimate of the amount necessary to
provide for the administration of claims, including legal costs.
  SEC. 11.  Section 3701 of the Labor Code is amended to read:
   3701.  (a) Each year every private self-insuring employer shall
secure incurred liabilities for the payment of compensation and the
performance of the obligations of employers imposed under this
chapter by renewing the prior year's security deposit or by making a
new deposit of security. If a new deposit is made, it shall be posted
within 60 days of the filing of the self-insured employer's annual
report with the director, but in no event later than May 1.
   (b) The solvency risk and security deposit amount for each private
and group self-insurer shall be acceptable to the Self-Insurers'
Security Fund.
   (c) Unless otherwise permitted by regulation, the deposit shall be
an amount equal to the self-insurer's projected losses, net of
specific excess insurance coverage, if any, and inclusive of incurred
but not reported (IBNR) liabilities, allocated loss adjustment
expense, and unallocated loss adjustment expense, calculated as of
December 31 of each year. The calculation of projected losses and
expenses shall be reflected in a written actuarial report that
projects ultimate liabilities of the private self-insured employer at
the expected actuarial confidence level, to ensure that all claims
and associated costs are recognized. The written actuarial report
shall be prepared by an actuary meeting the qualifications prescribed
by the director in regulation.
   (d) In determining the amount of the deposit required to secure
incurred liabilities for the payment of compensation and the
performance of obligations of a self-insured employer imposed under
this chapter, the director shall offset estimated future liabilities
for the same claims covered by a self-insured plan under the federal
Longshore and Harbor Workers' Compensation Act (33 U.S.C. Sec. 901
                                               et seq.), but in no
event shall the offset exceed the estimated future liabilities for
the claims under this chapter.
   (e) The director may only accept as security, and the employer
shall deposit as security, cash, securities, surety bonds, or
irrevocable letters of credit in any combination the director, in his
or her discretion, deems adequate security. The current deposit
shall include any amounts covered by terminated surety bonds or
excess insurance policies, as shall be set forth in regulations
adopted by the director pursuant to Section 3702.10.
   (f) Surety bonds, irrevocable letters of credit, and documents
showing issuance of any irrevocable letter of credit shall be
deposited with, and be in a form approved by, the director, shall be
exonerated only according to its terms and, in no event, by the
posting of additional security.
   (g) The director may accept as security a joint security deposit
that secures an employer's obligation under this chapter and that
also secures that employer's obligations under the federal Longshore
and Harbor Workers' Compensation Act.
   (h) The liability of the Self-Insurers' Security Fund, with
respect to any claims brought under both this chapter and under the
federal Longshore and Harbor Workers' Compensation Act, to pay for
shortfalls in a security deposit shall be limited to the amount of
claim liability owing the employee under this chapter offset by the
amount of any claim liability owing under the federal Longshore and
Harbor Workers' Compensation Act, but in no event shall the liability
of the fund exceed the claim liability under this chapter. The
employee shall be entitled to pursue recovery under either or both
the state and federal programs.
   (i) Securities shall be deposited on behalf of the director by the
self-insured employer with the Treasurer. Securities shall be
accepted by the Treasurer for deposit and shall be withdrawn only
upon written order of the director.
   (j) Cash shall be deposited in a financial institution approved by
the director, and in the account assigned to the director. Cash
shall be withdrawn only upon written order of the director.
   (k) Upon the sending by the director of a request to renew,
request to post, or request to increase or decrease a security
deposit, a perfected security interest is created in the private
self-insured's assets in favor of the director and the Self-Insurers'
Security Fund to the extent of any then unsecured portion of the
self-insured's incurred liabilities. That perfected security interest
is transferred to any cash or securities thereafter posted by the
private self-insured with the director and is released only upon
either of the following:
   (1) The acceptance by the director of a surety bond or irrevocable
letter of credit for the full amount of the incurred liabilities for
the payment of compensation.
   (2) The return of cash or securities by the director.
   The private self-insured employer loses all right, title, and
interest in, and any right to control, all assets or obligations
posted or left on deposit as security. The director may liquidate the
deposit as provided in Section 3701.5 and apply it to the
self-insured employer's incurred liabilities either directly or
through the Self-Insurers' Security Fund.
  SEC. 12.  Section 3701.3 of the Labor Code is amended to read:
   3701.3.  The director shall return to a private self-insured
employer all individual security determined, with the consent of the
Self-Insurers' Security Fund, to be in excess of that needed to
ensure the administration of the employer's self insuring, including
legal fees, and the payment of any future claims. This section shall
not apply to any security posted as part of the composite deposit, or
to any security turned over to the Self-Insurers' Security Fund
following an order of default under Section 3701.5.
  SEC. 13.  Section 3701.5 of the Labor Code is amended to read:
   3701.5.  (a) If the director determines that a private
self-insured employer has failed to pay workers' compensation as
required by this division, the security deposit shall be utilized to
administer and pay the employer's compensation obligations.
   (b) If the director determines the security deposit has not been
immediately made available for the payment of compensation, the
director shall determine the method of payment and claims
administration as appropriate, which may include, but is not limited
to, payment by a surety that issued the bond, or payment by an issuer
of an irrevocable letter of credit, and administration by a surety
or by an adjusting agency, or through the Self-Insurers' Security
Fund, or any combination thereof. If the director arranges for
administration and payment by any person other than the Self-Insurers'
Security Fund after a default is declared, the fund shall have no
responsibility for claims administration or payment of the claims.
   (c) If the director determines the payment of benefits and claims
administration shall be made through the Self-Insurers' Security
Fund, the fund shall commence payment of the private self-insured
employer's obligations for which it is liable under Section 3743
within 30 days of notification. Payments shall be made to claimants
whose entitlement to benefits can be ascertained by the fund, with or
without proceedings before the appeals board. Upon the assumption of
obligations by the fund pursuant to the director's determination,
the fund shall have a right to immediate possession of any posted
security and the custodian, surety, or issuer of any irrevocable
letter of credit shall turn over the security to the fund together
with the interest that has accrued since the date of the self-insured
employer's default or insolvency.
   (d) The payment of benefits by the Self-Insurers' Security Fund
from security deposit proceeds shall release and discharge any
custodian of the security deposit, surety, any issuer of a letter of
credit, and the self-insured employer, from liability to fulfill
obligations to provide those same benefits as compensation, but does
not release any person from any liability to the fund for full
reimbursement. Payment by a surety constitutes a full release of the
surety's liability under the bond to the extent of that payment, and
entitles the surety to full reimbursement by the principal or his or
her estate. Full reimbursement includes necessary attorney fees and
other costs and expenses, without prior claim or proceedings on the
part of the injured employee or other beneficiaries. Any decision or
determination made, or any settlement approved, by the director or by
the appeals board under subdivision (f) shall conclusively be
presumed valid and binding as to any and all known claims arising out
of the underlying dispute, unless an appeal is made within the time
limit specified in Section 5950.
   (e) The director shall advise the Self-Insurers' Security Fund
promptly after receipt of information indicating that a private
self-insured employer may be unable to meet its compensation
obligations. The director shall also advise the Self-Insurers'
Security Fund of all determinations and directives made or issued
pursuant to this section. All financial, actuarial, or claims
information received by the director from any self-insurer may be
shared by the director with the Self-Insurers' Security Fund.
   (f) Disputes concerning the posting, renewal, termination,
exoneration, or return of all or any portion of the security deposit,
or any liability arising out of the posting or failure to post
security, or adequacy of the security or reasonableness of
administrative costs, including legal fees, and arising between or
among a surety, the issuer of an agreement of assumption and
guarantee of workers' compensation liabilities, the issuer of a
letter of credit, any custodian of the security deposit, a
self-insured employer, or the Self-Insurers' Security Fund shall be
resolved by the director. An appeal from the director's decision or
determination may be taken to the appropriate superior court by
petition for writ of mandate. Payment of claims from the security
deposit or by the Self-Insurers' Security Fund shall not be stayed
pending the resolution of the disputes unless and until the superior
court issues a determination staying a payment of claims decision or
determination of the director.
  SEC. 14.  Section 3701.7 of the Labor Code is amended to read:
   3701.7.  Where any employer requesting coverage under a new or
existing certificate of consent to self-insure has had a period of
unlawful uninsurance, either for an applicant in its entirety or for
a subsidiary or member of a joint powers authority legally
responsible for its own workers' compensation obligations, the
following special conditions shall apply before the director may
determine if the requesting employer can operate under a certificate
of consent to self-insure:
   (a) The director may require a deposit of not less than 200
percent of the outstanding liabilities remaining unpaid at the time
of application, which had been incurred during the uninsurance
period.
   (b) At the discretion of the director, where a public or private
employer has been previously totally uninsured for workers'
compensation pursuant to Section 3700, the director may require an
additional deposit not to exceed 100 percent of the total outstanding
liabilities for the uninsured period, or the sum of two hundred
fifty thousand dollars ($250,000), whichever is greater.
   (c) In addition to the deposits required by subdivisions (a) and
(b), a penalty shall be paid to the Uninsured Employers Fund of 10
percent per year of the remaining unpaid liabilities, for every year
liabilities remain outstanding. In addition, an additional
application fee, not to exceed one thousand dollars ($1,000), plus
assessments, pursuant to Section 3702.5 and subdivision (b) of
Section 3745, may be imposed by the director and the Self-Insurers'
Security Fund, respectively, against private self-insured employers.
   (d) A certificate of consent to self-insure shall not be granted
to an applicant that has had a period of unlawful uninsurance without
the written approval of the Self-Insurers' Security Fund.
   (e) An employer may retrospectively insure the outstanding
liabilities arising out of the uninsured period, either before or
after an application for self-insurance has been approved. Upon proof
of insurance acceptable to the director, no deposit shall be
required for the period of uninsurance.
   The penalties to be paid to the Uninsured Employers Fund shall
consist of a one-time payment of 20 percent of the outstanding
liabilities for the period of uninsurance remaining unpaid at the
time of application, in lieu of any other penalty for being
unlawfully uninsured pursuant to this code.
   (f) In the case of a subsidiary which meets all of the following
conditions, a certificate shall issue without penalty:
   (1) The subsidiary has never had a certificate revoked for reasons
set forth in Section 3702.
   (2) Employee injuries were reported to the Office of
Self-Insurance Plans in annual reports.
   (3) The security deposit of the certificate holder was calculated
to include the entity's compensation liabilities.
   (4) Application for a separate certificate or corrected
certificate is made within 90 days and completed within 180 days of
notice from the Office of Self-Insurance Plans. If the requirements
of this subdivision are not met, all penalties pursuant to
subdivision (b) of Section 3702.9 shall apply.
   (g) The director may approve an application on the date the
application is substantially completed, subject to completion
requirements, and may make the certificate effective on an earlier
date, covering a period of uninsurance, if the employer complies with
the requirements of this section.
   (h) Any decision by the director may be contested by an entity in
the manner provided in Section 3701.5.
   (i) Nothing in this section shall abrogate the right of an
employee to bring an action against an uninsured employer pursuant to
Section 3706.
   (j) Nothing in this statute shall abrogate the right of a
self-insured employer to insure against known or unknown claims
arising out of the self-insurance period.
  SEC. 15.  Section 3701.8 of the Labor Code is amended to read:
   3701.8.  (a) As an alternative to each private self-insuring
employer securing its own incurred liabilities as provided in Section
3701, the director may provide by regulation for an alternative
security system whereby all private self-insureds designated for full
participation by the director shall collectively secure their
aggregate incurred liabilities through the Self-Insurers' Security
Fund. The regulations shall provide for the director to set a total
security requirement for these participating self-insured employers
based on a review of their annual reports and any other self-insurer
information as may be specified by the director. The Self-Insurers'
Security Fund shall propose to the director a combination of cash and
securities, surety bonds, irrevocable letters of credit, insurance,
or other financial instruments or guarantees satisfactory to the
director sufficient to meet the security requirement set by the
director. Upon approval by the director and posting by the
Self-Insurers' Security Fund on or before the date set by the
director, that combination shall be the composite deposit. The
noncash elements of the composite deposit may be one-year or
multiple-year instruments. If the Self-Insurers' Security Fund fails
to post the required composite deposit by the date set by the
director, then within 30 days after that date, each private
self-insuring employer shall secure its incurred liabilities in the
manner required by Section 3701. Self-insured employers not
designated for full participation by the director shall meet all
requirements as may be set by the director pursuant to subdivision
(g).
   (b) In order to provide for the composite deposit approved by the
director, the Self-Insurers' Security Fund shall assess, in a manner
approved by the director, each fully participating private
self-insuring employer a deposit assessment payable within 30 days of
assessment. The amount of the deposit assessment charged each fully
participating self-insured employer shall be set by the Self-Insurers'
Security Fund, based on its reasonable consideration of all the
following factors:
   (1) The total amount needed to provide the composite deposit.
   (2) The self-insuring employer's paid or incurred liabilities as
reflected in its annual report.
   (3) The financial strength and creditworthiness of the
self-insured.
   (4) Any other reasonable factors as may be authorized by
regulation.
   (5) In order to make a composite deposit proposal to the director
and set the deposit assessment to be charged each fully participating
self-insured, the Self-Insurers' Security Fund shall have access to
the annual reports and other information submitted by all
self-insuring employers to the director, under terms and conditions
as may be set by the director, to preserve the confidentiality of the
self-insured's financial information.
   (c) Upon payment of the deposit assessment and except as provided
herein, the self-insuring employer loses all right, title, and
interest in the deposit assessment. To the extent that in any one
year the deposit assessment paid by self-insurers is not exhausted in
the purchase of securities, surety bonds, irrevocable letters of
credit, insurance, or other financial instruments to post with the
director as part of the composite deposit, the surplus shall remain
posted with the director, and the principal and interest earned on
that surplus shall remain as part of the composite deposit in
subsequent years. In the event that in any one year the Self-Insurers'
Security Fund fails to post the required composite deposit by the
date set the by the director, and the director requires each private
self-insuring employer to secure its incurred liabilities in the
manner required by Section 3701, then any deposit assessment paid in
that year shall be refunded to the self-insuring employer that paid
the deposit assessment.
   (d) If any private self-insuring employer objects to the
calculation, posting, or any other aspect of its deposit assessment,
upon payment of the assessment in the time provided, the employer
shall have the right to appeal the assessment to the director, who
shall have exclusive jurisdiction over this dispute. If any private
self-insuring employer fails to pay the deposit assessment in the
time provided, the director shall order the self-insuring employer to
pay a penalty of not less than 10 percent of its deposit assessment,
plus interest on any unpaid amount at the prejudgment rate, and to
post a separate security deposit in the manner provided by Section
3701. The penalty and interest shall be paid directly to the
Self-Insurers' Security Fund. The director may also revoke the
certificate of consent to self-insure of any self-insuring employer
who fails to pay the deposit assessment in the time provided.
   (e) Upon the posting by the Self-Insurers' Security Fund of the
composite deposit with the director, the deposit shall be held until
the director determines that a private self-insured employer has
failed to pay workers' compensation as required by this division, and
the director orders the Self-Insurers' Security Fund to commence
payment. Upon ordering the Self-Insurers' Security Fund to commence
payment, the director shall make available to the fund that portion
of the composite deposit necessary to pay the workers' compensation
benefits of the defaulting self-insuring employer. In the event
additional funds are needed in subsequent years to pay the workers'
compensation benefits of any self-insuring employer who defaulted in
earlier years, the director shall make available to the Self-Insurers'
Security Fund any portions of the composite deposit as may be needed
to pay those benefits. In making the deposit available to the
Self-Insurers' Security Fund, the director shall also allow any
amounts as may be reasonably necessary to pay for the administrative
and other activities of the fund.
   (f) The cash portion of the composite deposit shall be segregated
from all other funds held by the director, and shall be invested by
the director for the sole benefit of the Self-Insurers' Security Fund
and the injured workers of private self-insured employers, and may
not be used for any other purpose by the state. Alternatively, the
director, in his discretion, may allow the Self-Insurers' Security
Fund to hold, invest, and draw upon the cash portion of the composite
deposit as prescribed by regulation.
   (g) Notwithstanding any other provision of this section, the
director shall, by regulation, set minimum credit, financial, or
other conditions that a private self-insured must meet in order to be
a fully participating self-insurer in the alternative security
system. In the event any private self-insuring employer is unable to
meet the conditions set by the director, or upon application of the
Self-Insurers' Security Fund to exclude an employer for credit or
financial reasons, the director shall exclude the self-insuring
employer from full participation in the alternative security system.
In the event a self-insuring employer is excluded from full
participation, the nonfully participating private self-insuring
employer shall post a separate security deposit in the manner
provided by Section 3701 and pay a deposit assessment set by the
director. Alternatively, the director may order that the nonfully
participating private self-insuring employer post a separate security
deposit to secure a portion of its incurred liabilities and pay a
deposit assessment set by the director.
   (h) An employer who self-insures through group self-insurance and
an employer whose certificate to self-insure has been revoked may
fully participate in the alternative security system if both the
director and the Self-Insurers' Security Fund approve the
participation of the self-insurer. If not approved for full
participation, or if an employer is issued a certificate to
self-insure after the composite deposit is posted, the employer shall
satisfy the requirements of subdivision (g) for nonfully
participating private self-insurers.
   (i) At all times, a self-insured employer shall have secured its
incurred workers' compensation liabilities either in the manner
required by Section 3701 or through the alternative security system,
and there shall not be any lapse in the security.
  SEC. 16.  Section 3701.9 is added to the Labor Code, to read:
   3701.9.  (a) A certificate of consent to self-insure shall not be
issued after January 1, 2013, to any of the following:
   (1) A professional employer organization.
   (2) A leasing employer, as defined in Section 606.5 of the
Unemployment Insurance Code.
   (3) A temporary services employer, as defined in Section 606.5 of
the Unemployment Insurance Code.
   (4) Any employer, regardless of name or form of organization,
which the director determines to be in the business of providing
employees to other employers.
   (b) A certificate of consent to self-insure that has been issued
to any employer described in subdivision (a) shall be revoked by the
director not later than January 1, 2015.
  SEC. 17.  Section 3702 of the Labor Code is amended to read:
   3702.  (a) A certificate of consent to self-insure may be revoked
by the director at any time for good cause after a hearing. Good
cause includes, among other things, a recommendation by the
Self-Insurers' Security Fund to revoke the certificate of consent,
the impairment of the solvency of the employer to the extent that
there is a marked reduction of the employer's financial strength,
failure to maintain a security deposit as required by Section 3701,
failure to pay assessments of the Self-Insurers' Security Fund,
frequent or flagrant violations of state safety and health orders,
the failure or inability of the employer to fulfill his or her
obligations, or any of the following practices by the employer or his
or her agent in charge of the administration of obligations under
this division:
   (1) Habitually and as a matter of practice and custom inducing
claimants for compensation to accept less than the compensation due
or making it necessary for them to resort to proceedings against the
employer to secure compensation due.
   (2) Where liability for temporary disability indemnity is not in
dispute, intentionally failing to pay temporary disability indemnity
without good cause in order to influence the amount of permanent
disability benefits due.
   (3) Intentionally refusing to comply with known and legally
indisputable compensation obligations.
   (4) Discharging or administering his or her compensation
obligations in a dishonest manner.
   (5) Discharging or administering his or her compensation
obligations in such a manner as to cause injury to the public or
those dealing with the employer.
   (b) Where revocation is in part based upon the director's finding
of a marked reduction of the employer's financial strength or the
failure or inability of the employer to fulfill his or her
obligations, or a practice of discharging obligations in a dishonest
manner, it is a condition precedent to the employer's challenge or
appeal of the revocation that the employer have in effect insurance
against liability to pay compensation.
   (c) The director may hold a hearing to determine whether good
cause exists to revoke an employer's certificate of consent to
self-insure if the employer is cited for a willful, or repeat serious
violation of the standard adopted pursuant to Section 6401.7 and the
citation has become final.
  SEC. 18.  Section 3702.2 of the Labor Code is amended to read:
   3702.2.  (a) All self-insured employers shall file a self-insurer'
s annual report in a form prescribed by the director. Public
self-insured employers shall provide detailed information as the
director determines necessary to evaluate the costs of
administration, workers' compensation benefit expenditures, and
solvency and performance of the public self-insured employer workers'
compensation programs, on a schedule established by the director.
The director may grant deferrals to public self-insured employers
that are not yet capable of accurately reporting the information
required, giving priority to bringing larger programs into compliance
with the more detailed reporting.
   (b) To enable the director to determine the amount of the security
deposit required by subdivision (c) of Section 3701, the annual
report of a self-insured employer who has self-insured both state and
federal workers' compensation liability shall also set forth (1) the
amount of all compensation liability incurred, paid-to-date, and
estimated future liability under both this chapter and under the
federal Longshore and Harbor Workers' Compensation Act (33 U.S.C.
Sec. 901 et seq.), and (2) the identity and the amount of the
security deposit securing the employer's liability under state and
federal self-insured programs.
   (c) The director shall annually prepare an aggregated summary of
all self-insured employer liability to pay compensation reported on
the self-insurers' employers annual reports, including a separate
summary for public and private employer self-insurers. The summaries
shall be in the same format as the individual self-insured employers
are required to report that liability on the employer self-insurer's
annual report forms prescribed by the director. The aggregated
summaries shall be made available to the public on the self-insurance
section of the department's Internet Web site. Nothing in this
subdivision shall authorize the director to release or make available
information that is aggregated by industry or business type, that
identifies individual self-insured filers, or that includes any
individually identifiable claimant information.
   (d) The director may release a copy, or make available an
electronic version, of the data contained in any public sector
employer self-insurer's annual reports received from an individual
public entity self-insurer or from a joint powers authority employer
and its membership. However, the release of any annual report
information by the director shall not include any portion of any
listing of open indemnity claims that contains individually
identifiable claimant information, or any portion of excess insurance
coverage information that contains any individually identifiable
claimant information.
  SEC. 19.  Section 3702.4 is added to the Labor Code, to read:
       3702.4.  (a) The Commission on Health and Safety and Workers'
Compensation shall conduct an examination of the public self-insured
program and publish, on its Internet Web site, a preliminary draft
report and recommendations for improvement of the program no later
than October 1, 2013, and a final report no later than December 31,
2013. The recommendations shall address costs of administration,
workers' compensation benefit expenditures, and solvency and
performance of public self-insured workers' compensation programs, as
well as provisions in the event of insolvencies.
   (b) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
  SEC. 20.  Section 3702.5 of the Labor Code is amended to read:
   3702.5.  (a) (1) The cost of administration of the public
self-insured program by the Director of Industrial Relations shall be
borne by the Workers' Compensation Administration Revolving Fund.
   (2) The cost of administration of the private self-insured program
by the Director of Industrial Relations shall be borne by the
private self-insurers through payment of certificate fees which shall
be established by the director in broad ranges based on the
comparative numbers of employees insured by the private self-insurers
and the number of adjusting locations. The director may assess other
fees as necessary to cover the costs of special audits or services
rendered to private self-insured employers. The director may assess a
civil penalty for late filing as set forth in subdivision (a) of
Section 3702.9.
   (b) All revenues from fees and penalties paid by private
self-insured employers shall be deposited into the Self-Insurance
Plans Fund, which is hereby created for the administration of the
private self-insurance program. Any unencumbered balance in
subdivision (a) of Item 8350-001-001 of the Budget Act of 1983 shall
be transferred to the Self-Insurance Plans Fund. The director shall
annually eliminate any unused surplus in the Self-Insurance Plans
Fund by reducing certificate fee assessments by an appropriate amount
in the subsequent year. Moneys paid into the Self-Insurance Plans
Fund for administration of the private self-insured program shall not
be used by any other department or agency or for any purpose other
than administration of the private self-insurance program. Detailed
accountability shall be maintained by the director for any security
deposit or other funds held in trust for the Self-Insurer's Security
Fund in the Self-Insurance Plans Fund.
   Moneys held by the director shall be invested in the Surplus Money
Investment Fund. Interest shall be paid on all moneys transferred to
the General Fund in accordance with Section 16310 of the Government
Code. The Treasurer's and Controller's administrative costs may be
charged to the interest earnings upon approval of the director.
  SEC. 21.  Section 3702.8 of the Labor Code is amended to read:
   3702.8.  (a) Employers who have ceased to be self-insured
employers shall discharge their continuing obligations to secure the
payment of workers' compensation that accrued during the period of
self-insurance, for purposes of Sections 3700, 3700.5, 3706, and
3715, and shall comply with all of the following obligations of
current certificate holders:
   (1) Filing annual reports as deemed necessary by the director to
carry out the requirements of this chapter.
   (2) In the case of a private employer, depositing and maintaining
a security deposit for accrued liability for the payment of any
workers' compensation that may become due, pursuant to subdivision
(b) of Section 3700 and Section 3701, except as provided in
subdivision (c).
   (3) Paying within 30 days all assessments of which notice is sent,
pursuant to subdivision (b) of Section 3745, within 36 months from
the last day the employer's certificate of self-insurance was in
effect. Assessments shall be based on the benefits paid by the
employer during the last full calendar year of self-insurance on
claims incurred during that year.
   (b) In addition to proceedings to establish liabilities and
penalties otherwise provided, a failure to comply may be the subject
of a proceeding before the director. An appeal from the director's
determination shall be taken to the appropriate superior court by
petition for writ of mandate.
   (c) Notwithstanding subdivision (a), any employer who is currently
self-insured or who has ceased to be self-insured may purchase a
special excess workers' compensation policy to discharge any or all
of the employer's continuing obligations as a self-insurer to pay
compensation or to secure the payment of compensation.
   (1) The special excess workers' compensation insurance policy
shall be issued by an insurer authorized to transact workers'
compensation insurance in this state.
   (2) Each carrier's special excess workers' compensation policy
shall be approved as to form and substance by the Insurance
Commissioner, and rates for special excess workers' compensation
insurance shall be subject to the filing requirements set forth in
Section 11735 of the Insurance Code.
   (3) Each special excess workers' compensation insurance policy
shall be submitted by the employer to the director. The director
shall adopt and publish minimum insurer financial rating standards
for companies issuing special excess workers' compensation policies.
   (4) Upon acceptance by the director, a special excess workers'
compensation policy shall provide coverage for all or any portion of
the purchasing employer's claims for compensation arising out of
injuries occurring during the period the employer was self-insured in
accordance with Sections 3755, 3756, and 3757 of the Labor Code and
Sections 11651 and 11654 of the Insurance Code. The director's
acceptance shall discharge the Self-Insurer's Security Fund, without
recourse or liability to the Self-Insurer's Security Fund, of any
continuing liability for the claims covered by the special excess
workers' compensation insurance policy.
   (5) For public employers, no security deposit or financial
guarantee bond or other security shall be required. The director
shall set minimum financial rating standards for insurers issuing
special excess workers' compensation policies for public employers.
   (d) (1) In order for the special excess workers' compensation
insurance policy to discharge the full obligations of a private
employer to maintain a security deposit with the director for the
payment of self-insured claims, applicable to the period to be
covered by the policy, the special excess policy shall provide
coverage for all claims for compensation arising out of that
liability. The employer shall maintain the required deposit for the
period covered by the policy with the director for a period of three
years after the issuance date of the special excess policy.
   (2) If the special workers' compensation insurance policy does not
provide coverage for all of the continuing obligations for which the
private self-insured employer is liable, to the extent the employer'
s obligations are not covered by the policy a private employer shall
maintain the required deposit with the director. In addition, the
employer shall maintain with the director the required deposit for
the period covered by the policy for a period of three years after
the issuance date of the special excess policy.
   (e) The director shall adopt regulations pursuant to Section
3702.10 that are reasonably necessary to implement this section in
order to reasonably protect injured workers, employers, the
Self-Insurers' Security Fund, and the California Insurance Guarantee
Association.
   (f) The posting of a special excess workers' compensation
insurance policy with the director shall discharge the obligation of
the Self-Insurer's Security Fund pursuant to Section 3744 to pay
claims in the event of an insolvency of a private employer to the
extent of coverage of compensation liabilities under the special
excess workers' compensation insurance policy. The California
Insurance Guarantee Association and the Self-Insurers' Security Fund
shall be advised by the director whenever a special excess workers'
compensation insurance policy is posted.
  SEC. 22.  Section 3702.10 of the Labor Code is amended to read:
   3702.10.  The director, in accordance with Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code, may adopt, amend, and repeal rules and regulations
reasonably necessary to carry out the purposes of Section 129 and
Article 1 (commencing with Section 3700), Article 2 (commencing with
Section 3710), and Article 2.5 (commencing with Section 3740). This
authorization includes, but is not limited to, the adoption of
regulations to do all of the following:
   (a) Specifying what constitutes ability to self-insure and to pay
any compensation which may become due under Section 3700.
   (b) Specifying what constitutes a marked reduction of an employer'
s financial strength.
   (c) Specifying what constitutes a failure or inability to fulfill
the employer's obligations under Section 3702.
   (d) Interpreting and defining the terms used.
   (e) Establishing procedures and standards for hearing and
determinations, and providing for those determinations to be appealed
to the appeals board.
   (f) Specifying the standards, form, and content of agreements,
forms, and reports between parties who have obligations pursuant to
this chapter.
   (g) Providing for the combinations and relative liabilities of
security deposits, assumptions, and guarantees used pursuant to this
chapter.
   (h) Disclosing otherwise confidential financial information
concerning self-insureds to courts or the Self-Insurers' Security
Fund and specifying appropriate safeguards for that information.
   (i) Requiring an amount to be added to each security deposit to
secure the cost of administration of claims and to pay all legal
costs.
   (j) Regulating the workers' compensation self-insurance
obligations of self-insurance groups and professional employer
organizations, leasing employers as defined in Section 606.5 of the
Unemployment Insurance Code, or temporary services employers, as
defined in Section 606.5 of the Unemployment Insurance Code, holding
certificates of consent to self-insure.
  SEC. 23.  Section 3742 of the Labor Code is amended to read:
   3742.  (a) The Self-Insurers' Security Fund shall be established
as a Nonprofit Mutual Benefit Corporation pursuant to Part 3
(commencing with Section 7110) of Division 2 of Title 1 of the
Corporations Code and this article. If any provision of the Nonprofit
Mutual Benefit Corporation Law conflicts with any provision of this
article, the provisions of this article shall apply. Each private
self-insurer shall participate as a member in the fund, unless its
liabilities have been turned over to the fund pursuant to Section
3701.5, at which time its membership in the fund is relinquished.
   (b) The fund shall be governed by a board of trustees with no more
than eight members, as established by the bylaws of the
Self-Insurers' Security Fund. The director shall hold ex officio
status, with full powers equal to those of a trustee, except that the
director shall not have a vote. The director, or a delegate
authorized in writing to act as the director's representative on the
board of trustees, shall carry out exclusively the responsibilities
set forth in Division 1 (commencing with Section 50) through Division
4 (commencing with Section 3200) and shall not have the obligations
of a trustee under the Nonprofit Mutual Benefit Corporation Law. The
fund shall adopt bylaws to segregate the director from all matters
that may involve fund litigation against the department or fund
participation in legal proceedings before the director. Although not
voting, the director or a delegate authorized in writing to represent
the director, shall be counted toward a quorum of trustees. The
remaining trustees shall be representatives of private self-insurers.
The self-insurer trustees shall be elected by the members of the
fund, each member having one vote. Trustees shall be elected to
four-year terms, and shall serve until their successors are elected
and assume office pursuant to the bylaws of the fund.
   (c) The fund shall establish bylaws as are necessary to effectuate
the purposes of this article and to carry out the responsibilities
of the fund, including, but not limited to, any obligations imposed
by the director pursuant to Section 3701.8. The fund may carry out
its responsibilities directly or by contract, and may purchase
services and insurance and borrow funds as it deems necessary for the
protection of the members and their employees. The fund may receive
confidential information concerning the financial condition of
self-insured employers whose liabilities to pay compensation may
devolve upon it and shall adopt bylaws to prevent dissemination of
that information.
   (d) The director may also require fund members to subscribe to
financial instruments or guarantees to be posted with the director in
order to satisfy the security requirements set by the director
pursuant to Section 3701.8.
  SEC. 24.  Section 3744 of the Labor Code is amended to read:
   3744.  (a) (1) The fund shall have the right and obligation to
obtain reimbursement from an insolvent self-insurer up to the amount
of the self-insurer's workers' compensation obligations paid and
assumed by the fund, including reasonable administrative and legal
costs. This right includes, but is not limited to, a right to claim
for wages and other necessities of life advanced to claimants as
subrogee of the claimants in any action to collect against the
self-insured as debtor. For purposes of this section, "insolvent
self-insurer" includes the entity to which the certificate of consent
to self-insure was issued, any guarantor of the entity's liabilities
under the certificate, any member of a self-insurance group to which
the certificate was issued, and any employer who obtained employees
from a self-insured employer under subdivision (d) of Section 3602.
   (2) The Legislature finds and declares that the amendments made to
this subdivision by the act adding this paragraph are declaratory of
existing law.
   (b) The fund shall have the right and obligation to obtain from
the security deposit of an insolvent self-insurer the amount of the
self-insurer's compensation obligations, including reasonable
administrative and legal costs, paid or assumed by the fund.
Reimbursement of administrative costs, including legal costs, shall
be subject to approval by a majority vote of the fund's trustees. The
fund shall be a party in interest in any action to obtain the
security deposit for the payment of compensation obligations of an
insolvent self-insurer.
   (c) The fund shall have the right to bring an action against any
person to recover compensation paid and liability assumed by the
fund, including, but not limited to, any excess insurance carrier of
the self-insured employer, and any person whose negligence or breach
of any obligation contributed to any underestimation of the
self-insured employer's total accrued liability as reported to the
director.
   (d) The fund may be a party in interest in any action brought by
any other person seeking damages resulting from the failure of an
insolvent self-insurer to pay workers' compensation required pursuant
to this division.
   (e) At the election of the Self-Insurers' Security Fund, venue
shall be in the Superior Court for the State of California, County of
Sacramento, for any action under this section. All actions in which
the Self-Insurers' Security Fund and two or more members or former
members of one self-insurance group are parties shall be consolidated
if requested by the Self-Insurers' Security Fund.
  SEC. 25.  Section 3745 of the Labor Code is amended to read:
   3745.  (a) The fund shall maintain cash, readily marketable
securities, or other assets, or a line of credit, approved by the
director, sufficient to immediately continue the payment of the
compensation obligations of an insolvent self-insurer pending
assessment of the members. The director may establish the minimum
amount to be maintained by, or immediately available to, the fund for
this purpose.
   (b) The fund may assess each of its members a pro rata share of
the funding necessary to carry out the purposes of this article.
   (c) The trustees shall certify to the director the collection and
receipt of all moneys from assessments, noting any delinquencies. The
trustees shall take any action deemed appropriate to collect any
delinquent assessments.
  SEC. 26.  Section 3746 of the Labor Code is amended to read:
   3746.  The fund shall annually contract for an independent
certified audit of the financial activities of the fund. An annual
report on the financial status of the fund as of June 30 shall be
submitted to the director and to each member, or at the election of
the fund, posted on the fund's Internet Web site.
  SEC. 27.  Section 4061 of the Labor Code is amended to read:
   4061.  This section shall not apply to the employee's dispute of a
utilization review decision under Section 4610, nor to the employee'
s dispute of the medical provider network treating physician's
diagnosis or treatment recommendations under Sections 4616.3 and
4616.4.
   (a) Together with the last payment of temporary disability
indemnity, the employer shall, in a form prescribed by the
administrative director pursuant to Section 138.4, provide the
employee one of the following:
   (1) Notice either that no permanent disability indemnity will be
paid because the employer alleges the employee has no permanent
impairment or limitations resulting from the injury or notice of the
amount of permanent disability indemnity determined by the employer
to be payable. If the employer determines permanent disability
indemnity is payable, the employer shall advise the employee of the
amount determined payable and the basis on which the determination
was made, whether there is need for future medical care, and whether
an indemnity payment will be deferred pursuant to paragraph (2) of
subdivision (b) of Section 4650.
   (2) Notice that permanent disability indemnity may be or is
payable, but that the amount cannot be determined because the
employee's medical condition is not yet permanent and stationary. The
notice shall advise the employee that his or her medical condition
will be monitored until it is permanent and stationary, at which time
the necessary evaluation will be performed to determine the
existence and extent of permanent impairment and limitations for the
purpose of rating permanent disability and to determine whether there
will be the need for future medical care, or at which time the
employer will advise the employee of the amount of permanent
disability indemnity the employer has determined to be payable.
   (b) If either the employee or employer objects to a medical
determination made by the treating physician concerning the existence
or extent of permanent impairment and limitations or the need for
future medical care, and the employee is represented by an attorney,
a medical evaluation to determine permanent disability shall be
obtained as provided in Section 4062.2.
   (c) If either the employee or employer objects to a medical
determination made by the treating physician concerning the existence
or extent of permanent impairment and limitations or the need for
future medical care, and if the employee is not represented by an
attorney, the employer shall immediately provide the employee with a
form prescribed by the medical director with which to request
assignment of a panel of three qualified medical evaluators. Either
party may request a comprehensive medical evaluation to determine
permanent disability or the need for future medical care, and the
evaluation shall be obtained only by the procedure provided in
Section 4062.1.
   (d) (1) Within 30 days of receipt of a report from a qualified
medical evaluator who has evaluated an unrepresented employee, the
unrepresented employee or the employer may each request one
supplemental report seeking correction of factual errors in the
report. Any of these requests shall be made in writing. A request
made by the employer shall be provided to the employee, and a request
made by the employee shall be provided to the employer, insurance
carrier, or claims administrator at the time the request is sent to
the evaluator. A request for correction that is made by the employer
shall also inform the employee of the availability of information and
assistance officers to assist him or her in responding to the
request, if necessary.
   (2) The permanent disability rating procedure set forth in
subdivision (e) shall not be invoked by the unrepresented employee or
the employer when a request for correction pursuant to paragraph (1)
is pending.
   (e) The qualified medical evaluator who has evaluated an
unrepresented employee shall serve the comprehensive medical
evaluation and the summary form on the employee, employer, and the
administrative director. The unrepresented employee or the employer
may submit the treating physician's evaluation for the calculation of
a permanent disability rating. Within 20 days of receipt of the
comprehensive medical evaluation, the administrative director shall
calculate the permanent disability rating according to Section 4660
and serve the rating on the employee and employer.
   (f) Any comprehensive medical evaluation concerning an
unrepresented employee which indicates that part or all of an
employee's permanent impairment or limitations may be subject to
apportionment pursuant to Sections 4663 and 4664 shall first be
submitted by the administrative director to a workers' compensation
judge who may refer the report back to the qualified medical
evaluator for correction or clarification if the judge determines the
proposed apportionment is inconsistent with the law.
   (g) Within 30 days of receipt of the rating, if the employee is
unrepresented, the employee or employer may request that the
administrative director reconsider the recommended rating or obtain
additional information from the treating physician or medical
evaluator to address issues not addressed or not completely addressed
in the original comprehensive medical evaluation or not prepared in
accord with the procedures promulgated under paragraph (2) or (3) of
subdivision (j) of Section 139.2. This request shall be in writing,
shall specify the reasons the rating should be reconsidered, and
shall be served on the other party. If the administrative director
finds the comprehensive medical evaluation is not complete or not in
compliance with the required procedures, the administrative director
shall return the report to the treating physician or qualified
medical evaluator for appropriate action as the administrative
director instructs. Upon receipt of the treating physician's or
qualified medical evaluator's final comprehensive medical evaluation
and summary form, the administrative director shall recalculate the
permanent disability rating according to Section 4660 and serve the
rating, the comprehensive medical evaluation, and the summary form on
the employee and employer.
   (h) (1) If a comprehensive medical evaluation from the treating
physician or an agreed medical evaluator or a qualified medical
evaluator selected from a three-member panel resolves any issue so as
to require an employer to provide compensation, the employer shall
commence the payment of compensation, except as provided pursuant to
paragraph (2) of subdivision (b) of Section 4650, or promptly
commence proceedings before the appeals board to resolve the dispute.

   (2) If the employee and employer agree to a stipulated findings
and award as provided under Section 5702 or to compromise and release
the claim under Chapter 2 (commencing with Section 5000) of Part 3,
or if the employee wishes to commute the award under Chapter 3
(commencing with Section 5100) of Part 3, the appeals board shall
first determine whether the agreement or commutation is in the best
interests of the employee and whether the proper procedures have been
followed in determining the permanent disability rating. The
administrative director shall promulgate a form to notify the
employee, at the time of service of any rating under this section, of
the options specified in this subdivision, the potential advantages
and disadvantages of each option, and the procedure for disputing the
rating.
   (i) No issue relating to the existence or extent of permanent
impairment and limitations resulting from the injury may be the
subject of a declaration of readiness to proceed unless there has
first been a medical evaluation by a treating physician and by either
an agreed or qualified medical evaluator. With the exception of an
evaluation or evaluations prepared by the treating physician or
physicians, no evaluation of permanent impairment and limitations
resulting from the injury shall be obtained, except in accordance
with Section 4062.1 or 4062.2. Evaluations obtained in violation of
this prohibition shall not be admissible in any proceeding before the
appeals board.
  SEC. 28.  Section 4062 of the Labor Code is amended to read:
   4062.  (a) If either the employee or employer objects to a medical
determination made by the treating physician concerning any medical
issues not covered by Section 4060 or 4061 and not subject to Section
4610, the objecting party shall notify the other party in writing of
the objection within 20 days of receipt of the report if the
employee is represented by an attorney or within 30 days of receipt
of the report if the employee is not represented by an attorney.
These time limits may be extended for good cause or by mutual
agreement. If the employee is represented by an attorney, a medical
evaluation to determine the disputed medical issue shall be obtained
as provided in Section 4062.2, and no other medical evaluation shall
be obtained. If the employee is not represented by an attorney, the
employer shall immediately provide the employee with a form
prescribed by the medical director with which to request assignment
of a panel of three qualified medical evaluators, the evaluation
shall be obtained as provided in Section 4062.1, and no other medical
evaluation shall be obtained.
   (b) If the employee objects to a decision made pursuant to Section
4610 to modify, delay, or deny a request for authorization of a
medical treatment recommendation made by a treating physician, the
objection shall be resolved only in accordance with the independent
medical review process established in Section
                          4610.5.
   (c) If the employee objects to the diagnosis or recommendation for
medical treatment by a physician within the employer's medical
provider network established pursuant to Section 4616, the objection
shall be resolved only in accordance with the independent medical
review process established in Sections 4616.3 and 4616.4.
  SEC. 29.  Section 4062.2 of the Labor Code is amended to read:
   4062.2.  (a) Whenever a comprehensive medical evaluation is
required to resolve any dispute arising out of an injury or a claimed
injury occurring on or after January 1, 2005, and the employee is
represented by an attorney, the evaluation shall be obtained only as
provided in this section.
   (b) No earlier than the first working day that is at least 10 days
after the date of mailing of a request for a medical evaluation
pursuant to Section 4060 or the first working day that is at least 10
days after the date of mailing of an objection pursuant to Sections
4061 or 4062, either party may request the assignment of a
three-member panel of qualified medical evaluators to conduct a
comprehensive medical evaluation. The party submitting the request
shall designate the specialty of the medical evaluator, the specialty
of the medical evaluator requested by the other party if it has been
made known to the party submitting the request, and the specialty of
the treating physician. The party submitting the request form shall
serve a copy of the request form on the other party.
   (c) Within 10 days of assignment of the panel by the
administrative director, each party may strike one name from the
panel. The remaining qualified medical evaluator shall serve as the
medical evaluator. If a party fails to exercise the right to strike a
name from the panel within 10 days of assignment of the panel by the
administrative director, the other party may select any physician
who remains on the panel to serve as the medical evaluator. The
administrative director may prescribe the form, the manner, or both,
by which the parties shall conduct the selection process.
   (d) The represented employee shall be responsible for arranging
the appointment for the examination, but upon his or her failure to
inform the employer of the appointment within 10 days after the
medical evaluator has been selected, the employer may arrange the
appointment and notify the employee of the arrangements. The employee
shall not unreasonably refuse to participate in the evaluation.
   (e) If an employee has received a comprehensive medical-legal
evaluation under this section, and he or she later ceases to be
represented, he or she shall not be entitled to an additional
evaluation.
   (f) The parties may agree to an agreed medical evaluator at any
time, except as to issues subject to the independent medical review
process established pursuant to Section 4610.5. A panel shall not be
requested pursuant to subdivision (b) on any issue that has been
agreed to be submitted to or has been submitted to an agreed medical
evaluator unless the agreement has been canceled by mutual written
consent.
  SEC. 30.  Section 4062.3 of the Labor Code is amended to read:
   4062.3.  (a) Any party may provide to the qualified medical
evaluator selected from a panel any of the following information:
   (1) Records prepared or maintained by the employee's treating
physician or physicians.
   (2) Medical and nonmedical records relevant to determination of
the medical issue.
   (b) Information that a party proposes to provide to the qualified
medical evaluator selected from a panel shall be served on the
opposing party 20 days before the information is provided to the
evaluator. If the opposing party objects to consideration of
nonmedical records within 10 days thereafter, the records shall not
be provided to the evaluator. Either party may use discovery to
establish the accuracy or authenticity of nonmedical records prior to
the evaluation.
   (c) If an agreed medical evaluator is selected, as part of their
agreement on an evaluator, the parties shall agree on what
information is to be provided to the agreed medical evaluator.
   (d) In any formal medical evaluation, the agreed or qualified
medical evaluator shall identify the following:
   (1) All information received from the parties.
   (2) All information reviewed in preparation of the report.
   (3) All information relied upon in the formulation of his or her
opinion.
   (e) All communications with a qualified medical evaluator selected
from a panel before a medical evaluation shall be in writing and
shall be served on the opposing party 20 days in advance of the
evaluation. Any subsequent communication with the medical evaluator
shall be in writing and shall be served on the opposing party when
sent to the medical evaluator.
   (f) Communications with an agreed medical evaluator shall be in
writing, and shall be served on the opposing party when sent to the
agreed medical evaluator. Oral or written communications with
physician staff or, as applicable, with the agreed medical evaluator,
relative to nonsubstantial matters such as the scheduling of
appointments, missed appointments, the furnishing of records and
reports, and the availability of the report, do not constitute ex
parte communication in violation of this section unless the appeals
board has made a specific finding of an impermissible ex parte
communication.
   (g) Ex parte communication with an agreed medical evaluator or a
qualified medical evaluator selected from a panel is prohibited. If a
party communicates with the agreed medical evaluator or the
qualified medical evaluator in violation of subdivision (e), the
aggrieved party may elect to terminate the medical evaluation and
seek a new evaluation from another qualified medical evaluator to be
selected according to Section 4062.1 or 4062.2, as applicable, or
proceed with the initial evaluation.
   (h) The party making the communication prohibited by this section
shall be subject to being charged with contempt before the appeals
board and shall be liable for the costs incurred by the aggrieved
party as a result of the prohibited communication, including the cost
of the medical evaluation, additional discovery costs, and attorney'
s fees for related discovery.
   (i) Subdivisions (e) and (g) shall not apply to oral or written
communications by the employee or, if the employee is deceased, the
employee's dependent, in the course of the examination or at the
request of the evaluator in connection with the examination.
   (j) Upon completing a determination of the disputed medical issue,
the medical evaluator shall summarize the medical findings on a form
prescribed by the administrative director and shall serve the formal
medical evaluation and the summary form on the employee and the
employer. The medical evaluation shall address all contested medical
issues arising from all injuries reported on one or more claim forms
prior to the date of the employee's initial appointment with the
medical evaluator.
   (k) If, after a medical evaluation is prepared, the employer or
the employee subsequently objects to any new medical issue, the
parties, to the extent possible, shall utilize the same medical
evaluator who prepared the previous evaluation to resolve the medical
dispute.
   (l) No disputed medical issue specified in subdivision (a) may be
the subject of declaration of readiness to proceed unless there has
first been an evaluation by the treating physician or an agreed or
qualified medical evaluator.
  SEC. 31.  Section 4063 of the Labor Code is amended to read:
   4063.  If a formal medical evaluation from an agreed medical
evaluator or a qualified medical evaluator selected from a three
member panel resolves any issue so as to require an employer to
provide compensation, the employer shall, except as provided pursuant
to paragraph (2) of subdivision (b) of Section 4650, commence the
payment of compensation or file a declaration of readiness to
proceed.
  SEC. 32.  Section 4064 of the Labor Code is amended to read:
   4064.  (a) The employer shall be liable for the cost of each
reasonable and necessary comprehensive medical-legal evaluation
obtained by the employee pursuant to Sections 4060, 4061, and 4062.
Each comprehensive medical-legal evaluation shall address all
contested medical issues arising from all injuries reported on one or
more claim forms, except medical treatment recommendations, which
are subject to utilization review as provided by Section 4610, and
objections to utilization review determinations, which are subject to
independent medical review as provided by Section 4610.5.
   (b) For injuries occurring on or after January 1, 2003, if an
unrepresented employee obtains an attorney after the evaluation
pursuant to subdivision (d) of Section 4061 or subdivision (b) of
Section 4062 has been completed, the employee shall be entitled to
the same reports at employer expense as an employee who has been
represented from the time the dispute arose and those reports shall
be admissible in any proceeding before the appeals board.
   (c) Subject to Section 4906, if an employer files a declaration of
readiness to proceed and the employee is unrepresented at the time
the declaration of readiness to proceed is filed, the employer shall
be liable for any attorney's fees incurred by the employee in
connection with the declaration of readiness to proceed.
   (d) The employer shall not be liable for the cost of any
comprehensive medical evaluations obtained by the employee other than
those authorized pursuant to Sections 4060, 4061, and 4062. However,
no party is prohibited from obtaining any medical evaluation or
consultation at the party's own expense. In no event shall an
employer or employee be liable for an evaluation obtained in
violation of subdivision (b) of Section 4060. All comprehensive
medical evaluations obtained by any party shall be admissible in any
proceeding before the appeals board except as provided in Section
4060, 4061, 4062, 4062.1, or 4062.2.
  SEC. 33.  Section 4066 of the Labor Code is repealed.
  SEC. 34.  Section 4453 of the Labor Code is amended to read:
   4453.  (a) In computing average annual earnings for the purposes
of temporary disability indemnity and permanent total disability
indemnity only, the average weekly earnings shall be taken at:
   (1) Not less than one hundred twenty-six dollars ($126) nor more
than two hundred ninety-four dollars ($294), for injuries occurring
on or after January 1, 1983.
   (2) Not less than one hundred sixty-eight dollars ($168) nor more
than three hundred thirty-six dollars ($336), for injuries occurring
on or after January 1, 1984.
   (3) Not less than one hundred sixty-eight dollars ($168) for
permanent total disability, and, for temporary disability, not less
than the lesser of one hundred sixty-eight dollars ($168) or 1.5
times the employee's average weekly earnings from all employers, but
in no event less than one hundred forty-seven dollars ($147), nor
more than three hundred ninety-nine dollars ($399), for injuries
occurring on or after January 1, 1990.
   (4) Not less than one hundred sixty-eight dollars ($168) for
permanent total disability, and for temporary disability, not less
than the lesser of one hundred eighty-nine dollars ($189) or 1.5
times the employee's average weekly earnings from all employers, nor
more than five hundred four dollars ($504), for injuries occurring on
or after January 1, 1991.
   (5) Not less than one hundred sixty-eight dollars ($168) for
permanent total disability, and for temporary disability, not less
than the lesser of one hundred eighty-nine dollars ($189) or 1.5
times the employee's average weekly earnings from all employers, nor
more than six hundred nine dollars ($609), for injuries occurring on
or after July 1, 1994.
   (6) Not less than one hundred sixty-eight dollars ($168) for
permanent total disability, and for temporary disability, not less
than the lesser of one hundred eighty-nine dollars ($189) or 1.5
times the employee's average weekly earnings from all employers, nor
more than six hundred seventy-two dollars ($672), for injuries
occurring on or after July 1, 1995.
   (7) Not less than one hundred sixty-eight dollars ($168) for
permanent total disability, and for temporary disability, not less
than the lesser of one hundred eighty-nine dollars ($189) or 1.5
times the employee's average weekly earnings from all employers, nor
more than seven hundred thirty-five dollars ($735), for injuries
occurring on or after July 1, 1996.
   (8) Not less than one hundred eighty-nine dollars ($189), nor more
than nine hundred three dollars ($903), for injuries occurring on or
after January 1, 2003.
   (9) Not less than one hundred eighty-nine dollars ($189), nor more
than one thousand ninety-two dollars ($1,092), for injuries
occurring on or after January 1, 2004.
   (10) Not less than one hundred eighty-nine dollars ($189), nor
more than one thousand two hundred sixty dollars ($1,260), for
injuries occurring on or after January 1, 2005. For injuries
occurring on or after January 1, 2006, average weekly earnings shall
be taken at not less than one hundred eighty-nine dollars ($189), nor
more than one thousand two hundred sixty dollars ($1,260) or 1.5
times the state average weekly wage, whichever is greater. Commencing
on January 1, 2007, and each January 1 thereafter, the limits
specified in this paragraph shall be increased by an amount equal to
the percentage increase in the state average weekly wage as compared
to the prior year. For purposes of this paragraph, "state average
weekly wage" means the average weekly wage paid by employers to
employees covered by unemployment insurance as reported by the United
States Department of Labor for California for the 12 months ending
March 31 of the calendar year preceding the year in which the injury
occurred.
   (b) In computing average annual earnings for purposes of permanent
partial disability indemnity, except as provided in Section 4659,
the average weekly earnings shall be taken at:
   (1) Not less than seventy-five dollars ($75), nor more than one
hundred ninety-five dollars ($195), for injuries occurring on or
after January 1, 1983.
   (2) Not less than one hundred five dollars ($105), nor more than
two hundred ten dollars ($210), for injuries occurring on or after
January 1, 1984.
   (3) When the final adjusted permanent disability rating of the
injured employee is 15 percent or greater, but not more than 24.75
percent: (A) not less than one hundred five dollars ($105), nor more
than two hundred twenty-two dollars ($222), for injuries occurring on
or after July 1, 1994; (B) not less than one hundred five dollars
($105), nor more than two hundred thirty-one dollars ($231), for
injuries occurring on or after July 1, 1995; (C) not less than one
hundred five dollars ($105), nor more than two hundred forty dollars
($240), for injuries occurring on or after July 1, 1996.
   (4) When the final adjusted permanent disability rating of the
injured employee is 25 percent or greater, not less than one hundred
five dollars ($105), nor more than two hundred twenty-two dollars
($222), for injuries occurring on or after January 1, 1991.
   (5) When the final adjusted permanent disability rating of the
injured employee is 25 percent or greater but not more than 69.75
percent: (A) not less than one hundred five dollars ($105), nor more
than two hundred thirty-seven dollars ($237), for injuries occurring
on or after July 1, 1994; (B) not less than one hundred five dollars
($105), nor more than two hundred forty-six dollars ($246), for
injuries occurring on or after July 1, 1995; and (C) not less than
one hundred five dollars ($105), nor more than two hundred fifty-five
dollars ($255), for injuries occurring on or after July 1, 1996.
   (6) When the final adjusted permanent disability rating of the
injured employee is less than 70 percent: (A) not less than one
hundred fifty dollars ($150), nor more than two hundred seventy-seven
dollars and fifty cents ($277.50), for injuries occurring on or
after January 1, 2003; (B) not less than one hundred fifty-seven
dollars and fifty cents ($157.50), nor more than three hundred
dollars ($300), for injuries occurring on or after January 1, 2004;
(C) not less than one hundred fifty-seven dollars and fifty cents
($157.50), nor more than three hundred thirty dollars ($330), for
injuries occurring on or after January 1, 2005; and (D) not less than
one hundred ninety-five dollars ($195), nor more than three hundred
forty-five dollars ($345), for injuries occurring on or after January
1, 2006.
   (7) When the final adjusted permanent disability rating of the
injured employee is 70 percent or greater, but less than 100 percent:
(A) not less than one hundred five dollars ($105), nor more than two
hundred fifty-two dollars ($252), for injuries occurring on or after
July 1, 1994; (B) not less than one hundred five dollars ($105), nor
more than two hundred ninety-seven dollars ($297), for injuries
occurring on or after July 1, 1995; (C) not less than one hundred
five dollars ($105), nor more than three hundred forty-five dollars
($345), for injuries occurring on or after July 1, 1996; (D) not less
than one hundred fifty dollars ($150), nor more than three hundred
forty-five dollars ($345), for injuries occurring on or after January
1, 2003; (E) not less than one hundred fifty-seven dollars and fifty
cents ($157.50), nor more than three hundred seventy-five dollars
($375), for injuries occurring on or after January 1, 2004; (F) not
less than one hundred fifty-seven dollars and fifty cents ($157.50),
nor more than four hundred five dollars ($405), for injuries
occurring on or after January 1, 2005; and (G) not less than one
hundred ninety-five dollars ($195), nor more than four hundred five
dollars ($405), for injuries occurring on or after January 1, 2006.
   (8) For injuries occurring on or after January 1, 2013:
   (A) When the final adjusted permanent disability rating is less
than 55 percent, not less than two hundred forty dollars ($240) nor
more than three hundred forty-five dollars ($345).
   (B) When the final adjusted permanent disability rating is 55
percent or greater but less than 70 percent, not less than two
hundred forty dollars ($240) nor more than four hundred five dollars
($405).
   (C) When the final adjusted permanent disability rating is 70
percent or greater but less than 100 percent, not less than two
hundred forty dollars ($240) nor more than four hundred thirty-five
dollars ($435).
   (9) For injuries occurring on or after January 1, 2014, not less
than two hundred forty dollars ($240) nor more than four hundred
thirty-five dollars ($435).
   (c) Between the limits specified in subdivisions (a) and (b), the
average weekly earnings, except as provided in Sections 4456 to 4459,
shall be arrived at as follows:
   (1) Where the employment is for 30 or more hours a week and for
five or more working days a week, the average weekly earnings shall
be the number of working days a week times the daily earnings at the
time of the injury.
   (2) Where the employee is working for two or more employers at or
about the time of the injury, the average weekly earnings shall be
taken as the aggregate of these earnings from all employments
computed in terms of one week; but the earnings from employments
other than the employment in which the injury occurred shall not be
taken at a higher rate than the hourly rate paid at the time of the
injury.
   (3) If the earnings are at an irregular rate, such as piecework,
or on a commission basis, or are specified to be by week, month, or
other period, then the average weekly earnings mentioned in
subdivision (a) shall be taken as the actual weekly earnings averaged
for this period of time, not exceeding one year, as may conveniently
be taken to determine an average weekly rate of pay.
   (4) Where the employment is for less than 30 hours per week, or
where for any reason the foregoing methods of arriving at the average
weekly earnings cannot reasonably and fairly be applied, the average
weekly earnings shall be taken at 100 percent of the sum which
reasonably represents the average weekly earning capacity of the
injured employee at the time of his or her injury, due consideration
being given to his or her actual earnings from all sources and
employments.
   (d) Every computation made pursuant to this section beginning
January 1, 1990, shall be made only with reference to temporary
disability or the permanent disability resulting from an original
injury sustained after January 1, 1990. However, all rights existing
under this section on January 1, 1990, shall be continued in force.
Except as provided in Section 4661.5, disability indemnity benefits
shall be calculated according to the limits in this section in effect
on the date of injury and shall remain in effect for the duration of
any disability resulting from the injury.
  SEC. 35.  Section 4600 of the Labor Code is amended to read:
   4600.  (a) Medical, surgical, chiropractic, acupuncture, and
hospital treatment, including nursing, medicines, medical and
surgical supplies, crutches, and apparatuses, including orthotic and
prosthetic devices and services, that is reasonably required to cure
or relieve the injured worker from the effects of his or her injury
shall be provided by the employer. In the case of his or her neglect
or refusal reasonably to do so, the employer is liable for the
reasonable expense incurred by or on behalf of the employee in
providing treatment.
   (b) As used in this division and notwithstanding any other
provision of law, medical treatment that is reasonably required to
cure or relieve the injured worker from the effects of his or her
injury means treatment that is based upon the guidelines adopted by
the administrative director pursuant to Section 5307.27.
   (c) Unless the employer or the employer's insurer has established
or contracted with a medical provider network as provided for in
Section 4616, after 30 days from the date the injury is reported, the
employee may be treated by a physician of his or her own choice or
at a facility of his or her own choice within a reasonable geographic
area. A chiropractor shall not be a treating physician after the
employee has received the maximum number of chiropractic visits
allowed by subdivision (d) of Section 4604.5.
   (d) (1) If an employee has notified his or her employer in writing
prior to the date of injury that he or she has a personal physician,
the employee shall have the right to be treated by that physician
from the date of injury if the employee has health care coverage for
nonoccupational injuries or illnesses on the date of injury in a
plan, policy, or fund as described in subdivisions (b), (c), and (d)
of Section 4616.7.
   (2) For purposes of paragraph (1), a personal physician shall meet
all of the following conditions:
   (A) Be the employee's regular physician and surgeon, licensed
pursuant to Chapter 5 (commencing with Section 2000) of Division 2 of
the Business and Professions Code.
   (B) Be the employee's primary care physician and has previously
directed the medical treatment of the employee, and who retains the
employee's medical records, including his or her medical history.
"Personal physician" includes a medical group, if the medical group
is a single corporation or partnership composed of licensed doctors
of medicine or osteopathy, which operates an integrated
multispecialty medical group providing comprehensive medical services
predominantly for nonoccupational illnesses and injuries.
   (C) The physician agrees to be predesignated.
   (3) If the employee has health care coverage for nonoccupational
injuries or illnesses on the date of injury in a health care service
plan licensed pursuant to Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code, and the employer is
notified pursuant to paragraph (1), all medical treatment,
utilization review of medical treatment, access to medical treatment,
and other medical treatment issues shall be governed by Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code. Disputes regarding the provision of medical treatment shall be
resolved pursuant to Article 5.55 (commencing with Section 1374.30)
of Chapter 2.2 of Division 2 of the Health and Safety Code.
   (4) If the employee has health care coverage for nonoccupational
injuries or illnesses on the date of injury in a group health
insurance policy as described in Section 4616.7, all medical
treatment, utilization review of medical treatment, access to medical
treatment, and other medical treatment issues shall be governed by
the applicable provisions of the Insurance Code.
   (5) The insurer may require prior authorization of any
nonemergency treatment or diagnostic service and may conduct
reasonably necessary utilization review pursuant to Section 4610.
   (6) An employee shall be entitled to all medically appropriate
referrals by the personal physician to other physicians or medical
providers within the nonoccupational health care plan. An employee
shall be entitled to treatment by physicians or other medical
providers outside of the nonoccupational health care plan pursuant to
standards established in Article 5 (commencing with Section 1367) of
Chapter 2.2 of Division 2 of the Health and Safety Code.
   (e) (1) When at the request of the employer, the employer's
insurer, the administrative director, the appeals board, or a workers'
compensation administrative law judge, the employee submits to
examination by a physician, he or she shall be entitled to receive,
in addition to all other benefits herein provided, all reasonable
expenses of transportation, meals, and lodging incident to reporting
for the examination, together with one day of temporary disability
indemnity for each day of wages lost in submitting to the
examination.
   (2) Regardless of the date of injury, "reasonable expenses of
transportation" includes mileage fees from the employee's home to the
place of the examination and back at the rate of twenty-one cents
($0.21) a mile or the mileage rate adopted by the Director of Human
Resources pursuant to Section 19820 of the Government Code, whichever
is higher, plus any bridge tolls. The mileage and tolls shall be
paid to the employee at the time he or she is given notification of
the time and place of the examination.
   (f) When at the request of the employer, the employer's insurer,
the administrative director, the appeals board, or a workers'
compensation administrative law judge, an employee submits to
examination by a physician and the employee does not proficiently
speak or understand the English language, he or she shall be entitled
to the services of a qualified
            interpreter in accordance with conditions and a fee
schedule prescribed by the administrative director. These services
shall be provided by the employer. For purposes of this section,
"qualified interpreter" means a language interpreter certified, or
deemed certified, pursuant to Article 8 (commencing with Section
11435.05) of Chapter 4.5 of Part 1 of Division 3 of Title 2 of, or
Section 68566 of, the Government Code.
   (g) If the injured employee cannot effectively communicate with
his or her treating physician because he or she cannot proficiently
speak or understand the English language, the injured employee is
entitled to the services of a qualified interpreter during medical
treatment appointments. To be a qualified interpreter for purposes of
medical treatment appointments, an interpreter is not required to
meet the requirements of subdivision (f), but shall meet any
requirements established by rule by the administrative director that
are substantially similar to the requirements set forth in Section
1367.04 of the Health and Safety Code. The administrative director
shall adopt a fee schedule for qualified interpreter fees in
accordance with this section. Upon request of the injured employee,
the employer or insurance carrier shall pay for interpreter services.
An employer shall not be required to pay for the services of an
interpreter who is not certified or is provisionally certified by the
person conducting the medical treatment or examination unless either
the employer consents in advance to the selection of the individual
who provides the interpreting service or the injured worker requires
interpreting service in a language other than the languages
designated pursuant to Section 11435.40 of the Government Code.
   (h) Home health care services shall be provided as medical
treatment only if reasonably required to cure or relieve the injured
employee from the effects of his or her injury and prescribed by a
physician and surgeon licensed pursuant to Chapter 5 (commencing with
Section 2000) of Division 2 of the Business and Professions Code,
and subject to Section 5307.1 or 5703.8. The employer shall not be
liable for home health care services that are provided more than 14
days prior to the date of the employer's receipt of the physician's
prescription.
  SEC. 36.  Section 4603.2 of the Labor Code is amended to read:
   4603.2.  (a) (1) Upon selecting a physician pursuant to Section
4600, the employee or physician shall notify the employer of the name
and address, including the name of the medical group, if applicable,
of the physician. The physician shall submit a report to the
employer within five working days from the date of the initial
examination, as required by Section 6409, and shall submit periodic
reports at intervals that may be prescribed by rules and regulations
adopted by the administrative director.
   (2) If the employer objects to the employee's selection of the
physician on the grounds that the physician is not within the medical
provider network used by the employer, and there is a final
determination that the employee was entitled to select the physician
pursuant to Section 4600, the employee shall be entitled to continue
treatment with that physician at the employer's expense in accordance
with this division, notwithstanding Section 4616.2. The employer
shall be required to pay from the date of the initial examination if
the physician's report was submitted within five working days of the
initial examination. If the physician's report was submitted more
than five working days after the initial examination, the employer
and the employee shall not be required to pay for any services prior
to the date the physician's report was submitted.
   (3) If the employer objects to the employee's selection of the
physician on the grounds that the physician is not within the medical
provider network used by the employer, and there is a final
determination that the employee was not entitled to select a
physician outside of the medical provider network, the employer shall
have no liability for treatment provided by or at the direction of
that physician or for any consequences of the treatment obtained
outside the network.
   (b) (1) Any provider of services provided pursuant to Section
4600, including, but not limited to, physicians, hospitals,
pharmacies, interpreters, copy services, transportation services, and
home health care services, shall submit its request for payment with
an itemization of services provided and the charge for each service,
a copy of all reports showing the services performed, the
prescription or referral from the primary treating physician if the
services were performed by a person other than the primary treating
physician, and any evidence of authorization for the services that
may have been received. Nothing in this section shall prohibit an
employer, insurer, or third-party claims administrator from
establishing, through written agreement, an alternative manual or
electronic request for payment with providers for services provided
pursuant to Section 4600.
   (2) Except as provided in subdivision (d) of Section 4603.4, or
under contracts authorized under Section 5307.11, payment for medical
treatment provided or prescribed by the treating physician selected
by the employee or designated by the employer shall be made at
reasonable maximum amounts in the official medical fee schedule,
pursuant to Section 5307.1, in effect on the date of service.
Payments shall be made by the employer with an explanation of review
pursuant to Section 4603.3 within 45 days after receipt of each
separate, itemization of medical services provided, together with any
required reports and any written authorization for services that may
have been received by the physician. If the itemization or a portion
thereof is contested, denied, or considered incomplete, the
physician shall be notified, in the explanation of review, that the
itemization is contested, denied, or considered incomplete, within 30
days after receipt of the itemization by the employer. An
explanation of review that states an itemization is incomplete shall
also state all additional information required to make a decision.
Any properly documented list of services provided and not paid at the
rates then in effect under Section 5307.1 within the 45-day period
shall be paid at the rates then in effect and increased by 15
percent, together with interest at the same rate as judgments in
civil actions retroactive to the date of receipt of the itemization,
unless the employer does both of the following:
   (A) Pays the provider at the rates in effect within the 45-day
period.
   (B) Advises, in an explanation of review pursuant to Section
4603.3, the physician, or another provider of the items being
contested, the reasons for contesting these items, and the remedies
available to the physician or the other provider if he or she
disagrees. In the case of an itemization that includes services
provided by a hospital, outpatient surgery center, or independent
diagnostic facility, advice that a request has been made for an audit
of the itemization shall satisfy the requirements of this paragraph.

   An employer's liability to a physician or another provider under
this section for delayed payments shall not affect its liability to
an employee under Section 5814 or any other provision of this
division.
   (3) Notwithstanding paragraph (1), if the employer is a
governmental entity, payment for medical treatment provided or
prescribed by the treating physician selected by the employee or
designated by the employer shall be made within 60 days after receipt
of each separate itemization, together with any required reports and
any written authorization for services that may have been received
by the physician.
   (4) Duplicate submissions of medical services itemizations, for
which an explanation of review was previously provided, shall require
no further or additional notification or objection by the employer
to the medical provider and shall not subject the employer to any
additional penalties or interest pursuant to this section for failing
to respond to the duplicate submission. This paragraph shall apply
only to duplicate submissions and does not apply to any other
penalties or interest that may be applicable to the original
submission.
   (c) Any interest or increase in compensation paid by an insurer
pursuant to this section shall be treated in the same manner as an
increase in compensation under subdivision (d) of Section 4650 for
the purposes of any classification of risks and premium rates, and
any system of merit rating approved or issued pursuant to Article 2
(commencing with Section 11730) of Chapter 3 of Part 3 of Division 2
of the Insurance Code.
   (d) (1) Whenever an employer or insurer employs an individual or
contracts with an entity to conduct a review of an itemization
submitted by a physician or medical provider, the employer or insurer
shall make available to that individual or entity all documentation
submitted together with that itemization by the physician or medical
provider. When an individual or entity conducting a itemization
review determines that additional information or documentation is
necessary to review the itemization, the individual or entity shall
contact the claims administrator or insurer to obtain the necessary
information or documentation that was submitted by the physician or
medical provider pursuant to subdivision (b).
   (2) An individual or entity reviewing an itemization of service
submitted by a physician or medical provider shall not alter the
procedure codes listed or recommend reduction of the amount of the
payment unless the documentation submitted by the physician or
medical provider with the itemization of service has been reviewed by
that individual or entity. If the reviewer does not recommend
payment for services as itemized by the physician or medical
provider, the explanation of review shall provide the physician or
medical provider with a specific explanation as to why the reviewer
altered the procedure code or changed other parts of the itemization
and the specific deficiency in the itemization or documentation that
caused the reviewer to conclude that the altered procedure code or
amount recommended for payment more accurately represents the service
performed.
   (e) (1) If the provider disputes the amount paid, the provider may
request a second review within 90 days of service of the explanation
of review or an order of the appeals board resolving the threshold
issue as stated in the explanation of review pursuant to paragraph
(5) of subdivision (a) of Section 4603.3. The request for a second
review shall be submitted to the employer on a form prescribed by the
administrative director and shall include all of the following:
   (A) The date of the explanation of review and the claim number or
other unique identifying number provided on the explanation of
review.
   (B) The item and amount in dispute.
   (C) The additional payment requested and the reason therefor.
   (D) The additional information provided in response to a request
in the first explanation of review or any other additional
information provided in support of the additional payment requested.
   (2) If the only dispute is the amount of payment and the provider
does not request a second review within 90 days, the bill shall be
deemed satisfied and neither the employer nor the employee shall be
liable for any further payment.
   (3) Within 14 days of a request for second review, the employer
shall respond with a final written determination on each of the items
or amounts in dispute. Payment of any balance not in dispute shall
be made within 21 days of receipt of the request for second review.
This time limit may be extended by mutual written agreement.
   (4) If the provider contests the amount paid, after receipt of the
second review, the provider shall request an independent bill review
as provided for in Section 4603.6.
   (f) Except as provided in paragraph (4) of subdivision (e), the
appeals board shall have jurisdiction over disputes arising out of
this subdivision pursuant to Section 5304.
  SEC. 37.  Section 4603.3 is added to the Labor Code, to read:
   4603.3.  (a) Upon payment, adjustment, or denial of a complete or
incomplete itemization of medical services, an employer shall provide
an explanation of review in the manner prescribed by the
administrative director that shall include all of the following:
   (1) A statement of the items or procedures billed and the amounts
requested by the provider to be paid.
   (2) The amount paid.
   (3) The basis for any adjustment, change, or denial of the item or
procedure billed.
   (4) The additional information required to make a decision for an
incomplete itemization.
   (5) If a denial of payment is for some reason other than a fee
dispute, the reason for the denial.
   (6) Information on whom to contact on behalf of the employer if a
dispute arises over the payment of the billing. The explanation of
review shall inform the medical provider of the time limit to raise
any objection regarding the items or procedures paid or disputed and
how to obtain an independent review of the medical bill pursuant to
Section 4603.6.
   (b) The administrative director may adopt regulations requiring
the use of electronic explanations of review.
  SEC. 38.  Section 4603.4 of the Labor Code is amended to read:
   4603.4.  (a) The administrative director shall adopt rules and
regulations to do all of the following:
   (1) Ensure that all health care providers and facilities submit
medical bills for payment on standardized forms.
   (2) Require acceptance by employers of electronic claims for
payment of medical services.
   (3) Ensure confidentiality of medical information submitted on
electronic claims for payment of medical services.
   (b) To the extent feasible, standards adopted pursuant to
subdivision (a) shall be consistent with existing standards under the
federal Health Insurance Portability and Accountability Act of 1996.

   (c) The rules and regulations requiring employers to accept
electronic claims for payment of medical services shall be adopted on
or before January 1, 2005, and shall require all employers to accept
electronic claims for payment of medical services on or before July
1, 2006.
   (d) Payment for medical treatment provided or prescribed by the
treating physician selected by the employee or designated by the
employer shall be made with an explanation of review by the employer
within 15 working days after electronic receipt of an itemized
electronic billing for services at or below the maximum fees provided
in the official medical fee schedule adopted pursuant to Section
5307.1. If the billing is contested, denied, or incomplete, payment
shall be made with an explanation of review of any uncontested
amounts within 15 working days after electronic receipt of the
billing, and payment of the balance shall be made in accordance with
Section 4603.2.
  SEC. 39.  Section 4603.6 is added to the Labor Code, to read:
   4603.6.  (a) If the only dispute is the amount of payment and the
provider has received a second review that did not resolve the
dispute, the provider may request an independent bill review within
30 calendar days of service of the second review pursuant to Section
4603.2 or 4622. If the provider fails to request an independent bill
review within 30 days, the bill shall be deemed satisfied, and
neither the employer nor the employee shall be liable for any further
payment. If the employer has contested liability for any issue other
than the reasonable amount payable for services, that issue shall be
resolved prior to filing a request for independent bill review, and
the time limit for requesting independent bill review shall not begin
to run until the resolution of that issue becomes final, except as
provided for in Section 4622.
   (b) A request for independent review shall be made on a form
prescribed by the administrative director, and shall include copies
of the original billing itemization, any supporting documents that
were furnished with the original billing, the explanation of review,
the request for second review together with any supporting
documentation submitted with that request, and the final explanation
of the second review. The administrative director may require that
requests for independent bill review be submitted electronically. A
copy of the request, together with all required documents, shall be
served on the employer. Only the request form and the proof of
payment of the fee required by subdivision (c) shall be filed with
the administrative director. Upon notice of assignment of the
independent bill reviewer, the requesting party shall submit the
documents listed in this subdivision to the independent bill reviewer
within 10 days.
   (c) The provider shall pay to the administrative director a fee
determined by the administrative director to cover no more than the
reasonable estimated cost of independent bill review and
administration of the independent bill review program. The
administrative director may prescribe different fees depending on the
number of items in the bill or other criteria determined by
regulation adopted by the administrative director. If any additional
payment is found owing from the employer to the medical provider, the
employer shall reimburse the provider for the fee in addition to the
amount found owing.
   (d) Upon receipt of a request for independent bill review and the
required fee, the administrative director or the administrative
director's designee shall assign the request to an independent bill
reviewer within 30 days and notify the medical provider and employer
of the independent reviewer assigned.
   (e) The independent bill reviewer shall review the materials
submitted by the parties and make a written determination of any
additional amounts to be paid to the medical provider and state the
reasons for the determination. If the independent bill reviewer deems
necessary, the independent bill reviewer may request additional
documents from the medical provider or employer. The employer shall
have no obligation to serve medical reports on the provider unless
the reports are requested by the independent bill reviewer. If
additional documents are requested, the parties shall respond with
the documents requested within 30 days and shall provide the other
party with copies of any documents submitted to the independent
reviewer, and the independent reviewer shall make a written
determination of any additional amounts to be paid to the medical
provider and state the reasons for the determination within 60 days
of the receipt of the administrative director's assignment. The
written determination of the independent bill reviewer shall be sent
to the administrative director and provided to both the medical
provider and the employer.
   (f) The determination of the independent bill reviewer shall be
deemed a determination and order of the administrative director. The
determination is final and binding on all parties unless an aggrieved
party files with the appeals board a verified appeal from the
medical bill review determination of the administrative director
within 20 days of the service of the determination. The medical bill
review determination of the administrative director shall be presumed
to be correct and shall be set aside only upon clear and convincing
evidence of one or more of the following grounds for appeal:
   (1) The administrative director acted without or in excess of his
or her powers.
   (2) The determination of the administrative director was procured
by fraud.
   (3) The independent bill reviewer was subject to a material
conflict of interest that is in violation of Section 139.5.
   (4) The determination was the result of bias on the basis of race,
national origin, ethnic group identification, religion, age, sex,
sexual orientation, color, or disability.
   (5) The determination was the result of a plainly erroneous
express or implied finding of fact, provided that the mistake of fact
is a matter of ordinary knowledge based on the information submitted
for review and not a matter that is subject to expert opinion.
   (g) If the determination of the administrative director is
reversed, the dispute shall be remanded to the administrative
director to submit the dispute to independent bill review by a
different independent review organization. In the event that a
different independent bill review organization is not available after
remand, the administrative director shall submit the dispute to the
original bill review organization for review by a different reviewer
within the organization. In no event shall the appeals board or any
higher court make a determination of ultimate fact contrary to the
determination of the bill review organization.
   (h) Once the independent bill reviewer has made a determination
regarding additional amounts to be paid to the medical provider, the
employer shall pay the additional amounts per the timely payment
requirements set forth in Sections 4603.2 and 4603.4.
  SEC. 40.  Section 4604 of the Labor Code is amended to read:
   4604.  Controversies between employer and employee arising under
this chapter shall be determined by the appeals board, upon the
request of either party, except as otherwise provided by Section
4610.5.
  SEC. 41.  Section 4604.5 of the Labor Code is amended to read:
   4604.5.  (a) The recommended guidelines set forth in the medical
treatment utilization schedule adopted by the administrative director
pursuant to Section 5307.27 shall be presumptively correct on the
issue of extent and scope of medical treatment. The presumption is
rebuttable and may be controverted by a preponderance of the
scientific medical evidence establishing that a variance from the
guidelines reasonably is required to cure or relieve the injured
worker from the effects of his or her injury. The presumption created
is one affecting the burden of proof.
   (b) The recommended guidelines set forth in the schedule adopted
pursuant to subdivision (a) shall reflect practices that are evidence
and scientifically based, nationally recognized, and peer reviewed.
The guidelines shall be designed to assist providers by offering an
analytical framework for the evaluation and treatment of injured
workers, and shall constitute care in accordance with Section 4600
for all injured workers diagnosed with industrial conditions.
   (c) (1) Notwithstanding the medical treatment utilization
schedule, for injuries occurring on and after January 1, 2004, an
employee shall be entitled to no more than 24 chiropractic, 24
occupational therapy, and 24 physical therapy visits per industrial
injury.
   (2) (A) Paragraph (1) shall not apply when an employer authorizes,
in writing, additional visits to a health care practitioner for
physical medicine services. Payment or authorization for treatment
beyond the limits set forth in paragraph (1) shall not be deemed a
waiver of the limits set forth by paragraph (1) with respect to
future requests for authorization.
   (B) The Legislature finds and declares that the amendments made to
subparagraph (A) by the act adding this subparagraph are declaratory
of existing law.
   (3) Paragraph (1) shall not apply to visits for postsurgical
physical medicine and postsurgical rehabilitation services provided
in compliance with a postsurgical treatment utilization schedule
established by the administrative director pursuant to Section
5307.27.
   (d) For all injuries not covered by the official utilization
schedule adopted pursuant to Section 5307.27, authorized treatment
shall be in accordance with other evidence-based medical treatment
guidelines that are recognized generally by the national medical
community and scientifically based.
  SEC. 42.  Section 4605 of the Labor Code is amended to read:
   4605.  Nothing contained in this chapter shall limit the right of
the employee to provide, at his or her own expense, a consulting
physician or any attending physicians whom he or she desires. Any
report prepared by consulting or attending physicians pursuant to
this section shall not be the sole basis of an award of compensation.
A qualified medical evaluator or authorized treating physician shall
address any report procured pursuant to this section and shall
indicate whether he or she agrees or disagrees with the findings or
opinions stated in the report, and shall identify the bases for this
opinion.
  SEC. 43.  Section 4610 of the Labor Code is amended to read:
   4610.  (a) For purposes of this section, "utilization review"
means utilization review or utilization management functions that
prospectively, retrospectively, or concurrently review and approve,
modify, delay, or deny, based in whole or in part on medical
necessity to cure and relieve, treatment recommendations by
physicians, as defined in Section 3209.3, prior to, retrospectively,
or concurrent with the provision of medical treatment services
pursuant to Section 4600.
   (b) Every employer shall establish a utilization review process in
compliance with this section, either directly or through its insurer
or an entity with which an employer or insurer contracts for these
services.
   (c) Each utilization review process shall be governed by written
policies and procedures. These policies and procedures shall ensure
that decisions based on the medical necessity to cure and relieve of
proposed medical treatment services are consistent with the schedule
for medical treatment utilization adopted pursuant to Section
5307.27. These policies and procedures, and a description of the
utilization process, shall be filed with the administrative director
and shall be disclosed by the employer to employees, physicians, and
the public upon request.
   (d) If an employer, insurer, or other entity subject to this
section requests medical information from a physician in order to
determine whether to approve, modify, delay, or deny requests for
authorization, the employer shall request only the information
reasonably necessary to make the determination. The employer,
insurer, or other entity shall employ or designate a medical director
who holds an unrestricted license to practice medicine in this state
issued pursuant to Section 2050 or Section 2450 of the Business and
Professions Code. The medical director shall ensure that the process
by which the employer or other entity reviews and approves, modifies,
delays, or denies requests by physicians prior to, retrospectively,
or concurrent with the provision of medical treatment services,
complies with the requirements of this section. Nothing in this
section shall be construed as restricting the existing authority of
the Medical Board of California.
                                                          (e) No
person other than a licensed physician who is competent to evaluate
the specific clinical issues involved in the medical treatment
services, and where these services are within the scope of the
physician's practice, requested by the physician may modify, delay,
or deny requests for authorization of medical treatment for reasons
of medical necessity to cure and relieve.
   (f) The criteria or guidelines used in the utilization review
process to determine whether to approve, modify, delay, or deny
medical treatment services shall be all of the following:
   (1) Developed with involvement from actively practicing
physicians.
   (2) Consistent with the schedule for medical treatment utilization
adopted pursuant to Section 5307.27.
   (3) Evaluated at least annually, and updated if necessary.
   (4) Disclosed to the physician and the employee, if used as the
basis of a decision to modify, delay, or deny services in a specified
case under review.
   (5) Available to the public upon request. An employer shall only
be required to disclose the criteria or guidelines for the specific
procedures or conditions requested. An employer may charge members of
the public reasonable copying and postage expenses related to
disclosing criteria or guidelines pursuant to this paragraph.
Criteria or guidelines may also be made available through electronic
means. No charge shall be required for an employee whose physician's
request for medical treatment services is under review.
   (g) In determining whether to approve, modify, delay, or deny
requests by physicians prior to, retrospectively, or concurrent with
the provisions of medical treatment services to employees all of the
following requirements shall be met:
   (1) Prospective or concurrent decisions shall be made in a timely
fashion that is appropriate for the nature of the employee's
condition, not to exceed five working days from the receipt of the
information reasonably necessary to make the determination, but in no
event more than 14 days from the date of the medical treatment
recommendation by the physician. In cases where the review is
retrospective, a decision resulting in denial of all or part of the
medical treatment service shall be communicated to the individual who
received services, or to the individual's designee, within 30 days
of receipt of information that is reasonably necessary to make this
determination. If payment for a medical treatment service is made
within the time prescribed by Section 4603.2, a retrospective
decision to approve the service need not otherwise be communicated.
   (2) When the employee's condition is such that the employee faces
an imminent and serious threat to his or her health, including, but
not limited to, the potential loss of life, limb, or other major
bodily function, or the normal timeframe for the decisionmaking
process, as described in paragraph (1), would be detrimental to the
employee's life or health or could jeopardize the employee's ability
to regain maximum function, decisions to approve, modify, delay, or
deny requests by physicians prior to, or concurrent with, the
provision of medical treatment services to employees shall be made in
a timely fashion that is appropriate for the nature of the employee'
s condition, but not to exceed 72 hours after the receipt of the
information reasonably necessary to make the determination.
   (3) (A) Decisions to approve, modify, delay, or deny requests by
physicians for authorization prior to, or concurrent with, the
provision of medical treatment services to employees shall be
communicated to the requesting physician within 24 hours of the
decision. Decisions resulting in modification, delay, or denial of
all or part of the requested health care service shall be
communicated to physicians initially by telephone or facsimile, and
to the physician and employee in writing within 24 hours for
concurrent review, or within two business days of the decision for
prospective review, as prescribed by the administrative director. If
the request is not approved in full, disputes shall be resolved in
accordance with Section 4610.5, if applicable, or otherwise in
accordance with Section 4062.
   (B) In the case of concurrent review, medical care shall not be
discontinued until the employee's physician has been notified of the
decision and a care plan has been agreed upon by the physician that
is appropriate for the medical needs of the employee. Medical care
provided during a concurrent review shall be care that is medically
necessary to cure and relieve, and an insurer or self-insured
employer shall only be liable for those services determined medically
necessary to cure and relieve. If the insurer or self-insured
employer disputes whether or not one or more services offered
concurrently with a utilization review were medically necessary to
cure and relieve, the dispute shall be resolved pursuant to Section
4610.5, if applicable, or otherwise pursuant to Section 4062. Any
compromise between the parties that an insurer or self-insured
employer believes may result in payment for services that were not
medically necessary to cure and relieve shall be reported by the
insurer or the self-insured employer to the licensing board of the
provider or providers who received the payments, in a manner set
forth by the respective board and in such a way as to minimize
reporting costs both to the board and to the insurer or self-insured
employer, for evaluation as to possible violations of the statutes
governing appropriate professional practices. No fees shall be levied
upon insurers or self-insured employers making reports required by
this section.
   (4) Communications regarding decisions to approve requests by
physicians shall specify the specific medical treatment service
approved. Responses regarding decisions to modify, delay, or deny
medical treatment services requested by physicians shall include a
clear and concise explanation of the reasons for the employer's
decision, a description of the criteria or guidelines used, and the
clinical reasons for the decisions regarding medical necessity. If a
utilization review decision to deny or delay a medical service is due
to incomplete or insufficient information, the decision shall
specify the reason for the decision and specify the information that
is needed.
   (5) If the employer, insurer, or other entity cannot make a
decision within the timeframes specified in paragraph (1) or (2)
because the employer or other entity is not in receipt of all of the
information reasonably necessary and requested, because the employer
requires consultation by an expert reviewer, or because the employer
has asked that an additional examination or test be performed upon
the employee that is reasonable and consistent with good medical
practice, the employer shall immediately notify the physician and the
employee, in writing, that the employer cannot make a decision
within the required timeframe, and specify the information requested
but not received, the expert reviewer to be consulted, or the
additional examinations or tests required. The employer shall also
notify the physician and employee of the anticipated date on which a
decision may be rendered. Upon receipt of all information reasonably
necessary and requested by the employer, the employer shall approve,
modify, or deny the request for authorization within the timeframes
specified in paragraph (1) or (2).
   (6) A utilization review decision to modify, delay, or deny a
treatment recommendation shall remain effective for 12 months from
the date of the decision without further action by the employer with
regard to any further recommendation by the same physician for the
same treatment unless the further recommendation is supported by a
documented change in the facts material to the basis of the
utilization review decision.
   (7) Utilization review of a treatment recommendation shall not be
required while the employer is disputing liability for injury or
treatment of the condition for which treatment is recommended
pursuant to Section 4062.
   (8) If utilization review is deferred pursuant to paragraph (7),
and it is finally determined that the employer is liable for
treatment of the condition for which treatment is recommended, the
time for the employer to conduct retrospective utilization review in
accordance with paragraph (1) shall begin on the date the
determination of the employer's liability becomes final, and the time
for the employer to conduct prospective utilization review shall
commence from the date of the employer's receipt of a treatment
recommendation after the determination of the employer's liability.
   (h) Every employer, insurer, or other entity subject to this
section shall maintain telephone access for physicians to request
authorization for health care services.
   (i) If the administrative director determines that the employer,
insurer, or other entity subject to this section has failed to meet
any of the timeframes in this section, or has failed to meet any
other requirement of this section, the administrative director may
assess, by order, administrative penalties for each failure. A
proceeding for the issuance of an order assessing administrative
penalties shall be subject to appropriate notice to, and an
opportunity for a hearing with regard to, the person affected. The
administrative penalties shall not be deemed to be an exclusive
remedy for the administrative director. These penalties shall be
deposited in the Workers' Compensation Administration Revolving Fund.

  SEC. 44.  Section 4610.1 of the Labor Code is amended to read:
   4610.1.  An employee shall not be entitled to an increase in
compensation under Section 5814 for unreasonable delay in the
provision of medical treatment for periods of time necessary to
complete the utilization review process in compliance with Section
4610. A determination by the appeals board or a final determination
of the administrative director pursuant to independent medical review
that medical treatment is appropriate shall not be conclusive
evidence that medical treatment was unreasonably delayed or denied
for purposes of penalties under Section 5814. In no case shall this
section preclude an employee from entitlement to an increase in
compensation under Section 5814 when an employer has unreasonably
delayed or denied medical treatment due to an unreasonable delay in
completion of the utilization review process set forth in Section
4610.
  SEC. 45.  Section 4610.5 is added to the Labor Code, to read:
   4610.5.  (a) This section applies to the following disputes:
   (1) Any dispute over a utilization review decision regarding
treatment for an injury occurring on or after January 1, 2013.
   (2) Any dispute over a utilization review decision if the decision
is communicated to the requesting physician on or after July 1,
2013, regardless of the date of injury.
   (b) A dispute described in subdivision (a) shall be resolved only
in accordance with this section.
   (c) For purposes of this section and Section 4610.6, the following
definitions apply:
   (1) "Disputed medical treatment" means medical treatment that has
been modified, delayed, or denied by a utilization review decision.
   (2) "Medically necessary" and "medical necessity" mean medical
treatment that is reasonably required to cure or relieve the injured
employee of the effects of his or her injury and based on the
following standards, which shall be applied in the order listed,
allowing reliance on a lower ranked standard only if every higher
ranked standard is inapplicable to the employee's medical condition:
   (A) The guidelines adopted by the administrative director pursuant
to Section 5307.27.
   (B) Peer-reviewed scientific and medical evidence regarding the
effectiveness of the disputed service.
   (C) Nationally recognized professional standards.
   (D) Expert opinion.
   (E) Generally accepted standards of medical practice.
   (F) Treatments that are likely to provide a benefit to a patient
for conditions for which other treatments are not clinically
efficacious.
   (3) "Utilization review decision" means a decision pursuant to
Section 4610 to modify, delay, or deny, based in whole or in part on
medical necessity to cure or relieve, a treatment recommendation or
recommendations by a physician prior to, retrospectively, or
concurrent with the provision of medical treatment services pursuant
to Section 4600 or subdivision (c) of Section 5402.
   (4) Unless otherwise indicated by context, "employer" means the
employer, the insurer of an insured employer, a claims administrator,
or a utilization review organization, or other entity acting on
behalf of any of them.
   (d) If a utilization review decision denies, modifies, or delays a
treatment recommendation, the employee may request an independent
medical review as provided by this section.
   (e) A utilization review decision may be reviewed or appealed only
by independent medical review pursuant to this section. Neither the
employee nor the employer shall have any liability for medical
treatment furnished without the authorization of the employer if the
treatment is delayed, modified, or denied by a utilization review
decision unless the utilization review decision is overturned by
independent medical review in accordance with this section.
   (f) As part of its notification to the employee regarding an
initial utilization review decision that denies, modifies, or delays
a treatment recommendation, the employer shall provide the employee
with
    a one-page form prescribed by the administrative director, and an
addressed envelope, which the employee may return to the
administrative director or the administrative director's designee to
initiate an independent medical review. The employer shall include on
the form any information required by the administrative director to
facilitate the completion of the independent medical review. The form
shall also include all of the following:
   (1) Notice that the utilization review decision is final unless
the employee requests independent medical review.
   (2) A statement indicating the employee's consent to obtain any
necessary medical records from the employer or insurer and from any
medical provider the employee may have consulted on the matter, to be
signed by the employee.
   (3) Notice of the employee's right to provide information or
documentation, either directly or through the employee's physician,
regarding the following:
   (A) The treating physician's recommendation indicating that the
disputed medical treatment is medically necessary for the employee's
medical condition.
   (B) Medical information or justification that a disputed medical
treatment, on an urgent care or emergency basis, was medically
necessary for the employee's medical condition.
   (C) Reasonable information supporting the employee's position that
the disputed medical treatment is or was medically necessary for the
employee's medical condition, including all information provided to
the employee by the employer or by the treating physician, still in
the employee's possession, concerning the employer's or the physician'
s decision regarding the disputed medical treatment, as well as any
additional material that the employee believes is relevant.
   (g) The independent medical review process may be terminated at
any time upon the employer's written authorization of the disputed
medical treatment.
   (h) (1) The employee may submit a request for independent medical
review to the division no later than 30 days after the service of the
utilization review decision to the employee.
   (2) If at the time of a utilization review decision the employer
is also disputing liability for the treatment for any reason besides
medical necessity, the time for the employee to submit a request for
independent medical review to the administrative director or
administrative director's designee is extended to 30 days after
service of a notice to the employee showing that the other dispute of
liability has been resolved.
   (3) If the employer fails to comply with subdivision (e) at the
time of notification of its utilization review decision, the time
limitations for the employee to submit a request for independent
medical review shall not begin to run until the employer provides the
required notice to the employee.
   (4) A provider of emergency medical treatment when the employee
faced an imminent and serious threat to his or her health, including,
but not limited to, the potential loss of life, limb, or other major
bodily function, may submit a request for independent medical review
on its own behalf. A request submitted by a provider pursuant to
this paragraph shall be submitted to the administrative director or
administrative director's designee within the time limitations
applicable for an employee to submit a request for independent
medical review.
   (i) An employer shall not engage in any conduct that has the
effect of delaying the independent review process. Engaging in that
conduct or failure of the plan to promptly comply with this section
is a violation of this section and, in addition to any other fines,
penalties, and other remedies available to the administrative
director, the employer shall be subject to an administrative penalty
in an amount determined pursuant to regulations to be adopted by the
administrative director, not to exceed five thousand dollars ($5,000)
for each day that proper notification to the employee is delayed.
The administrative penalties shall be paid to the Workers'
Compensation Administration Revolving Fund.
   (j) For purposes of this section, an employee may designate a
parent, guardian, conservator, relative, or other designee of the
employee as an agent to act on his or her behalf. A designation of an
agent executed prior to the utilization review decision shall not be
valid. The requesting physician may join with or otherwise assist
the employee in seeking an independent medical review, and may
advocate on behalf of the employee.
   (k) The administrative director or his or her designee shall
expeditiously review requests and immediately notify the employee and
the employer in writing as to whether the request for an independent
medical review has been approved, in whole or in part, and, if not
approved, the reasons therefor. If there appears to be any medical
necessity issue, the dispute shall be resolved pursuant to an
independent medical review, except that, unless the employer agrees
that the case is eligible for independent medical review, a request
for independent medical review shall be deferred if at the time of a
utilization review decision the employer is also disputing liability
for the treatment for any reason besides medical necessity.
   (l) Upon notice from the administrative director that an
independent review organization has been assigned, the employer shall
provide to the independent medical review organization all of the
following documents within 10 days of notice of assignment:
   (1) A copy of all of the employee's medical records in the
possession of the employer or under the control of the employer
relevant to each of the following:
   (A) The employee's current medical condition.
   (B) The medical treatment being provided by the employer.
   (C) The disputed medical treatment requested by the employee.
   (2) A copy of all information provided to the employee by the
employer concerning employer and provider decisions regarding the
disputed treatment.
   (3) A copy of any materials the employee or the employee's
provider submitted to the employer in support of the employee's
request for the disputed treatment.
   (4) A copy of any other relevant documents or information used by
the employer or its utilization review organization in determining
whether the disputed treatment should have been provided, and any
statements by the employer or its utilization review organization
explaining the reasons for the decision to deny, modify, or delay the
recommended treatment on the basis of medical necessity. The
employer shall concurrently provide a copy of the documents required
by this paragraph to the employee and the requesting physician,
except that documents previously provided to the employee or
physician need not be provided again if a list of those documents is
provided.
    (m) Any newly developed or discovered relevant medical records in
the possession of the employer after the initial documents are
provided to the independent medical review organization shall be
forwarded immediately to the independent medical review organization.
The employer shall concurrently provide a copy of medical records
required by this subdivision to the employee or the employee's
treating physician, unless the offer of medical records is declined
or otherwise prohibited by law. The confidentiality of medical
records shall be maintained pursuant to applicable state and federal
laws.
   (n) If there is an imminent and serious threat to the health of
the employee, as specified in subdivision (c) of Section 1374.33 of
the Health and Safety Code, all necessary information and documents
required by subdivision (l) shall be delivered to the independent
medical review organization within 24 hours of approval of the
request for review.
   (o) The employer shall promptly issue a notification to the
employee, after submitting all of the required material to the
independent medical review organization, that lists documents
submitted and includes copies of material not previously provided to
the employee or the employee's designee.
  SEC. 46.  Section 4610.6 is added to the Labor Code, to read:
   4610.6.  (a) Upon receipt of a case pursuant to Section 4610.5, an
independent medical review organization shall conduct the review in
accordance with this article and any regulations or orders of the
administrative director. The organization's review shall be limited
to an examination of the medical necessity of the disputed medical
treatment.
   (b) Upon receipt of information and documents related to a case,
the medical reviewer or reviewers selected to conduct the review by
the independent medical review organization shall promptly review all
pertinent medical records of the employee, provider reports, and any
other information submitted to the organization or requested from
any of the parties to the dispute by the reviewers. If the reviewers
request information from any of the parties, a copy of the request
and the response shall be provided to all of the parties. The
reviewer or reviewers shall also review relevant information related
to the criteria set forth in subdivision (c).
   (c) Following its review, the reviewer or reviewers shall
determine whether the disputed health care service was medically
necessary based on the specific medical needs of the employee and the
standards of medical necessity as defined in subdivision (c) of
Section 4610.5.
   (d) The organization shall complete its review and make its
determination in writing, and in layperson's terms to the maximum
extent practicable, within 30 days of the receipt of the request for
review and supporting documentation, or within less time as
prescribed by the administrative director. If the disputed medical
treatment has not been provided and the employee's provider or the
administrative director certifies in writing that an imminent and
serious threat to the health of the employee may exist, including,
but not limited to, serious pain, the potential loss of life, limb,
or major bodily function, or the immediate and serious deterioration
of the health of the employee, the analyses and determinations of the
reviewers shall be expedited and rendered within three days of the
receipt of the information. Subject to the approval of the
administrative director, the deadlines for analyses and
determinations involving both regular and expedited reviews may be
extended for up to three days in extraordinary circumstances or for
good cause.
   (e) The medical professionals' analyses and determinations shall
state whether the disputed health care service is medically
necessary. Each analysis shall cite the employee's medical condition,
the relevant documents in the record, and the relevant findings
associated with the provisions of subdivision (c) to support the
determination. If more than one medical professional reviews the
case, the recommendation of the majority shall prevail. If the
medical professionals reviewing the case are evenly split as to
whether the disputed health care service should be provided, the
decision shall be in favor of providing the service.
   (f) The independent medical review organization shall provide the
administrative director, the employer, the employee, and the employee'
s provider with the analyses and determinations of the medical
professionals reviewing the case, and a description of the
qualifications of the medical professionals. The independent medical
review organization shall keep the names of the reviewers
confidential in all communications with entities or individuals
outside the independent medical review organization. If more than one
medical professional reviewed the case and the result was differing
determinations, the independent medical review organization shall
provide each of the separate reviewer's analyses and determinations.
   (g) The determination of the independent medical review
organization shall be deemed to be the determination of the
administrative director and shall be binding on all parties.
   (h) A determination of the administrative director pursuant to
this section may be reviewed only by a verified appeal from the
medical review determination of the administrative director, filed
with the appeals board for hearing pursuant to Chapter 3 (commencing
with Section 5500) of Part 4 and served on all interested parties
within 30 days of the date of mailing of the determination to the
aggrieved employee or the aggrieved employer. The determination of
the administrative director shall be presumed to be correct and shall
be set aside only upon proof by clear and convincing evidence of one
or more of the following grounds for appeal:
   (1) The administrative director acted without or in excess of the
administrative director's powers.
   (2) The determination of the administrative director was procured
by fraud.
   (3) The independent medical reviewer was subject to a material
conflict of interest that is in violation of Section 139.5.
   (4) The determination was the result of bias on the basis of race,
national origin, ethnic group identification, religion, age, sex,
sexual orientation, color, or disability.
   (5) The determination was the result of a plainly erroneous
express or implied finding of fact, provided that the mistake of fact
is a matter of ordinary knowledge based
                on the information submitted for review pursuant to
Section 4610.5 and not a matter that is subject to expert opinion.
   (i) If the determination of the administrative director is
reversed, the dispute shall be remanded to the administrative
director to submit the dispute to independent medical review by a
different independent review organization. In the event that a
different independent medical review organization is not available
after remand, the administrative director shall submit the dispute to
the original medical review organization for review by a different
reviewer in the organization. In no event shall a workers'
compensation administrative law judge, the appeals board, or any
higher court make a determination of medical necessity contrary to
the determination of the independent medical review organization.
   (j) Upon receiving the determination of the administrative
director that a disputed health care service is medically necessary,
the employer shall promptly implement the decision as provided by
this section unless the employer has also disputed liability for any
reason besides medical necessity. In the case of reimbursement for
services already rendered, the employer shall reimburse the provider
or employee, whichever applies, within 20 days, subject to resolution
of any remaining issue of the amount of payment pursuant to Sections
4603.2 to 4603.6, inclusive. In the case of services not yet
rendered, the employer shall authorize the services within five
working days of receipt of the written determination from the
independent medical review organization, or sooner if appropriate for
the nature of the employee's medical condition, and shall inform the
employee and provider of the authorization.
   (k) Failure to pay for services already provided or to authorize
services not yet rendered within the time prescribed by subdivision
(l) is a violation of this section and, in addition to any other
fines, penalties, and other remedies available to the administrative
director, the employer shall be subject to an administrative penalty
in an amount determined pursuant to regulations to be adopted by the
administrative director, not to exceed five thousand dollars ($5,000)
for each day the decision is not implemented. The administrative
penalties shall be paid to the Workers' Compensation Administration
Revolving Fund.
   (l) The costs of independent medical review and the administration
of the independent medical review system shall be borne by employers
through a fee system established by the administrative director.
After considering any relevant information on program costs, the
administrative director shall establish a reasonable, per-case
reimbursement schedule to pay the costs of independent medical review
organization reviews and the cost of administering the independent
medical review system, which may vary depending on the type of
medical condition under review and on other relevant factors.
   (m) The administrative director may publish the results of
independent medical review determinations after removing individually
identifiable information.
   (n) If any provision of this section, or the application thereof
to any person or circumstances, is held invalid, the remainder of the
section, and the application of its provisions to other persons or
circumstances, shall not be affected thereby.
  SEC. 47.  Section 4616 of the Labor Code is amended to read:
   4616.  (a) (1) On or after January 1, 2005, an insurer, employer,
or entity that provides physician network services may establish or
modify a medical provider network for the provision of medical
treatment to injured employees. The network shall include physicians
primarily engaged in the treatment of occupational injuries. The
administrative director shall encourage the integration of
occupational and nonoccupational providers. The number of physicians
in the medical provider network shall be sufficient to enable
treatment for injuries or conditions to be provided in a timely
manner. The provider network shall include an adequate number and
type of physicians, as described in Section 3209.3, or other
providers, as described in Section 3209.5, to treat common injuries
experienced by injured employees based on the type of occupation or
industry in which the employee is engaged, and the geographic area
where the employees are employed.
   (2) Medical treatment for injuries shall be readily available at
reasonable times to all employees. To the extent feasible, all
medical treatment for injuries shall be readily accessible to all
employees. With respect to availability and accessibility of
treatment, the administrative director shall consider the needs of
rural areas, specifically those in which health facilities are
located at least 30 miles apart and areas in which there is a health
care shortage.
   (3) Commencing January 1, 2014, a treating physician shall be
included in the network only if, at the time of entering into or
renewing an agreement by which the physician would be in the network,
the physician, or an authorized employee of the physician or the
physician's office, provides a separate written acknowledgment in
which the physician affirmatively elects to be a member of the
network. Copies of the written acknowledgment shall be provided to
the administrative director upon the administrative director's
request. This paragraph shall not apply to a physician who is a
shareholder, partner, or employee of a medical group that elects to
be part of the network.
   (4) Commencing January 1, 2014, every medical provider network
shall post on its Internet Web site a roster of all treating
physicians in the medical provider network and shall update the
roster at least quarterly. Every network shall provide to the
administrative director the Internet Web site address of the network
and of its roster of treating physicians. The administrative director
shall post, on the division's Internet Web site, the Internet Web
site address of every approved medical provider network.
   (5) Commencing January 1, 2014, every medical provider network
shall provide one or more persons within the United States to serve
as medical access assistants to help an injured employee find an
available physician of the employee's choice, and subsequent
physicians if necessary, under Section 4616.3. Medical access
assistants shall have a toll-free telephone number that injured
employees may use and shall be available at least from 7 a.m. to 8
p.m. Pacific Standard Time, Monday through Saturday, inclusive, to
respond to injured employees, contact physicians' offices during
regular business hours, and schedule appointments. The administrative
director shall promulgate regulations on or before July 1, 2013,
governing the provision of medical access assistants.
   (b) (1) An insurer, employer, or entity that provides physician
network services shall submit a plan for the medical provider network
to the administrative director for approval. The administrative
director shall approve the plan for a period of four years if he or
she determines that the plan meets the requirements of this section.
If the administrative director does not act on the plan within 60
days of submitting the plan, it shall be deemed approved. Commencing
January 1, 2014, existing approved plans shall be deemed approved for
a period of four years from the most recent application or
modification approval date. Plans for reapproval for medical provider
networks shall be submitted at least six months before the
expiration of the four-year approval period. Upon a showing that the
medical provider network was approved or deemed approved by the
administrative director, there shall be a conclusive presumption on
the part of the appeals board that the medical provider network was
validly formed.
   (2) Every medical provider network shall establish and follow
procedures to continuously review the quality of care, performance of
medical personnel, utilization of services and facilities, and
costs.
   (3) Every medical provider network shall submit geocoding of its
network for reapproval to establish that the number and geographic
location of physicians in the network meets the required access
standards.
   (4) The administrative director shall at any time have the
discretion to investigate complaints and to conduct random reviews of
approved medical provider networks.
   (5) Approval of a plan may be denied, revoked, or suspended if the
medical provider network fails to meet the requirements of this
article. Any person contending that a medical provider network is not
validly constituted may petition the administrative director to
suspend or revoke the approval of the medical provider network. The
administrative director may adopt regulations establishing a schedule
of administrative penalties not to exceed five thousand dollars
($5,000) per violation, or probation, or both, in lieu of revocation
or suspension for less severe violations of the requirements of this
article. Penalties, probation, suspension, or revocation shall be
ordered by the administrative director only after notice and
opportunity to be heard. Unless suspended or revoked by the
administrative director, the administrative director's approval of a
medical provider network shall be binding on all persons and all
courts. A determination of the administrative director may be
reviewed only by an appeal of the determination of the administrative
director filed as an original proceeding before the reconsideration
unit of the workers' compensation appeals board on the same grounds
and within the same time limits after issuance of the determination
as would be applicable to a petition for reconsideration of a
decision of a workers' compensation administrative law judge.
   (c) Physician compensation may not be structured in order to
achieve the goal of reducing, delaying, or denying medical treatment
or restricting access to medical treatment.
   (d) If the employer or insurer meets the requirements of this
section, the administrative director may not withhold approval or
disapprove an employer's or insurer's medical provider network based
solely on the selection of providers. In developing a medical
provider network, an employer or insurer shall have the exclusive
right to determine the members of their network.
   (e) All treatment provided shall be provided in accordance with
the medical treatment utilization schedule established pursuant to
Section 5307.27.
   (f) No person other than a licensed physician who is competent to
evaluate the specific clinical issues involved in the medical
treatment services, when these services are within the scope of the
physician's practice, may modify, delay, or deny requests for
authorization of medical treatment.
   (g) Commencing January 1, 2013, every contracting agent that
sells, leases, assigns, transfers, or conveys its medical provider
networks and their contracted reimbursement rates to an insurer,
employer, entity that provides physician network services, or another
contracting agent shall, upon entering or renewing a provider
contract, disclose to the provider whether the medical provider
network may be sold, leased, transferred, or conveyed to other
insurers, employers, entities that provide physician network
services, or another contracting agent, and specify whether those
insurers, employers, entities that provide physician network
services, or contracting agents include workers' compensation
insurers.
   (h) On or before November 1, 2004, the administrative director, in
consultation with the Department of Managed Health Care, shall adopt
regulations implementing this article. The administrative director
shall develop regulations that establish procedures for purposes of
making medical provider network modifications.
  SEC. 48.  Section 4616.1 of the Labor Code is amended to read:
   4616.1.  (a) An insurer, employer, or entity that provides
physician network services that offers a medical provider network
under this division and that uses economic profiling shall file with
the administrative director a description of any policies and
procedures related to economic profiling utilized. The filing shall
describe how these policies and procedures are used in utilization
review, peer review, incentive and penalty programs, and in provider
retention and termination decisions. The insurer, employer, or entity
that provides physician network services shall provide a copy of the
filing to an individual physician, provider, medical group, or
individual practice association.
   (b) The administrative director shall make each approved medical
provider network economic profiling policy filing available to the
public upon request. The administrative director may not publicly
disclose any information submitted pursuant to this section that is
determined by the administrative director to be confidential pursuant
to state or federal law.
   (c) For the purposes of this article, "economic profiling" shall
mean any evaluation of a particular physician, provider, medical
group, or individual practice association based in whole or in part
on the economic costs or utilization of services associated with
medical care provided or authorized by the physician, provider,
medical group, or individual practice association.
  SEC. 49.  Section 4616.2 of the Labor Code is amended to read:
   4616.2.  (a) An insurer, employer, or entity that provides
physician network services that arranges for care for injured
employees through a medical provider network shall file a written
continuity of care policy with the administrative director.
   (b) If approved by the administrative director, the provisions of
the written continuity of care policy shall replace all prior
continuity of care policies. The insurer, employer, or entity that
provides physician network services shall file a revision of the
continuity of care policy with the administrative director if it
makes a material change to the policy.
   (c) The insurer, employer, or entity that provides physician
network services shall provide to all employees entering the workers'
compensation system notice of its written continuity of care policy
and information regarding the process for an employee to request a
review under the policy and shall provide, upon request, a copy of
the written policy to an employee.
   (d) (1) An insurer, employer, or entity that provides physician
network services that offers a medical provider network shall, at the
request of an injured employee, provide the completion of treatment
as set forth in this section by a terminated provider.
   (2) The completion of treatment shall be provided by a terminated
provider to an injured employee who, at the time of the contract's
termination, was receiving services from that provider for one of the
conditions described in paragraph (3).
   (3) The insurer, employer, or entity that provides physician
network services shall provide for the completion of treatment for
the following conditions subject to coverage through the workers'
compensation system:
   (A) An acute condition. An acute condition is a medical condition
that involves a sudden onset of symptoms due to an illness, injury,
or other medical problem that requires prompt medical attention and
that has a limited duration. Completion of treatment shall be
provided for the duration of the acute condition.
   (B) A serious chronic condition. A serious chronic condition is a
medical condition due to a disease, illness, or other medical problem
or medical disorder that is serious in nature and that persists
without full cure or worsens over an extended period of time or
requires ongoing treatment to maintain remission or prevent
deterioration. Completion of treatment shall be provided for a period
of time necessary to complete a course of treatment and to arrange
for a safe transfer to another provider, as determined by the
insurer, employer, or entity that provides physician network
services, in consultation with the injured employee and the
terminated provider and consistent with good professional practice.
Completion of treatment under this paragraph shall not exceed 12
months from the contract termination date.
   (C) A terminal illness. A terminal illness is an incurable or
irreversible condition that has a high probability of causing death
within one year or less. Completion of treatment shall be provided
for the duration of a terminal illness.
   (D) Performance of a surgery or other procedure that is authorized
by the insurer, employer, or entity that provides physician network
services as part of a documented course of treatment and has been
recommended and documented by the provider to occur within 180 days
of the contract's termination date.
   (4) (A) The insurer, employer, or entity that provides physician
network services may require the terminated provider whose services
are continued beyond the contract termination date pursuant to this
section to agree in writing to be subject to the same contractual
terms and conditions that were imposed upon the provider prior to
termination. If the terminated provider does not agree to comply or
does not comply with these contractual terms and conditions, the
insurer, employer, or entity that provides physician network services
is not required to continue the provider's services beyond the
contract termination date.
   (B) Unless otherwise agreed by the terminated provider and the
insurer, employer, or entity that provides physician network
services, the services rendered pursuant to this section shall be
compensated at rates and methods of payment similar to those used by
the insurer, employer, or entity that provides physician network
services for currently contracting providers providing similar
services who are practicing in the same or a similar geographic area
as the terminated provider. The insurer, employer, or entity that
provides physician network services is not required to continue the
services of a terminated provider if the provider does not accept the
payment rates provided for in this paragraph.
   (5) An insurer or employer shall ensure that the requirements of
this section are met.
   (6) This section shall not require an insurer, employer, or entity
that provides physician network services to provide for completion
of treatment by a provider whose contract with the insurer, employer,
or entity that provides physician network services has been
terminated or not renewed for reasons relating to a medical
disciplinary cause or reason, as defined in paragraph (6) of
subdivision (a) of Section 805 of the Business and Profession Code,
or fraud or other criminal activity.
   (7) Nothing in this section shall preclude an insurer, employer,
or entity that provides physician network services from providing
continuity of care beyond the requirements of this section.
   (e) The insurer, employer, or entity that provides physician
network services may require the terminated provider whose services
are continued beyond the contract termination date pursuant to this
section to agree in writing to be subject to the same contractual
terms and conditions that were imposed upon the provider prior to
termination. If the terminated provider does not agree to comply or
does not comply with these contractual terms and conditions, the
insurer, employer, or entity that provides physician network services
is not required to continue the provider's services beyond the
contract termination date.
  SEC. 50.  Section 4616.3 of the Labor Code is amended to read:
   4616.3.  (a) If the injured employee notifies the employer of the
injury or files a claim for workers' compensation with the employer,
the employer shall arrange an initial medical evaluation and begin
treatment as required by Section 4600.
   (b) The employer shall notify the employee of the existence of the
medical provider network established pursuant to this article, the
employee's right to change treating physicians within the network
after the first visit, and the method by which the list of
participating providers may be accessed by the employee. The employer'
s failure to provide notice as required by this subdivision or
failure to post the notice as required by Section 3550 shall not be a
basis for the employee to treat outside the network unless it is
shown that the failure to provide notice resulted in a denial of
medical care.
   (c) If an injured employee disputes either the diagnosis or the
treatment prescribed by the treating physician, the employee may seek
the opinion of another physician in the medical provider network. If
the injured employee disputes the diagnosis or treatment prescribed
by the second physician, the employee may seek the opinion of a third
physician in the medical provider network.
   (d) (1) Selection by the injured employee of a treating physician
and any subsequent physicians shall be based on the physician's
specialty or recognized expertise in treating the particular injury
or condition in question.
   (2) Treatment by a specialist who is not a member of the medical
provider network may be permitted on a case-by-case basis if the
medical provider network does not contain a physician who can provide
the approved treatment and the treatment is approved by the employer
or the insurer.
  SEC. 51.  Section 4616.7 of the Labor Code is amended to read:
   4616.7.  (a) A health care organization certified pursuant to
Section 4600.5 shall be deemed approved pursuant to this article if
the requirements of this article are met, as determined by the
administrative director.
   (b) A health care service plan, licensed pursuant to Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and Safety
Code, shall be deemed approved for purposes of this article if it
has a reasonable number of physicians with competency in occupational
medicine, as determined by the administrative director.
   (c) A group disability insurance policy, as defined in subdivision
(b) of Section 106 of the Insurance Code, that covers hospital,
surgical, and medical care expenses shall be deemed approved for
purposes of this article if it has a reasonable number of physicians
with competency in occupational medicine, as determined by the
administrative director. For the purposes of this section, a group
disability insurance policy shall not include Medicare supplement,
vision-only, dental-only, and Champus-supplement insurance. For
purposes of this section, a group disability insurance policy shall
not include hospital indemnity, accident-only, and specified disease
insurance that pays benefits on a fixed benefit, cash-payment-only
basis.
   (d) Any Taft-Hartley health and welfare fund shall be deemed
approved for purposes of this article if it has a reasonable number
of physicians with competency in occupational medicine, as determined
by the administrative director.
  SEC. 52.  Section 4620 of the Labor Code is amended to read:
   4620.  (a) For purposes of this article, a medical-legal expense
means any costs and expenses incurred by or on behalf of any party,
the administrative director, or the board, which expenses may include
X-rays, laboratory fees, other diagnostic tests, medical reports,
medical records, medical testimony, and, as needed, interpreter's
fees by a certified interpreter pursuant to Article 8 (commencing
with Section 11435.05) of Chapter 4.5 of Part 1 of Division 3 of
Title 2 of, or Section 68566 of, the Government Code, for the purpose
of proving or disproving a contested claim.
   (b) A contested claim exists when the employer knows or reasonably
should know that the employee is claiming entitlement to any benefit
arising out of a claimed industrial injury and one of the following
conditions exists:
   (1) The employer rejects liability for a claimed benefit.
   (2) The employer fails to accept liability for benefits after the
expiration of a reasonable period of time within which to decide if
it will contest the claim.
   (3) The employer fails to respond to a demand for payment of
benefits after the expiration of any time period fixed by statute for
the payment of indemnity.
   (c) Costs of medical evaluations, diagnostic tests, and
interpreters incidental to the production of a medical report do not
constitute medical-legal expenses unless the medical report is
capable of proving or disproving a disputed medical fact, the
determination of which is essential to an adjudication of the
employee's claim for benefits. In determining whether a report meets
the requirements of this subdivision, a judge shall give full
consideration to the substance as well as the form of the report, as
required by applicable statutes and regulations.
   (d) If the injured employee cannot effectively communicate with an
examining physician because he or she cannot proficiently speak or
understand the English language, the injured employee is entitled to
the services of a qualified interpreter during the medical
examination. Upon request of the injured employee, the employer or
insurance carrier shall pay the costs of the interpreter services, as
set forth in the fee schedule adopted by the administrative director
pursuant to Section 5811. An employer shall not be required to pay
for the services of an interpreter who is provisionally certified
unless either the employer consents in advance to the selection of
the individual who provides the interpreting service or the injured
worker requires interpreting service in a language other than the
languages designated pursuant to Section 11435.40 of the Government
Code.
  SEC. 53.  Section 4622 of the Labor Code is amended to read:
   4622.  All medical-legal expenses for which the employer is liable
shall, upon receipt by the employer of all reports and documents
required by the administrative director incident to the services, be
paid to whom the funds and expenses are due, as follows:
   (a) (1) Except as provided in subdivision (b), within 60 days
after receipt by the employer of each separate, written billing and
report, and if payment is not made within this period, that portion
of the billed sum then unreasonably unpaid shall be increased by 10
percent, together with interest thereon at the rate of 7 percent per
annum retroactive to the date of receipt of the bill and report by
the employer. If the employer, within the 60-day period, contests the
reasonableness and necessity for incurring the fees, services, and
expenses using the explanation of review required by Section 4603.3,
payment shall be made within 20 days of the service of an order of
the appeals board or the administrative director pursuant to Section
4603.6 directing payment.
   (2) The penalty provided for in paragraph (1) shall not apply if
both of the following occur:
                       (A) The employer pays the provider that
portion of his or her charges that do not exceed the amount deemed
reasonable pursuant to subdivision (e) within 60 days of receipt of
the report and itemized billing.
   (B) The employer prevails.
   (b) (1) If the provider contests the amount paid, the provider may
request a second review within 90 days of the service of the
explanation of review. The request for a second review shall be
submitted to the employer on a form prescribed by the administrative
director and shall include all of the following:
   (A) The date of the explanation of review and the claim number or
other unique identifying number provided on the explanation of
review.
   (B) The party or parties requesting the service.
   (C) Any item and amount in dispute.
   (D) The additional payment requested and the reason therefor.
   (E) Any additional information requested in the original
explanation of review and any other information provided in support
of the additional payment requested.
   (2) If the provider does not request a second review within 90
days, the bill will be deemed satisfied and neither the employer nor
the employee shall be liable for any further payment.
   (3) Within 14 days of the request for second review, the employer
shall respond with a final written determination on each of the items
or amounts in dispute, including whether additional payment will be
made.
   (4) If the provider contests the amount paid, after receipt of the
second review, the provider shall request an independent bill review
as provided for in Section 4603.6.
   (c) If the employer denies all or a portion of the amount billed
for any reason other than the amount to be paid pursuant to the fee
schedules in effect on the date of service, the provider may object
to the denial within 90 days of the service of the explanation of
review. If the provider does not object to the denial within 90 days,
neither the employer nor the employee shall be liable for the amount
that was denied. If the provider objects to the denial within 90
days of the service of the explanation of review, the employer shall
file a petition and a declaration of readiness to proceed with the
appeals board within 60 days of service of the objection. If the
employer prevails before the appeals board, the appeals board shall
order the physician to reimburse the employer for the amount of the
paid charges found to be unreasonable.
   (d) If requested by the employee, or the dependents of a deceased
employee, within 20 days from the filing of an order of the appeals
board directing payment, and where payment is not made within that
period, that portion of the billed sum then unpaid shall be increased
by 10 percent, together with interest thereon at the rate of 7
percent per annum retroactive to the date of the filing of the order
of the board directing payment.
   (e) (1) Using the explanation of review as described in Section
4603.3, the employer shall notify the provider of the services, the
employee, or if represented, his or her attorney, if the employer
contests the reasonableness or necessity of incurring these expenses,
and shall indicate the reasons therefor.
   (2) The appeals board shall promulgate all necessary and
reasonable rules and regulations to insure compliance with this
section, and shall take such further steps as may be necessary to
guarantee that the rules and regulations are enforced.
   (3) The provisions of Sections 5800 and 5814 shall not apply to
this section.
   (f) Nothing contained in this section shall be construed to create
a rebuttable presumption of entitlement to payment of an expense
upon receipt by the employer of the required reports and documents.
This section is not applicable unless there has been compliance with
Sections 4620 and 4621.
  SEC. 54.  Section 4650 of the Labor Code is amended to read:
   4650.  (a) If an injury causes temporary disability, the first
payment of temporary disability indemnity shall be made not later
than 14 days after knowledge of the injury and disability, on which
date all indemnity then due shall be paid, unless liability for the
injury is earlier denied.
   (b) (1) If the injury causes permanent disability, the first
payment shall be made within 14 days after the date of last payment
of temporary disability indemnity, except as provided in paragraph
(2). When the last payment of temporary disability indemnity has been
made pursuant to subdivision (c) of Section 4656, and regardless of
whether the extent of permanent disability can be determined at that
date, the employer nevertheless shall commence the timely payment
required by this subdivision and shall continue to make these
payments until the employer's reasonable estimate of permanent
disability indemnity due has been paid, and if the amount of
permanent disability indemnity due has been determined, until that
amount has been paid.
   (2) Prior to an award of permanent disability indemnity, a
permanent disability indemnity payment shall not be required if the
employer has offered the employee a position that pays at least 85
percent of the wages and compensation paid to the employee at the
time of injury or if the employee is employed in a position that pays
at least 100 percent of the wages and compensation paid to the
employee at the time of injury, provided that when an award of
permanent disability indemnity is made, the amount then due shall be
calculated from the last date for which temporary disability
indemnity was paid, or the date the employee's disability became
permanent and stationary, whichever is earlier.
   (c) Payment of temporary or permanent disability indemnity
subsequent to the first payment shall be made as due every two weeks
on the day designated with the first payment.
   (d) If any indemnity payment is not made timely as required by
this section, the amount of the late payment shall be increased 10
percent and shall be paid, without application, to the employee,
unless the employer continues the employee's wages under a salary
continuation plan, as defined in subdivision (g). No increase shall
apply to any payment due prior to or within 14 days after the date
the claim form was submitted to the employer under Section 5401. No
increase shall apply when, within the 14-day period specified under
subdivision (a), the employer is unable to determine whether
temporary disability indemnity payments are owed and advises the
employee, in the manner prescribed in rules and regulations adopted
pursuant to Section 138.4, why payments cannot be made within the
14-day period, what additional information is required to make the
decision whether temporary disability indemnity payments are owed,
and when the employer expects to have the information required to
make the decision.
   (e) If the employer is insured for its obligation to provide
compensation, the employer shall be obligated to reimburse the
insurer for the amount of increase in indemnity payments, made
pursuant to subdivision (d), if the late payment which gives rise to
the increase in indemnity payments, is due less than seven days after
the insurer receives the completed claim form from the employer.
Except as specified in this subdivision, an employer shall not be
obligated to reimburse an insurer nor shall an insurer be permitted
to seek reimbursement, directly or indirectly, for the amount of
increase in indemnity payments specified in this section.
   (f) If an employer is obligated under subdivision (e) to reimburse
the insurer for the amount of increase in indemnity payments, the
insurer shall notify the employer in writing, within 30 days of the
payment, that the employer is obligated to reimburse the insurer and
shall bill and collect the amount of the payment no later than at
final audit. However, the insurer shall not be obligated to collect,
and the employer shall not be obligated to reimburse, amounts paid
pursuant to subdivision (d) unless the aggregate total paid in a
policy year exceeds one hundred dollars ($100). The employer shall
have 60 days, following notice of the obligation to reimburse, to
appeal the decision of the insurer to the Department of Insurance.
The notice of the obligation to reimburse shall specify that the
employer has the right to appeal the decision of the insurer as
provided in this subdivision.
   (g) For purposes of this section, "salary continuation plan" means
a plan that meets both of the following requirements:
   (1) The plan is paid for by the employer pursuant to statute,
collective bargaining agreement, memorandum of understanding, or
established employer policy.
   (2) The plan provides the employee on his or her regular payday
with salary not less than the employee is entitled to receive
pursuant to statute, collective bargaining agreement, memorandum of
understanding, or established employer policy and not less than the
employee would otherwise receive in indemnity payments.
  SEC. 55.  Section 4658 of the Labor Code is amended to read:
   4658.  (a) For injuries occurring prior to January 1, 1992, if the
injury causes permanent disability, the percentage of disability to
total disability shall be determined, and the disability payment
computed and allowed, according to paragraph (1). However, in no
event shall the disability payment allowed be less than the
disability payment computed according to paragraph (2).


   (1)
                            Column 2--Number of
                                   weeks
                           for which two-thirds
                                    of
                              average weekly
                                 earnings
Column 1-                  allowed for each 1
-Range                           percent
of percentage                 of permanent
                                disability
of
permanent                   within percentage
disability incurred:             range:
   Under 10..............            3
   10-19.75..............            4
   20-29.75..............            5
   30-49.75..............            6
   50-69.75..............            7
   70-99.75..............            8


   The number of weeks for which payments shall be allowed set forth
in column 2 above based upon the percentage of permanent disability
set forth in column 1 above shall be cumulative, and the number of
benefit weeks shall increase with the severity of the disability. The
following schedule is illustrative of the computation of the number
of benefit weeks:
Column 1-
-                          Column 2-
Percentage                     -
of                        Cumulative
permanent                   number
disability                    of
incurred:               benefit weeks:
   5...................       15.00
  10...................       30.25
  15...................       50.25
  20...................       70.50
  25...................       95.50
  30...................      120.75
  35...................      150.75
  40...................      180.75
  45...................      210.75
  50...................      241.00
  55...................      276.00
  60...................      311.00
  65...................      346.00
  70...................      381.25
  75...................      421.25
  80...................      461.25
  85...................      501.25
  90...................      541.25
  95...................      581.25
  100..................     for life


   (2) Two-thirds of the average weekly earnings for four weeks for
each 1 percent of disability, where, for the purposes of this
subdivision, the average weekly earnings shall be taken at not more
than seventy-eight dollars and seventy-five cents ($78.75).
   (b) This subdivision shall apply to injuries occurring on or after
January 1, 1992. If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed, according to paragraph
(1). However, in no event shall the disability payment allowed be
less than the disability payment computed according to paragraph (2).



   (1)
                            Column 2--Number of
                                   weeks
                           for which two-thirds
                                    of
                              average weekly
                                 earnings
Column 1-                  allowed for each 1
-Range                           percent
of percentage                 of permanent
                                disability
of
permanent                   within percentage
disability incurred:             range:
   Under 10..............            3
   10-19.75..............            4
   20-24.75..............            5
   25-29.75..............            6
   30-49.75..............            7
   50-69.75..............            8
   70-99.75..............            9


   The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
   (2) Two-thirds of the average weekly earnings for four weeks for
each 1 percent of disability, where, for the purposes of this
subdivision, the average weekly earnings shall be taken at not more
than seventy-eight dollars and seventy-five cents ($78.75).
   (c) This subdivision shall apply to injuries occurring on or after
January 1, 2004. If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed as follows:
                            Column 2--Number of
                                   weeks
                           for which two-thirds
                                    of
                              average weekly
                                 earnings
Column 1-                  allowed for each 1
-Range                           percent
of percentage                 of permanent
                                disability
of
permanent                   within percentage
disability incurred:             range:
   Under 10..............            4
   10-19.75..............            5
   20-24.75..............            5
   25-29.75..............            6
   30-49.75..............            7
   50-69.75..............            8
   70-99.75..............            9


   The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
   (d) (1) This subdivision shall apply to injuries occurring on or
after January 1, 2005, and as additionally provided in paragraph (4).
If the injury causes permanent disability, the percentage of
disability to total disability shall be determined, and the basic
disability payment computed as follows:
                            Column 2--Number of
                                   weeks
                           for which two-thirds
                                    of
                              average weekly
                                 earnings
Column 1-                  allowed for each 1
-Range                           percent
of percentage                 of permanent
                                disability
of
permanent                   within percentage
disability incurred:             range:
   0.25-9.75.............            3
   10-14.75..............            4
   15-24.75..............            5
   25-29.75..............            6
   30-49.75..............            7
   50-69.75..............            8
   70-99.75..............           16


   The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
   (2) If, within 60 days of a disability becoming permanent and
stationary, an employer does not offer the injured employee regular
work, modified work, or alternative work, in the form and manner
prescribed by the administrative director, for a period of at least
12 months, each disability payment remaining to be paid to the
injured employee from the date of the end of the 60-day period shall
be paid in accordance with paragraph (1) and increased by 15 percent.
This paragraph shall not apply to an employer that employs fewer
than 50 employees.
   (3) (A) If, within 60 days of a disability becoming permanent and
stationary, an employer offers the injured employee regular work,
modified work, or alternative work, in the form and manner prescribed
by the administrative director, for a period of at least 12 months,
and regardless of whether the injured employee accepts or rejects the
offer, each disability payment remaining to be paid to the injured
employee from the date the offer was made shall be paid in accordance
with paragraph (1) and decreased by 15 percent.
   (B) If the regular work, modified work, or alternative work is
terminated by the employer before the end of the period for which
disability payments are due the injured employee, the amount of each
of the remaining disability payments shall be paid in accordance with
paragraph (1) and increased by 15 percent. An employee who
voluntarily terminates employment shall not be eligible for payment
under this subparagraph. This paragraph shall not apply to an
employer that employs fewer than 50 employees.
   (4) For compensable claims arising before April 30, 2004, the
schedule provided in this subdivision shall not apply to the
determination of permanent disabilities when there has been either a
comprehensive medical-legal report or a report by a treating
physician, indicating the existence of permanent disability, or when
the employer is required to provide the notice required by Section
4061 to the injured worker.
   (e) This subdivision shall apply to injuries occurring on or after
January 1, 2013. If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed as follows:


                            Column 2--Number of
                           weeks for which two-
                             thirds of average
                              weekly earnings
Column 1-                  allowed for each 1
-Range                           percent
of percentage                 of permanent
                                disability
of
permanent                   within percentage
disability incurred:             range:
   0.25-9.75.............            3
   10-14.75..............            4
   15-24.75..............            5
   25-29.75..............            6
   30-49.75..............            7
   50-69.75..............            8
   70-99.75..............           16


   (1) The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).




   (2) If the permanent disability directly caused by the industrial
injury is total, payment shall be made as provided in Section 4659.
  SEC. 56.  Section 4658.5 of the Labor Code is amended to read:
   4658.5.  (a) This section shall apply to injuries occurring on or
after January 1, 2004, and before January 1, 2013.
   (b) Except as provided in Section 4658.6, if the injury causes
permanent partial disability and the injured employee does not return
to work for the employer within 60 days of the termination of
temporary disability, the injured employee shall be eligible for a
supplemental job displacement benefit in the form of a
nontransferable voucher for education-related retraining or skill
enhancement, or both, at state-approved or accredited schools, as
follows:
   (1) Up to four thousand dollars ($4,000) for permanent partial
disability awards of less than 15 percent.
   (2) Up to six thousand dollars ($6,000) for permanent partial
disability awards between 15 and 25 percent.
   (3) Up to eight thousand dollars ($8,000) for permanent partial
disability awards between 26 and 49 percent.
   (4) Up to ten thousand dollars ($10,000) for permanent partial
disability awards between 50 and 99 percent.
   (c) The voucher may be used for payment of tuition, fees, books,
and other expenses required by the school for retraining or skill
enhancement. No more than 10 percent of the voucher moneys may be
used for vocational or return-to-work counseling. The administrative
director shall adopt regulations governing the form of payment,
direct reimbursement to the injured employee upon presentation to the
employer of appropriate documentation and receipts, and other
matters necessary to the proper administration of the supplemental
job displacement benefit.
   (d) A voucher issued on or after January 1, 2013, shall expire two
years after the date the voucher is furnished to the employee or
five years after the date of injury, whichever is later. The employee
shall not be entitled to payment or reimbursement of any expenses
that have not been incurred and submitted with appropriate
documentation to the employer prior to the expiration date.
   (e) An employer shall not be liable for compensation for injuries
incurred by the employee while utilizing the voucher.
  SEC. 57.  Section 4658.6 of the Labor Code is amended to read:
   4658.6.  The employer shall not be liable for the supplemental job
displacement benefit pursuant to Section 4658.5 if the employer
meets either of the following conditions:
   (a) Within 30 days of the termination of temporary disability
indemnity payments, the employer offers, and the employee rejects, or
fails to accept, in the form and manner prescribed by the
administrative director, modified work, accommodating the employee's
work restrictions, lasting at least 12 months.
   (b) Within 30 days of the termination of temporary disability
indemnity payments, the employer offers, and the employee rejects, or
fails to accept, in the form and manner prescribed by the
administrative director, alternative work meeting all of the
following conditions:
   (1) The employee has the ability to perform the essential
functions of the job provided.
   (2) The job provided is in a regular position lasting at least 12
months.
   (3) The job provided offers wages and compensation that are within
15 percent of those paid to the employee at the time of injury.
   (4) The job is located within reasonable commuting distance of the
employee's residence at the time of injury.
  SEC. 58.  Section 4658.7 is added to the Labor Code, to read:
   4658.7.  (a) This section shall apply to injuries occurring on or
after January 1, 2013.
   (b) If the injury causes permanent partial disability, the injured
employee shall be entitled to a supplemental job displacement
benefit as provided in this section unless the employer makes an
offer of regular, modified, or alternative work, as defined in
Section 4658.1, that meets both of the following criteria:
   (1) The offer is made no later than 60 days after receipt by the
claims administrator of the first report received from either the
primary treating physician, an agreed medical evaluator, or a
qualified medical evaluator, in the form created by the
administrative director pursuant to subdivision (h), finding that the
disability from all conditions for which compensation is claimed has
become permanent and stationary and that the injury has caused
permanent partial disability.
   (A) If the employer or claims administrator has provided the
physician with a job description of the employee's regular work,
proposed modified work, or proposed alternative work, the physician
shall evaluate and describe in the form whether the work capacities
and activity restrictions are compatible with the physical
requirements set forth in that job description.
   (B) The claims administrator shall forward the form to the
employer for the purpose of fully informing the employer of work
capacities and activity restrictions resulting from the injury that
are relevant to potential regular, modified, or alternative work.
   (2) The offer is for regular work, modified work, or alternative
work lasting at least 12 months.
   (c) The supplemental job displacement benefit shall be offered to
the employee within 20 days after the expiration of the time for
making an offer of regular, modified, or alternative work pursuant to
paragraph (1) of subdivision (b).
   (d) The supplemental job displacement benefit shall be in the form
of a voucher redeemable as provided in this section up to an
aggregate of six thousand dollars ($6,000).
   (e) The voucher may be applied to any of the following expenses at
the choice of the injured employee:
   (1) Payment for education-related retraining or skill enhancement,
or both, at a California public school or with a provider that is
certified and on the state's Eligible Training Provider List (EPTL),
as authorized by the federal Workforce Investment Act (P.L. 105-220),
including payment of tuition, fees, books, and other expenses
required by the school for retraining or skill enhancement.
   (2) Payment for occupational licensing or professional
certification fees, related examination fees, and examination
preparation course fees.
   (3) Payment for the services of licensed placement agencies,
vocational or return-to-work counseling, and résumé preparation, all
up to a combined limit of 10 percent of the amount of the voucher.
   (4) Purchase of tools required by a training or educational
program in which the employee is enrolled.
   (5) Purchase of computer equipment, up to one thousand dollars
($1,000).
   (6) Up to five hundred dollars ($500) as a miscellaneous expense
reimbursement or advance, payable upon request and without need for
itemized documentation or accounting. The employee shall not be
entitled to any other voucher payment for transportation, travel
expenses, telephone or Internet access, clothing or uniforms, or
incidental expenses.
   (f) The voucher shall expire two years after the date the voucher
is furnished to the employee, or five years after the date of injury,
whichever is later. The employee shall not be entitled to payment or
reimbursement of any expenses that have not been incurred and
submitted with appropriate documentation to the employer prior to the
expiration date.
   (g) Settlement or commutation of a claim for the supplemental job
displacement benefit shall
   not be permitted under Chapter 2 (commencing with Section 5000) or
Chapter 3 (commencing with Section 5100) of Part 3.
   (h) The administrative director shall adopt regulations for the
administration of this section, including, but not limited to, both
of the following:
   (1) The time, manner, and content of notices of rights under this
section.
   (2) The form of a mandatory attachment to a medical report to be
forwarded to the employer pursuant to paragraph (1) of subdivision
(b) for the purpose of fully informing the employer of work
capacities and of activity restrictions resulting from the injury
that are relevant to potential regular work, modified work, or
alternative work.
   (i) An employer shall not be liable for compensation for injuries
incurred by the employee while utilizing the voucher.
  SEC. 59.  Section 4660 of the Labor Code is amended to read:
   4660.  This section shall only apply to injuries occurring before
January 1, 2013.
   (a) In determining the percentages of permanent disability,
account shall be taken of the nature of the physical injury or
disfigurement, the occupation of the injured employee, and his or her
age at the time of the injury, consideration being given to an
employee's diminished future earning capacity.
   (b) (1) For purposes of this section, the "nature of the physical
injury or disfigurement" shall incorporate the descriptions and
measurements of physical impairments and the corresponding
percentages of impairments published in the American Medical
Association (AMA) Guides to the Evaluation of Permanent Impairment
(5th Edition).
   (2) For purposes of this section, an employee's diminished future
earning capacity shall be a numeric formula based on empirical data
and findings that aggregate the average percentage of long-term loss
of income resulting from each type of injury for similarly situated
employees. The administrative director shall formulate the adjusted
rating schedule based on empirical data and findings from the
Evaluation of California's Permanent Disability Rating Schedule,
Interim Report (December 2003), prepared by the RAND Institute for
Civil Justice, and upon data from additional empirical studies.
   (c) The administrative director shall amend the schedule for the
determination of the percentage of permanent disability in accordance
with this section at least once every five years. This schedule
shall be available for public inspection and, without formal
introduction in evidence, shall be prima facie evidence of the
percentage of permanent disability to be attributed to each injury
covered by the schedule.
   (d) The schedule shall promote consistency, uniformity, and
objectivity. The schedule and any amendment thereto or revision
thereof shall apply prospectively and shall apply to and govern only
those permanent disabilities that result from compensable injuries
received or occurring on and after the effective date of the adoption
of the schedule, amendment or revision, as the fact may be. For
compensable claims arising before January 1, 2005, the schedule as
revised pursuant to changes made in legislation enacted during the
2003-04 Regular and Extraordinary Sessions shall apply to the
determination of permanent disabilities when there has been either no
comprehensive medical-legal report or no report by a treating
physician indicating the existence of permanent disability, or when
the employer is not required to provide the notice required by
Section 4061 to the injured worker.
   (e) On or before January 1, 2005, the administrative director
shall adopt regulations to implement the changes made to this section
by the act that added this subdivision.
  SEC. 60.  Section 4660.1 is added to the Labor Code, to read:
   4660.1.  This section shall apply to injuries occurring on or
after January 1, 2013.
   (a) In determining the percentages of permanent partial or
permanent total disability, account shall be taken of the nature of
the physical injury or disfigurement, the occupation of the injured
employee, and his or her age at the time of injury.
   (b) For purposes of this section, the "nature of the physical
injury or disfigurement" shall incorporate the descriptions and
measurements of physical impairments and the corresponding
percentages of impairments published in the American Medical
Association (AMA) Guides to the Evaluation of Permanent Impairment
(5th Edition) with the employee's whole person impairment, as
provided in the Guides, multiplied by an adjustment factor of 1.4.
   (c) (1) Except as provided in paragraph (2), there shall be no
increases in impairment ratings for sleep dysfunction, sexual
dysfunction, or psychiatric disorder, or any combination thereof,
arising out of a compensable physical injury. Nothing in this section
shall limit the ability of an injured employee to obtain treatment
for sleep dysfunction, sexual dysfunction, or psychiatric disorder,
if any, that are a consequence of an industrial injury.
   (2) An increased impairment rating for psychiatric disorder shall
not be subject to paragraph (1) if the compensable psychiatric injury
resulted from either of the following:
    (A) Being a victim of a violent act or direct exposure to a
significant violent act within the meaning of Section 3208.3.
   (B) A catastrophic injury, including, but not limited to, loss of
a limb, paralysis, severe burn, or severe head injury.
   (d) The administrative director may formulate a schedule of age
and occupational modifiers and may amend the schedule for the
determination of the age and occupational modifiers in accordance
with this section. The Schedule for Rating Permanent Disabilities
pursuant to the American Medical Association (AMA) Guides to the
Evaluation of Permanent Impairment (5th Edition) and the schedule of
age and occupational modifiers shall be available for public
inspection and, without formal introduction in evidence, shall be
prima facie evidence of the percentage of permanent disability to be
attributed to each injury covered by the schedule. Until the schedule
of age and occupational modifiers is amended, for injuries occurring
on or after January 1, 2013, permanent disabilities shall be rated
using the age and occupational modifiers in the permanent disability
rating schedule adopted as of January 1, 2005.
   (e) The schedule of age and occupational modifiers shall promote
consistency, uniformity, and objectivity.
   (f) The schedule of age and occupational modifiers and any
amendment thereto or revision thereof shall apply prospectively and
shall apply to and govern only those permanent disabilities that
result from compensable injuries received or occurring on and after
the effective date of the adoption of the schedule, amendment, or
revision, as the case may be.
   (g) Nothing in this section shall preclude a finding of permanent
total disability in accordance with Section 4662.
   (h) In enacting the act adding this section, it is not the intent
of the Legislature to overrule the holding in Milpitas Unified School
District v. Workers' Comp. Appeals Bd. (Guzman) (2010) 187
Cal.App.4th 808.
   (i) The Commission on Health and Safety and Workers' Compensation
shall conduct a study to compare average loss of earnings for
employees who sustained work-related injuries with permanent
disability ratings under the schedule, and shall report the results
of the study to the appropriate policy and fiscal committees of the
Legislature no later than January 1, 2016.
  SEC. 61.  Section 4701 of the Labor Code is amended to read:
   4701.  If an injury causes death, either with or without
disability, the employer shall be liable, in addition to any other
benefits provided by this division, for all of the following:
   (a) Reasonable expenses of the employee's burial, in accordance
with the following:
   (1) Up to two thousand dollars ($2,000) for injuries occurring
prior to January 1, 1991.
   (2) Up to five thousand dollars ($5,000) for injuries occurring on
or after January 1, 1991, and prior to January 1, 2013.
   (3) Up to ten thousand dollars ($10,000) for injuries occurring on
or after January 1, 2013.
   (b) A death benefit, to be allowed to the dependents when the
employee leaves any person dependent upon him or her for support.
  SEC. 62.  Section 4903 of the Labor Code is amended to read:
   4903.  The appeals board may determine, and allow as liens against
any sum to be paid as compensation, any amount determined as
hereinafter set forth in subdivisions (a) through (i). If more than
one lien is allowed, the appeals board may determine the priorities,
if any, between the liens allowed. The liens that may be allowed
hereunder are as follows:
   (a) A reasonable attorney's fee for legal services pertaining to
any claim for compensation either before the appeals board or before
any of the appellate courts, and the reasonable disbursements in
connection therewith. No fee for legal services shall be awarded to
any representative who is not an attorney, except with respect to
those claims for compensation for which an application, pursuant to
Section 5501, has been filed with the appeals board on or before
December 31, 1991, or for which a disclosure form, pursuant to
Section 4906, has been sent to the employer, or insurer or
third-party administrator, if either is known, on or before December
31, 1991.
   (b) The reasonable expense incurred by or on behalf of the injured
employee, as provided by Article 2 (commencing with Section 4600),
except those disputes subject to independent medical review or
independent bill review.
   (c) The reasonable value of the living expenses of an injured
employee or of his or her dependents, subsequent to the injury.
   (d) The reasonable burial expenses of the deceased employee, not
to exceed the amount provided for by Section 4701.
   (e) The reasonable living expenses of the spouse or minor children
of the injured employee, or both, subsequent to the date of the
injury, where the employee has deserted or is neglecting his or her
family. These expenses shall be allowed in the proportion that the
appeals board deems proper, under application of the spouse, guardian
of the minor children, or the assignee, pursuant to subdivision (a)
of Section 11477 of the Welfare and Institutions Code, of the spouse,
a former spouse, or minor children. A collection received as a
result of a lien against a workers' compensation award imposed
pursuant to this subdivision for payment of child support ordered by
a court shall be credited as provided in Section 695.221 of the Code
of Civil Procedure.
   (f) The amount of unemployment compensation disability benefits
that have been paid under or pursuant to the Unemployment Insurance
Code in those cases where, pending a determination under this
division there was uncertainty whether the benefits were payable
under the Unemployment Insurance Code or payable hereunder; provided,
however, that any lien under this subdivision shall be allowed and
paid as provided in Section 4904.
   (g) The amount of unemployment compensation benefits and extended
duration benefits paid to the injured employee for the same day or
days for which he or she receives, or is entitled to receive,
temporary total disability indemnity payments under this division;
provided, however, that any lien under this subdivision shall be
allowed and paid as provided in Section 4904.
   (h) The amount of family temporary disability insurance benefits
that have been paid to the injured employee pursuant to the
Unemployment Insurance Code for the same day or days for which that
employee receives, or is entitled to receive, temporary total
disability indemnity payments under this division, provided, however,
that any lien under this subdivision shall be allowed and paid as
provided in Section 4904.
   (i) The amount of indemnification granted by the California
Victims of Crime Program pursuant to Article 1 (commencing with
Section 13959) of Chapter 5 of Part 4 of Division 3 of Title 2 of the
Government Code.
  SEC. 63.  Section 4903.05 is added to the Labor Code, to read:
   4903.05.  (a) Every lien claimant shall file its lien with the
appeals board in writing upon a form approved by the appeals board.
The lien shall be accompanied by a full statement or itemized voucher
supporting the lien and justifying the right to reimbursement and
proof of service upon the injured worker or, if deceased, upon the
worker's dependents, the employer, the insurer, and the respective
attorneys or other agents of record. Medical records shall be filed
only if they are relevant to the issues being raised by the lien.
   (b) Any lien claim for expenses under subdivision (b) of Section
4903 or for claims of costs shall be filed with the appeals board
electronically using the form approved by the appeals board. The lien
shall be accompanied by a proof of service and any other documents
that may be required by the appeals board. The service requirements
for Section 4603.2 are not modified by this section.
   (c) All liens filed on or after January 1, 2013, for expenses
under subdivision (b) of Section 4903 or for claims of costs shall be
subject to a filing fee as provided by this subdivision.
   (1) The lien claimant shall pay a filing fee of one hundred fifty
dollars ($150) to the Division of Workers' Compensation prior to
filing a lien and shall include proof that the filing fee has been
paid. The fee shall be collected through an electronic payment system
that accepts major credit cards and any additional forms of
electronic payment selected by the administrative director. If the
administrative director contracts with a service provider for the
processing of electronic payments, any processing fee shall be
absorbed by the division and not added to the fee charged to the lien
filer.
   (2) On or after January 1, 2013, a lien submitted for filing that
does not comply with paragraph (1) shall be invalid, even if lodged
with the appeals board, and shall not operate to preserve or extend
any time limit for filing of the lien.
   (3) The claims of two or more providers of goods or services shall
not be merged into a single lien.
   (4) The filing fee shall be collected by the administrative
director. All fees shall be deposited in the Workers' Compensation
Administration Revolving Fund and applied for the purposes of that
fund.
   (5) The administrative director shall adopt reasonable rules and
regulations governing the procedure for the collection of the filing
fee, including emergency regulations as necessary to implement this
section.
   (6) Any lien filed for goods or services that are not the proper
subject of a lien may be dismissed upon request of a party by
verified petition or on the appeals board's own motion. If the lien
is dismissed, the lien claimant will not be entitled to reimbursement
of the filing fee.
   (7) No filing fee shall be required for a lien filed by a health
care service plan licensed pursuant to Section 1349 of the Health and
Safety Code, a group disability insurer under a policy issued in
this state pursuant to the provisions of Section 10270.5 of the
Insurance Code, a self-insured employee welfare benefit plan, as
defined in Section 10121 of the Insurance Code, that is issued in
this state, a Taft-Hartley health and welfare fund, or a publicly
funded program providing medical benefits on a nonindustrial basis.
  SEC. 64.  Section 4903.06 is added to the Labor Code, to read:
   4903.06.  (a) Any lien filed pursuant to subdivision (b) of
Section 4903 prior to January 1, 2013, and any cost that was filed as
a lien prior to January 1, 2013, shall be subject to a lien
activation fee unless the lien claimant provides proof of having paid
a filing fee as previously required by former Section 4903.05 as
added by Chapter 639 of the Statutes of 2003.
   (1) The lien claimant shall pay a lien activation fee of one
hundred dollars ($100) to the Division of Workers' Compensation on or
before January 1, 2014. The fee shall be collected through an
electronic payment system that accepts major credit cards and any
additional forms of electronic payment selected by the administrative
director. If the administrative director contracts with a service
provider for the processing of electronic payments, any processing
fee shall be absorbed by the division and not added to the fee
charged to the lien filer.
   (2) The lien claimant shall include proof of payment of the filing
fee or lien activation fee with the declaration of readiness to
proceed.
   (3) The lien activation fee shall be collected by the
administrative director. All fees shall be deposited in the Workers'
Compensation Administration Revolving Fund and applied for the
purposes of that fund. The administrative director shall adopt
reasonable rules and regulations governing the procedure for the
collection of the lien activation fee and to implement this section,
including emergency regulations, as necessary.
   (4) All lien claimants that did not file the declaration of
readiness to proceed and that remain a lien claimant of record at the
time of a lien conference shall submit proof of payment of the
activation fee at the lien conference. If the fee has not been paid
or no proof of payment is available, the lien shall be dismissed with
prejudice.
   (5) Any lien filed pursuant to subdivision (b) of Section 4903
prior to January 1, 2013, and any cost that was filed as a lien prior
to January 1, 2013, for which the filing fee or lien activation fee
has not been paid by January 1, 2014, is dismissed by operation of
law.
   (b) This section shall not apply to any lien filed by a health
care service plan licensed pursuant to Section 1349 of the Health and
Safety Code, a group disability insurer under a policy issued in
this state pursuant to the provisions of Section 10270.5 of the
Insurance Code, a self-insured employee welfare benefit plan, as
defined in Section 10121 of the Insurance Code, that is issued in
this state, a Taft-Hartley health and welfare fund, or a publicly
funded program providing medical benefits on a nonindustrial basis.
  SEC. 65.  Section 4903.07 is added to the Labor Code, to read:
   4903.07.  (a) A lien claimant shall be entitled to an order or
award for reimbursement of a lien filing fee or lien activation fee,
together with interest at the rate allowed on civil judgments, only
if all of the following conditions are satisfied:
   (1) Not less than 30 days before filing the lien for which the
filing fee was paid or filing the declaration of readiness for which
the lien activation fee was paid, the lien claimant has made written
demand for settlement of the lien claim for a clearly stated sum
which shall be inclusive of all claims of debt, interest, penalty, or
other claims potentially recoverable on the lien.
   (2) The defendant fails to accept the settlement demand in writing
within 20 days of receipt of the demand for settlement, or within
any additional time as may be provide by the written demand.
   (3) After submission of the lien dispute to the appeals board or
an arbitrator, a final award is made in favor of the lien claimant of
a specified sum that is equal to or greater than the amount of the
settlement demand. The amount of the interest and filing fee or lien
activation fee shall not be considered in determining whether the
award is equal to or greater than the demand.
   (b) This section shall not preclude an order or award of
reimbursement of the filing fee or activation fee pursuant to the
express terms of an agreed disposition of a lien dispute.
  SEC. 66.  Section 4903.1 of the Labor Code is amended to read:
   4903.1.  (a) The appeals board or arbitrator, before issuing an
award or approval of any compromise of claim, shall determine, on the
basis of liens filed with it pursuant to Section 4903.05, whether
any benefits have been paid or services provided by a health care
provider, a health care service plan, a group disability policy,
including a loss of income policy or a self-insured employee welfare
benefit plan, and its award or approval shall provide for
reimbursement for benefits paid or services provided under these
plans as follows:
   (1) If the appeals board issues an award finding that an injury or
illness arises out of and in the course of employment, but denies
the applicant reimbursement for self-procured medical costs solely
because of lack of notice to the applicant's employer of his need for
hospital, surgical, or medical care, the appeals board shall
nevertheless award a lien against the employee's recovery, to the
extent of benefits paid or services provided, for the effects of the
industrial injury or illness, by a health care provider, a health
care service plan, a group disability policy or a self-insured
employee welfare benefit plan, subject to the provisions described in
subdivision (b).
   (2) If the appeals board issues an award finding that an injury or
illness arises out of and in the course of employment, and makes an
award for reimbursement for self-procured medical costs, the appeals
board shall allow a lien, to the extent of benefits paid or services
provided, for the effects of the industrial injury or illness, by a
health care provider, a health care service plan, a group disability
policy or a self-insured employee welfare benefit plan, subject to
the provisions of subdivision (b). For purposes of this paragraph,
benefits paid or services provided by a self-insured employee welfare
benefit plan shall be determined notwithstanding the official
medical fee schedule adopted pursuant to Section 5307.1.
   (3) If the appeals board issues an award finding that an injury or
illness arises out of and in the course of employment and makes an
award for temporary disability indemnity, the appeals board shall
allow a lien as living expense under Section 4903, for benefits paid
by a group disability policy providing loss of time benefits. The
lien shall be allowed to the extent that benefits have been paid for
the same day or days for which temporary disability indemnity is
awarded and shall not exceed the award for temporary disability
indemnity. A lien shall not be allowed hereunder unless the group
disability policy provides for reduction, exclusion, or coordination
of loss of time benefits on account of workers' compensation
benefits.
   (4) If the parties propose that the case be disposed of by way of
a compromise and release agreement, in the event the lien claimant,
other than a health care provider, does not agree to the amount
allocated to it, then the appeals board shall determine the potential
recovery and reduce the amount of the lien in the ratio of the
applicant's recovery to the potential recovery in full satisfaction
of its lien claim.
   (b) Notwithstanding subdivision (a), payment or reimbursement
shall not be allowed, whether payable by the employer or payable as a
lien against the employee's recovery, for any expense incurred as
provided by Article 2 (commencing with Section 4600) of Chapter 2 of
Part 2, nor shall the employee have any liability for the expense, if
at the time the expense was incurred the provider either knew or in
the exercise of reasonable diligence should have known that the
condition being treated was caused by the employee's present or prior
employment, unless at the time the expense was incurred at least one
of the following conditions was met:
   (1) The expense was incurred for services authorized by the
employer.
   (2) The expense was incurred for services furnished while the
employer failed or refused to furnish treatment as required by
subdivision (c) of Section 5402.
   (3) The expense was necessarily incurred for an emergency medical
condition, as defined by subdivision (b) of Section 1317.1 of the
Health and Safety Code.
   (c) The changes made to this section by Senate Bill 457 of the
2011-12 Regular Session do not modify in any way the rights or
obligations of the following:
   (1) Any health care provider to file and prosecute a lien pursuant
to subdivision (b) of Section 4903.
   (2) A payer to conduct utilization review pursuant to Section
4610.
   (3) Any party in complying with the requirements under Section
4903.
  SEC. 66.5.  Section 4903.1 of the Labor Code is amended to read:
   4903.1.  (a) The appeals board or arbitrator, before issuing an
award or approval of any compromise of claim, shall determine, on the
basis of liens filed with it pursuant to Section 4903.05, whether
any benefits have been paid or services provided by a health care
provider, a health care service plan, a group disability policy,
including a loss-of-income policy or a self-insured employee welfare
benefit plan, and its award or approval shall provide for
reimbursement for benefits paid or services provided under these
plans as follows:
   (1)  If the appeals board issues an award finding that an injury
or illness arises out of and in the course of employment, but denies
the applicant reimbursement for self-procured medical costs solely
because of lack of notice to the applicant's employer of his or her
need for hospital, surgical, or medical care, the appeals board shall
nevertheless award a lien against the employee's recovery, to the
extent of benefits paid or services provided, for the effects of the
industrial injury or illness, by a health care provider, a health
care service plan, a group disability policy or a self-insured
employee welfare benefit plan, subject to the provisions described in
subdivision (b).
   (2)  If the appeals board issues an award finding that an injury
or illness arises out of and in the course of employment, and makes
an award for reimbursement for self-procured medical costs, the
appeals board shall allow a lien, to the extent of benefits paid or
services provided, for the effects of the industrial injury or
illness, by a health care provider, a health care service plan, a
group disability policy or a self-insured employee welfare benefit
plan, subject to the provisions of subdivision (b). For purposes of
this paragraph, benefits paid or services provided by a self-insured
employee welfare benefit plan shall be determined notwithstanding the
official medical fee schedule adopted pursuant to Section 5307.1.
   (3) (A) If the appeals board issues an award finding that an
injury or illness arises out of and in the course of employment and
makes an award for temporary disability indemnity, the appeals board
shall allow a lien as living expense under Section 4903, for benefits
paid by a group disability policy providing loss-of-time benefits
and for loss-of-time benefits paid by a self-insured employee welfare
benefit plan. The lien shall be allowed to the extent that benefits
have been paid for the same day or days for which temporary
disability indemnity is awarded and shall not exceed the award
                                   for temporary disability
indemnity. A lien shall not be allowed hereunder unless the group
disability policy or self-insured employee welfare benefit plan
provides for reduction, exclusion, or coordination of loss-of-time
benefits on account of workers' compensation benefits.
   (B) For purposes of this paragraph, "self-insured employee welfare
benefit plan" means any plan, fund, or program that is established
or maintained by an employer or by an employee organization, or by
both, to the extent that the plan, fund, or program was established
or is maintained for the purpose of providing for its participants or
their beneficiaries, other than through the purchase of insurance,
either of the following:
   (i) Medical, surgical, or hospital care or benefits.
   (ii) Monetary or other benefits in the event of sickness,
accident, disability, death, or unemployment.
   (4)  If the parties propose that the case be disposed of by way of
a compromise and release agreement, in the event the lien claimant,
other than a health care provider, does not agree to the amount
allocated to it, then the appeals board shall determine the potential
recovery and reduce the amount of the lien in the ratio of the
applicant's recovery to the potential recovery in full satisfaction
of its lien claim.
   (b) Notwithstanding subdivision (a), payment or reimbursement
shall not be allowed, whether payable by the employer or payable as a
lien against the employee's recovery, for any expense incurred as
provided by Article 2 (commencing with Section 4600) of Chapter 2 of
Part 2, nor shall the employee have any liability for the expense, if
at the time the expense was incurred the provider either knew or in
the exercise of reasonable diligence should have known that the
condition being treated was caused by the employee's present or prior
employment, unless at the time the expense was incurred at least one
of the following conditions was met:
   (1) The expense was incurred for services authorized by the
employer.
   (2) The expense was incurred for services furnished while the
employer failed or refused to furnish treatment as required by
subdivision (e) of Section 5402.
   (3) The expense was necessarily incurred for an emergency medical
condition, as defined by subdivision (c) of Section 1317.1 of the
Health and Safety Code.
   (c) The changes made to this section by Senate Bill 457 of the
2011-12 Regular Session do not modify in any way the rights or
obligations of the following:
   (1) Any health care provider to file and prosecute a lien pursuant
to subdivision (b) of Section 4903.
   (2) A payer to conduct utilization review pursuant to Section
4610.
   (3) Any party in complying with the requirements under Section
4903.
  SEC. 67.  Section 4903.4 of the Labor Code is amended to read:
   4903.4.  (a) If a dispute arises concerning a lien for expenses
incurred by or on behalf of the injured employee as provided by
Article 2 (commencing with Section 4600) of Chapter 2 of Part 2, the
appeals board may resolve the dispute in a separate proceeding, which
may include binding arbitration upon agreement of the employer, lien
claimant, and the employee, if the employee remains a party to the
dispute, according to the rules of practice and procedure.
   (b) If the dispute is heard at a separate proceeding it shall be
calendared for hearing or hearings as determined by the appeals board
based upon the resources available to the appeals board and other
considerations as the appeals board deems appropriate and shall not
be subject to Section 5501.
  SEC. 68.  Section 4903.5 of the Labor Code is amended to read:
   4903.5.  (a) A lien claim for expenses as provided in subdivision
(b) of Section 4903 shall not be filed after three years from the
date the services were provided, nor more than 18 months after the
date the services were provided, if the services were provided on or
after July 1, 2013.
   (b) Notwithstanding subdivision (a), any health care service plan
licensed pursuant to Section 1349 of the Health and Safety Code,
group disability insurer under a policy issued in this state pursuant
to the provisions of Section 10270.5 of the Insurance Code,
self-insured employee welfare benefit plan issued in this state as
defined in Section 10121 of the Insurance Code, Taft-Hartley health
and welfare fund, or publicly funded program providing medical
benefits on a nonindustrial basis, may file a lien claim for expenses
as provided in subdivision (b) of Section 4903 within 12 months
after the entity first knew or in the exercise of reasonable
diligence should have known that an industrial injury is being
claimed, but in no event later than five years from the date the
services were provided to the employee.
   (c) The injured worker shall not be liable for any underlying
obligation if a lien claim has not been filed and served within the
allowable period. Except when the lien claimant is the applicant as
provided in Section 5501 or as otherwise permitted by rules of
practice and procedure adopted by the appeals board, a lien claimant
shall not file a declaration of readiness to proceed in any case
until the case-in-chief has been resolved.
   (d) This section shall not apply to civil actions brought under
the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part
2 of Division 7 of the Business and Professions Code), the Unfair
Practices Act (Chapter 4 (commencing with Section 17000) of Part 2 of
Division 7 of the Business and Professions Code), or the federal
Racketeer Influenced and Corrupt Organization Act (Chapter 96
(commencing with Section 1961) of Title 18 of the United States Code)
based on concerted action with other insurers that are not parties
to the case in which the lien or claim is filed.
  SEC. 69.  Section 4903.6 of the Labor Code is amended to read:
   4903.6.  (a) Except as necessary to meet the requirements of
Section 4903.5, a lien claim or application for adjudication shall
not be filed or served under subdivision (b) of Section 4903 until
both of the following have occurred:
   (1) Sixty days have elapsed after the date of acceptance or
rejection of liability for the claim, or expiration of the time
provided for investigation of liability pursuant to subdivision (b)
of Section 5402, whichever date is earlier.
   (2) Either of the following:
   (A) The time provided for payment of medical treatment bills
pursuant to Section 4603.2 has expired and, if the employer objected
to the amount of the bill, the reasonable fee has been determined
pursuant to Section 4603.6, and, if authorization for the medical
treatment has been disputed pursuant to Section 4610, the medical
necessity of the medical treatment has been determined pursuant to
Sections 4610.5 and 4610.6.
   (B) The time provided for payment of medical-legal expenses
pursuant to Section 4622 has expired and, if the employer objected to
the amount of the bill, the reasonable fee has been determined
pursuant to Section 4603.6.
   (b) All lien claimants under Section 4903 shall notify the
employer and the employer's representative, if any, and the employee
and his or her representative, if any, and the appeals board within
five working days of obtaining, changing, or discharging
representation by an attorney or nonattorney representative. The
notice shall set forth the legal name, address, and telephone number
of the attorney or nonattorney representative.
   (c) A declaration of readiness to proceed shall not be filed for a
lien under subdivision (b) of Section 4903 until the underlying case
has been resolved or where the applicant chooses not to proceed with
his or her case.
   (d) With the exception of a lien for services provided by a
physician as defined in Section 3209.3, no lien claimant shall be
entitled to any medical information, as defined in subdivision (g) of
Section 50.05 of the Civil Code, about an injured worker without
prior written approval of the appeals board. Any order authorizing
disclosure of medical information to a lien claimant other than a
physician shall specify the information to be provided to the lien
claimant and include a finding that such information is relevant to
the proof of the matter for which the information is sought. The
appeals board shall adopt reasonable regulations to ensure compliance
with this section, and shall take any further steps as may be
necessary to enforce the regulations, including, but not limited to,
impositions of sanctions pursuant to Section 5813.
   (e) The prohibitions of this section shall not apply to lien
claims, applications for adjudication, or declarations of readiness
to proceed filed by or on behalf of the employee, or to the filings
by or on behalf of the employer.
  SEC. 70.  Section 4903.8 is added to the Labor Code, to read:
   4903.8.  (a) Any order or award for payment of a lien filed
pursuant to subdivision (b) of Section 4903 shall be made for payment
only to the person who was entitled to payment for the expenses as
provided in subdivision (b) of Section 4903 at the time the expenses
were incurred, and not to an assignee unless the person has ceased
doing business in the capacity held at the time the expenses were
incurred and has assigned all right, title, and interests in the
remaining accounts receivable to the assignee.
   (b) If there has been an assignment of a lien, either as an
assignment of all right, title, and interest in the accounts
receivable or as an assignment for collection, a true and correct
copy of the assignment shall be filed and served.
   (1) If the lien is filed on or after January 1, 2013, and the
assignment occurs before the filing of the lien, the copy of the
assignment shall be served at the time the lien is filed.
   (2) If the lien is filed on or after January 1, 2013, and the
assignment occurs after the filing of the lien, the copy of the
assignment shall be served within 20 days of the date of the
assignment.
   (3) If the lien is filed before January 1, 2013, the copy of the
assignment shall be served by January 1, 2014, or with the filing of
a declaration of readiness or at the time of a lien hearing,
whichever is earliest.
   (c) If there has been more than one assignment of the same
receivable or bill, the appeals board may set the matter for hearing
on whether the multiple assignments constitute bad-faith actions or
tactics that are frivolous, harassing, or intended to cause
unnecessary delay or expense. If so found by the appeals board,
appropriate sanctions, including costs and attorney's fees, may be
awarded against the assignor, assignee, and their respective
attorneys.
   (d) At the time of filing of a lien on or after January 1, 2013,
or in the case of a lien filed before January 1, 2013, at the
earliest of the filing of a declaration of readiness, a lien hearing,
or January 1, 2014, supporting documentation shall be filed
including one or more declarations under penalty of perjury by a
natural person or persons competent to testify to the facts stated,
declaring both of the following:
   (1) The services or products described in the bill for services or
products were actually provided to the injured employee.
   (2) The billing statement attached to the lien truly and
accurately describes the services or products that were provided to
the injured employee.
   (e) A lien submitted for filing on or after January 1, 2013, for
expenses provided in subdivision (b) of Section 4903, that does not
comply with the requirements of this section shall be deemed to be
invalid, whether or not accepted for filing by the appeals board, and
shall not operate to preserve or extend any time limit for filing of
the lien.
   (f) This section shall take effect without regulatory action. The
appeals board and the administrative director may promulgate
regulations and forms for the implementation of this section.
  SEC. 71.  Section 4904 of the Labor Code is amended to read:
   4904.  (a) If notice is given in writing to the insurer, or to the
employer if uninsured, setting forth the nature and extent of any
claim that is allowable as a lien in favor of the Employment
Development Department, the claim is a lien against any amount
thereafter payable as temporary or permanent disability compensation,
subject to the determination of the amount and approval of the lien
by the appeals board. When the Employment Development Department has
served an insurer or employer with a lien claim, the insurer or
employer shall notify the Employment Development Department, in
writing, as soon as possible, but in no event later than 15 working
days after commencing disability indemnity payments. When a lien has
been served on an insurer or an employer by the Employment
Development Department, the insurer or employer shall notify the
Employment Development Department, in writing, within 10 working days
of filing an application for adjudication, a stipulated award, or a
compromise and release with the appeals board.
   (b) (1) In determining the amount of lien to be allowed for
unemployment compensation disability benefits under subdivision (f)
of Section 4903, the appeals board shall allow the lien in the amount
of benefits which it finds were paid for the same day or days of
disability for which an award of compensation for any permanent
disability indemnity resulting solely from the same injury or illness
or temporary disability indemnity, or both, is made and for which
the employer has not reimbursed the Employment Development Department
pursuant to Section 2629.1 of the Unemployment Insurance Code.
   (2) In determining the amount of lien to be allowed for
unemployment compensation benefits and extended duration benefits
under subdivision (g) of Section 4903, the appeals board shall allow
the lien in the amount of benefits which it finds were paid for the
same day or days for which an award of compensation for temporary
total disability is made.
   (3) In determining the amount of lien to be allowed for family
temporary disability insurance benefits under subdivision (h) of
Section 4903, the appeals board shall allow the lien in the amount of
benefits that it finds were paid for the same day or days for which
an award of compensation for temporary total disability is made and
for which the employer has not reimbursed the Employment Development
Department pursuant to Section 2629.1 of the Unemployment Insurance
Code.
   (c) In the case of agreements for the compromise and release of a
disputed claim for compensation, the applicant and defendant may
propose to the appeals board, as part of the compromise and release
agreement, an amount out of the settlement to be paid to any lien
claimant claiming under subdivision (f), (g), or (h) of Section 4903.
If the lien claimant objects to the amount proposed for payment of
its lien under a compromise and release settlement or stipulation,
the appeals board shall determine the extent of the lien claimant's
entitlement to reimbursement on its lien and make and file findings
on all facts involved in the controversy over this issue in
accordance with Section 5313. The appeals board may approve a
compromise and release agreement or stipulation which proposes the
disallowance of a lien, in whole or in part, only where there is
proof of service upon the lien claimant by the defendant, not less
than 15 days prior to the appeals board action, of all medical and
rehabilitation documents and a copy of the proposed compromise and
release agreement or stipulation. The determination of the appeals
board, subject to petition for reconsideration and to the right of
judicial review, as to the amount of lien allowed under subdivision
(f), (g), or (h) of Section 4903, whether in connection with an award
of compensation or the approval of a compromise and release
agreement, shall be binding on the lien claimant, the applicant, and
the defendant, insofar as the right to benefits paid under the
Unemployment Insurance Code for which the lien was claimed. The
appeals board may order the amount of any lien claim, as determined
and allowed by it, to be paid directly to the person entitled, either
in a lump sum or in installments.
   (d) Where unemployment compensation disability benefits, including
family temporary disability insurance benefits, have been paid
pursuant to the Unemployment Insurance Code while reconsideration of
an order, decision, or award is pending, or has been granted, the
appeals board shall determine and allow a final amount on the lien as
of the date the board is ready to issue its decision denying a
petition for reconsideration or affirming, rescinding, altering or
amending the original findings, order, decision, or award.
   (e) The appeals board shall not be prohibited from approving a
compromise and release agreement on all other issues and deferring to
subsequent proceedings the determination of a lien claimant's
entitlement to reimbursement if the defendant in any of these
proceedings agrees to pay the amount subsequently determined to be
due under the lien claim.
   (f) The amendments made to this section by the act adding this
subdivision are declaratory of existing law, and shall not constitute
good cause to reopen, rescind, or amend any final order, decision,
or award of the appeals board.
  SEC. 72.  Section 4905 of the Labor Code is amended to read:
   4905.  Except with regard to liens as permitted by subdivision (b)
of Section 4903, if it appears in any proceeding pending before the
appeals board that a lien should be allowed if it had been duly
requested by the party entitled thereto, the appeals board may,
without any request for such lien having been made, order the payment
of the claim to be made directly to the person entitled, in the same
manner and with the same effect as though the lien had been
regularly requested, and the award to such person shall constitute a
lien against unpaid compensation due at the time of service of the
award.
  SEC. 73.  Section 4907 of the Labor Code is amended to read:
   4907.  (a) The privilege of any person, except attorneys admitted
to practice in the Supreme Court of the state, to appear in any
proceeding as a representative of any party before the appeals board,
or any of its workers' compensation administrative law judges, may,
after a hearing, be removed, denied, or suspended by the appeals
board for either of the following:
   (1) For a violation of this chapter, the Rules of the Workers'
Compensation Appeals Board, or the Rules of the Administrative
Director.
   (2) For other good cause, including, but not limited to, failure
to pay final order of sanctions, attorney's fees, or costs issued
under Section 5813.
   (b) For purposes of this section, nonattorney representatives
shall be held to the same professional standards of conduct as
attorneys.
  SEC. 74.  Section 5307.1 of the Labor Code is amended to read:
   5307.1.  (a) (1) The administrative director, after public
hearings, shall adopt and revise periodically an official medical fee
schedule that shall establish reasonable maximum fees paid for
medical services other than physician services, drugs and pharmacy
services, health care facility fees, home health care, and all other
treatment, care, services, and goods described in Section 4600 and
provided pursuant to this section. Except for physician services, all
fees shall be in accordance with the fee-related structure and rules
of the relevant Medicare and Medi-Cal payment systems, provided that
employer liability for medical treatment, including issues of
reasonableness, necessity, frequency, and duration, shall be
determined in accordance with Section 4600. Commencing January 1,
2004, and continuing until the time the administrative director has
adopted an official medical fee schedule in accordance with the
fee-related structure and rules of the relevant Medicare payment
systems, except for the components listed in subdivision (j), maximum
reasonable fees shall be 120 percent of the estimated aggregate fees
prescribed in the relevant Medicare payment system for the same
class of services before application of the inflation factors
provided in subdivision (g), except that for pharmacy services and
drugs that are not otherwise covered by a Medicare fee schedule
payment for facility services, the maximum reasonable fees shall be
100 percent of fees prescribed in the relevant Medi-Cal payment
system. Upon adoption by the administrative director of an official
medical fee schedule pursuant to this section, the maximum reasonable
fees paid shall not exceed 120 percent of estimated aggregate fees
prescribed in the Medicare payment system for the same class of
services before application of the inflation factors provided in
subdivision (g). Pharmacy services and drugs shall be subject to the
requirements of this section, whether furnished through a pharmacy or
dispensed directly by the practitioner pursuant to subdivision (b)
of Section 4024 of the Business and Professions Code.
   (2) (A) The administrative director, after public hearings, shall
adopt and review periodically an official medical fee schedule based
on the resource-based relative value scale for physician services and
nonphysician practitioner services, as defined by the administrative
director, provided that all of the following apply:
   (i) Employer liability for medical treatment, including issues of
reasonableness, necessity, frequency, and duration, shall be
determined in accordance with Section 4600.
   (ii) The fee schedule is updated annually to reflect changes in
procedure codes, relative weights, and the adjustment factor provided
in subdivision (g).
   (iii) The maximum reasonable fees paid shall not exceed 120
percent of estimated annualized aggregate fees prescribed in the
Medicare payment system for physician services as it appeared on July
1, 2012, before application of the adjustment factor provided in
subdivision (g). For purposes of calculating maximum reasonable fees,
any service provided to injured workers that is not covered under
the federal Medicare program shall be included at its rate of payment
established by the administrative director pursuant to subdivision
(d).
   (iv) There shall be a four-year transition between the estimated
aggregate maximum allowable amount under the official medical fee
schedule for physician services prior to January 1, 2014, and the
maximum allowable amount based on the resource-based relative value
scale at 120 percent of the Medicare conversion factors as adjusted
pursuant to this section.
   (B) The official medical fee schedule shall include payment ground
rules that differ from Medicare payment ground rules, including, as
appropriate, payment of consultation codes and payment evaluation and
management services provided during a global period of surgery.
   (C) Commencing January 1, 2014, and continuing until the time the
administrative director has adopted an official medical fee schedule
in accordance with the resource-based relative value scale, the
maximum reasonable fees for physician services and nonphysician
practitioner services, including, but not limited to, physician
assistant, nurse practitioner, and physical therapist services, shall
be in accordance with the fee-related structure and rules of the
Medicare payment system for physician services and nonphysician
practitioner services, except that an average statewide geographic
adjustment factor of 1.078 shall apply in lieu of Medicare's
locality-specific geographic adjustment factors, and shall
incorporate the following conversion factors:
   (i) For dates of service in 2014, forty-nine dollars and five
thousand three hundred thirteen ten thousandths cents ($49.5313) for
surgery, fifty-six dollars and two thousand three hundred twenty-nine
ten thousandths cents ($56.2329) for radiology, thirty dollars and
six hundred forty-seven ten thousandths cents ($30.0647) for
anesthesia, and thirty-seven dollars and one thousand seven hundred
twelve ten thousandths cents ($37.1712) for all other before
application of the adjustment factor provided in subdivision (g).
   (ii) For dates of service in 2015, forty-six dollars and six
thousand three hundred fifty-nine ten thousandths cents ($46.6359)
for surgery, fifty-one dollars and one thousand thirty-six ten
thousandths cents ($51.1036) for radiology, twenty-eight dollars and
six thousand sixty-seven ten thousandths cents ($28.6067) for
anesthesia, and thirty-eight dollars and three thousand nine hundred
fifty-eight ten thousandths cents ($38.3958) for all other before
application of the adjustment factor provided in subdivision (g).
   (iii) For dates of service in 2016, forty-three dollars and seven
thousand four hundred five ten thousandths cents ($43.7405) for
surgery, forty-five dollars and nine thousand seven hundred
forty-four ten thousandths cents ($45.9744) for radiology,
twenty-seven dollars and one thousand four hundred eighty-seven
thousandths cents ($27.1487) for anesthesia, and thirty-nine dollars
and six thousand two hundred five ten thousandths cents ($39.6205)
for all other before application of the adjustment factor provided in
subdivision (g).
   (iv) For dates of service on or after January 1, 2017, 120 percent
of the 2012 Medicare conversion factor as updated pursuant to
subdivision (g).
   (b) In order to comply with the standards specified in subdivision
(f), the administrative director may adopt different conversion
factors, diagnostic-related group weights, and other factors
affecting payment amounts from those used in the Medicare payment
system, provided estimated aggregate fees do not exceed 120 percent
of the estimated aggregate fees paid for the same class of services
in the relevant Medicare payment system.
   (c) (1) Notwithstanding subdivisions (a) and (d), the maximum
facility fee for services performed in a hospital outpatient
department, shall not exceed 120 percent of the fee paid by Medicare
for the same services performed in a hospital outpatient department,
and the maximum facility fee for services performed in an ambulatory
surgical center shall not exceed 80 percent of the fee paid by
Medicare for the same services performed in a hospital outpatient
department.
   (2) The department shall study the feasibility of establishing a
facility fee for services that are performed in an ambulatory
surgical center and are not subject to a fee paid by Medicare for
services performed in an outpatient department, set at 85 percent of
the diagnostic-related group (DRG) fee paid by Medicare for the same
services performed in a hospital inpatient department. The department
shall report the finding to the Senate Labor Committee and Assembly
Insurance Committee no later than July 1, 2013.
   (d) If the administrative director determines that a medical
treatment, facility use, product, or service is not covered by a
Medicare                                          payment system, the
administrative director shall establish maximum fees for that item,
provided that the maximum fee paid shall not exceed 120 percent of
the fees paid by Medicare for services that require comparable
resources. If the administrative director determines that a pharmacy
service or drug is not covered by a Medi-Cal payment system, the
administrative director shall establish maximum fees for that item.
However, the maximum fee paid shall not exceed 100 percent of the
fees paid by Medi-Cal for pharmacy services or drugs that require
comparable resources.
   (e) (1) Prior to the adoption by the administrative director of a
medical fee schedule pursuant to this section, for any treatment,
facility use, product, or service not covered by a Medicare payment
system, including acupuncture services, the maximum reasonable fee
paid shall not exceed the fee specified in the official medical fee
schedule in effect on December 31, 2003, except as otherwise provided
in this subdivision.
   (2) Any compounded drug product shall be billed by the compounding
pharmacy or dispensing physician at the ingredient level, with each
ingredient identified using the applicable National Drug Code (NDC)
of the ingredient and the corresponding quantity, and in accordance
with regulations adopted by the California State Board of Pharmacy.
Ingredients with no NDC shall not be separately reimbursable. The
ingredient-level reimbursement shall be equal to 100 percent of the
reimbursement allowed by the Medi-Cal payment system and payment
shall be based on the sum of the allowable fee for each ingredient
plus a dispensing fee equal to the dispensing fee allowed by the
Medi-Cal payment systems. If the compounded drug product is dispensed
by a physician, the maximum reimbursement shall not exceed 300
percent of documented paid costs, but in no case more than twenty
dollars ($20) above documented paid costs.
   (3) For a dangerous drug dispensed by a physician that is a
finished drug product approved by the federal Food and Drug
Administration, the maximum reimbursement shall be according to the
official medical fee schedule adopted by the administrative director.

   (4) For a dangerous device dispensed by a physician, the
reimbursement to the physician shall not exceed either of the
following:
   (A) The amount allowed for the device pursuant to the official
medical fee schedule adopted by the administrative director.
   (B) One hundred twenty percent of the documented paid cost, but
not less than 100 percent of the documented paid cost plus the
minimum dispensing fee allowed for dispensing prescription drugs
pursuant to the official medical fee schedule adopted by the
administrative director, and not more than 100 percent of the
documented paid cost plus two hundred fifty dollars ($250).
   (5) For any pharmacy goods dispensed by a physician not subject to
paragraph (2), (3), or (4), the maximum reimbursement to a physician
for pharmacy goods dispensed by the physician shall not exceed any
of the following:
   (A) The amount allowed for the pharmacy goods pursuant to the
official medical fee schedule adopted by the administrative director
or pursuant to paragraph (2), as applicable.
   (B) One hundred twenty percent of the documented paid cost to the
physician.
   (C) One hundred percent of the documented paid cost to the
physician plus two hundred fifty dollars ($250).
   (6) For the purposes of this subdivision, the following
definitions apply:
   (A) "Administer" or "administered" has the meaning defined by
Section 4016 of the Business and Professions Code.
   (B) "Compounded drug product" means any drug product subject to
Article 4.5 (commencing with Section 1735) of Division 17 of Title 16
of the California Code of Regulations or other regulation adopted by
the State Board of Pharmacy to govern the practice of compounding.
   (C) "Dispensed" means furnished to or for a patient as
contemplated by Section 4024 of the Business and Professions Code and
does not include "administered."
   (D) "Dangerous drug" and "dangerous device" have the meanings
defined by Section 4022 of the Business and Professions Code.
   (E) "Documented paid cost" means the unit price paid for the
specific product or for each component used in the product as
documented by invoices, proof of payment, and inventory records as
applicable, or as documented in accordance with regulations that may
be adopted by the administrative director, net of rebates, discounts,
and any other immediate or anticipated cost adjustments.
   (F) "Pharmacy goods" has the same meaning as set forth in Section
139.3.
   (7) To the extent that any provision of paragraphs (2) to (6),
inclusive, is inconsistent with any provision of the official medical
fee schedule adopted by the administrative director on or after
January 1, 2012, the provision adopted by the administrative director
shall govern.
   (8) Notwithstanding paragraph (7), the provisions of this
subdivision concerning physician-dispensed pharmacy goods shall not
be superseded by any provision of the official medical fee schedule
adopted by the administrative director unless the relevant official
medical fee schedule provision is expressly applicable to
physician-dispensed pharmacy goods.
   (f) Within the limits provided by this section, the rates or fees
established shall be adequate to ensure a reasonable standard of
services and care for injured employees.
   (g) (1) (A) Notwithstanding any other law, the official medical
fee schedule shall be adjusted to conform to any relevant changes in
the Medicare and Medi-Cal payment systems no later than 60 days after
the effective date of those changes, subject to the following
provisions:
   (i) The annual inflation adjustment for facility fees for
inpatient hospital services provided by acute care hospitals and for
hospital outpatient services shall be determined solely by the
estimated increase in the hospital market basket for the 12 months
beginning October 1 of the preceding calendar year.
   (ii) The annual update in the operating standardized amount and
capital standard rate for inpatient hospital services provided by
hospitals excluded from the Medicare prospective payment system for
acute care hospitals and the conversion factor for hospital
outpatient services shall be determined solely by the estimated
increase in the hospital market basket for excluded hospitals for the
12 months beginning October 1 of the preceding calendar year.
   (iii) The annual adjustment factor for physician services shall be
based on the product of one plus the percentage change in the
Medicare Economic Index and any relative value scale adjustment
factor.
   (B) The update factors contained in clauses (i) and (ii) of
subparagraph (A) shall be applied beginning with the first update in
the Medicare fee schedule payment amounts after December 31, 2003,
and the adjustment factor in clause (iii) of subparagraph (A) shall
be applied beginning with the first update in the Medicare fee
schedule payment amounts after December 31, 2012.
   (C) The maximum reasonable fees paid for pharmacy services and
drugs shall not include any reductions in the relevant Medi-Cal
payment system implemented pursuant to Section 14105.192 of the
Welfare and Institutions Code.
   (2) The administrative director shall determine the effective date
of the changes, and shall issue an order, exempt from Sections
5307.3 and 5307.4 and the rulemaking provisions of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code), informing the
public of the changes and their effective date. All orders issued
pursuant to this paragraph shall be published on the Internet Web
site of the Division of Workers' Compensation.
   (3) For the purposes of this subdivision, the following
definitions apply:
   (A) "Medicare Economic Index" means the input price index used by
the federal Centers for Medicare and Medicaid Services to measure
changes in the costs of a providing physician and other services paid
under the resource-based relative value scale.
   (B) "Hospital market basket" means the input price index used by
the federal Centers for Medicare and Medicaid Services to measure
changes in the costs of providing inpatient hospital services
provided by acute care hospitals that are included in the Medicare
prospective payment system.
   (C) "Hospital market basket for excluded hospitals" means the
input price index used by the federal Centers for Medicare and
Medicaid Services to measure changes in the costs of providing
inpatient services by hospitals that are excluded from the Medicare
prospective payment system.
   (D) "Relative value scale adjustment factor" means the annual
factor applied by the federal Centers for Medicare and Medicaid
Services to the Medicare conversion factor to make changes in
relative value units for the physician fee schedule budget neutral.
   (h) This section does not prohibit an employer or insurer from
contracting with a medical provider for reimbursement rates different
from those prescribed in the official medical fee schedule.
   (i) Except as provided in Section 4626, the official medical fee
schedule shall not apply to medical-legal expenses, as that term is
defined by Section 4620.
   (j) The following Medicare payment system components shall not
become part of the official medical fee schedule until January 1,
2005:
   (1) Inpatient skilled nursing facility care.
   (2) Home health agency services.
   (3) Inpatient services furnished by hospitals that are exempt from
the prospective payment system for general acute care hospitals.
   (4) Outpatient renal dialysis services.
   (k) Except as revised by the administrative director, the official
medical fee schedule rates for physician services in effect on
December 31, 2012, shall remain in effect until January 1, 2014.
   (l) Notwithstanding subdivision (a), any explicit reductions in
the Medi-Cal fee schedule for pharmacy services and drugs to meet the
budgetary targets provided in Section 14105.192 of the Welfare and
Institutions Code shall not be reflected in the official medical fee
schedule.
   (m) On or before July 1, 2013, the administrative director shall
adopt a regulation specifying an additional reimbursement for MS-DRGs
Medicare Severity Diagnostic Related Groups (MS-DRGs) 028, 029, 030,
453, 454, 455, and 456 to ensure that the aggregate reimbursement is
sufficient to cover costs, including the implantable medical device,
hardware, and instrumentation. This regulation shall be repealed as
of January 1, 2014, unless extended by the administrative director.
  SEC. 75.  Section 5307.7 of the Labor Code is amended to read:
   5307.7.  (a) On or before January 1, 2013, the administrative
director shall adopt, after public hearings, a fee schedule that
shall establish reasonable fees paid for services provided by
vocational experts, including, but not limited to, vocational
evaluations and expert testimony determined to be reasonable, actual,
and necessary by the appeals board.
   (b) A vocational expert shall not be paid, and the appeals board
shall not allow, vocational expert fees in excess of those that are
reasonable, actual, and necessary, or that are not consistent with
the fee schedule adopted by the administrative director.
  SEC. 76.  Section 5307.8 is added to the Labor Code, to read:
   5307.8.  Notwithstanding Section 5307.1, on or before July 1,
2013, the administrative director shall adopt, after public hearings,
a schedule for payment of home health care services provided in
accordance with Section 4600 that are not covered by a Medicare fee
schedule and are not otherwise covered by the official medical fee
schedule adopted pursuant to Section 5307.1. The schedule shall set
forth fees and requirements for service providers, and shall be based
on the maximum service hours and fees as set forth in regulations
adopted pursuant to Article 7 (commencing with Section 12300) of
Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions
Code. No fees shall be provided for any services, including any
services provided by a member of the employee's household, to the
extent the services had been regularly performed in the same manner
and to the same degree prior to the date of injury. If appropriate,
an attorney's fee for recovery of home health care fees under this
section may be awarded in accordance with Section 4906 and any
applicable rules or regulations.
  SEC. 77.  Section 5307.9 is added to the Labor Code, to read:
   5307.9.  On or before December 31, 2013, the administrative
director, in consultation with the Commission on Health and Safety
and Workers' Compensation, shall adopt, after public hearings, a
schedule of reasonable maximum fees payable for copy and related
services, including, but not limited to, records or documents that
have been reproduced or recorded in paper, electronic, film, digital,
or other format. The schedule shall specify the services allowed and
shall require specificity in billing for these services, and shall
not allow for payment for services provided within 30 days of a
request by an injured worker or his or her authorized representative
to an employer, claims administrator, or workers' compensation
insurer for copies of records in the employer's, claims administrator'
s, or workers' compensation insurer's possession that are relevant to
the employee's claim. The schedule shall be applicable regardless of
whether payments of copy service costs are claimed under the
authority of Section 4600, 4620, or 5811, or any other authority
except a contract between the employer and the copy service provider.

  SEC. 78.  Section 5318 of the Labor Code is repealed.
  SEC. 79.  Section 5402 of the Labor Code is amended to read:
   5402.  (a) Knowledge of an injury, obtained from any source, on
the part of an employer, his or her managing agent, superintendent,
foreman, or other person in authority, or knowledge of the assertion
of a claim of injury sufficient to afford opportunity to the employer
to make an investigation into the facts, is equivalent to service
under Section 5400.
   (b) If liability is not rejected within 90 days after the date the
claim form is filed under Section 5401, the injury shall be presumed
compensable under this division. The presumption of this subdivision
is rebuttable only by evidence discovered subsequent to the 90-day
period.
   (c) Within one working day after an employee files a claim form
under Section 5401, the employer shall authorize the provision of all
treatment, consistent with Section 5307.27, for the alleged injury
and shall continue to provide the treatment until the date that
liability for the claim is accepted or rejected. Until the date the
claim is accepted or rejected, liability for medical treatment shall
be limited to ten thousand dollars ($10,000).
   (d) Treatment provided under subdivision (c) shall not give rise
to a presumption of liability on the part of the employer.
  SEC. 80.  Section 5502 of the Labor Code is amended to read:
   5502.  (a) Except as provided in subdivisions (b) and (d), the
hearing shall be held not less than 10 days, and not more than 60
days, after the date a declaration of readiness to proceed, on a form
prescribed by the appeals board, is filed. If a claim form has been
filed for an injury occurring on or after January 1, 1990, and before
January 1, 1994, an application for adjudication shall accompany the
declaration of readiness to proceed.
   (b) The administrative director shall establish a priority
calendar for issues requiring an expedited hearing and decision. A
hearing shall be held and a determination as to the rights of the
parties shall be made and filed within 30 days after the declaration
of readiness to proceed is filed if the issues in dispute are any of
the following, provided that when an expedited hearing is requested
pursuant to paragraph (2), no other issue may be heard until the
medical provider network dispute is resolved:
   (A) The employee's entitlement to medical treatment pursuant to
Section 4600, except for treatment issues determined pursuant to
Sections 4610 and 4610.5.
   (B) Whether the injured employee is required to obtain treatment
within a medical provider network.
   (C) A medical treatment appointment or medical-legal examination.
   (D) The employee's entitlement to, or the amount of, temporary
disability indemnity payments.
   (4) The employee's entitlement to compensation from one or more
responsible employers when two or more employers dispute liability as
among themselves.
   (5) Any other issues requiring an expedited hearing and
determination as prescribed in rules and regulations of the
administrative director.
   (c) The administrative director shall establish a priority
conference calendar for cases in which the employee is represented by
an attorney and the issues in dispute are employment or injury
arising out of employment or in the course of employment. The
conference shall be conducted by a workers' compensation
administrative law judge within 30 days after the declaration of
readiness to proceed. If the dispute cannot be resolved at the
conference, a trial shall be set as expeditiously as possible, unless
good cause is shown why discovery is not complete, in which case
status conferences shall be held at regular intervals. The case shall
be set for trial when discovery is complete, or when the workers'
compensation administrative law judge determines that the parties
have had sufficient time in which to complete reasonable discovery. A
determination as to the rights of the parties shall be made and
filed within 30 days after the trial.
   (d) (1) In all cases, a mandatory settlement conference, except a
lien conference or a mandatory settlement lien conference, shall be
conducted not less than 10 days, and not more than 30 days, after the
filing of a declaration of readiness to proceed. If the dispute is
not resolved, the regular hearing, except a lien trial, shall be held
within 75 days after the declaration of readiness to proceed is
filed.
   (2) The settlement conference shall be conducted by a workers'
compensation administrative law judge or by a referee who is eligible
to be a workers' compensation administrative law judge or eligible
to be an arbitrator under Section 5270.5. At the mandatory settlement
conference, the referee or workers' compensation administrative law
judge shall have the authority to resolve the dispute, including the
authority to approve a compromise and release or issue a stipulated
finding and award, and if the dispute cannot be resolved, to frame
the issues and stipulations for trial. The appeals board shall adopt
any regulations needed to implement this subdivision. The presiding
workers' compensation administrative law judge shall supervise
settlement conference referees in the performance of their judicial
functions under this subdivision.
   (3) If the claim is not resolved at the mandatory settlement
conference, the parties shall file a pretrial conference statement
noting the specific issues in dispute, each party's proposed
permanent disability rating, and listing the exhibits, and disclosing
witnesses. Discovery shall close on the date of the mandatory
settlement conference. Evidence not disclosed or obtained thereafter
shall not be admissible unless the proponent of the evidence can
demonstrate that it was not available or could not have been
discovered by the exercise of due diligence prior to the settlement
conference.
   (e) In cases involving the Director of Industrial Relations in his
or her capacity as administrator of the Uninsured Employers Fund,
this section shall not apply unless proof of service, as specified in
paragraph (1) of subdivision (d) of Section 3716, has been filed
with the appeals board and provided to the Director of Industrial
Relations, valid jurisdiction has been established over the employer,
and the fund has been joined.
   (f) Except as provided in subdivision (a) and in Section 4065, the
provisions of this section shall apply irrespective of the date of
injury.
  SEC. 81.  Section 5703 of the Labor Code is amended to read:
   5703.  The appeals board may receive as evidence either at or
subsequent to a hearing, and use as proof of any fact in dispute, the
following matters, in addition to sworn testimony presented in open
hearing:
   (a) Reports of attending or examining physicians.
   (1) Statements concerning any bill for services are admissible
only if made under penalty of perjury that they are true and correct
to the best knowledge of the physician.
   (2) In addition, reports are admissible under this subdivision
only if the physician has further stated in the body of the report
that there has not been a violation of Section 139.3 and that the
contents of the report are true and correct to the best knowledge of
the physician. The statement shall be made under penalty of perjury.
   (b) Reports of special investigators appointed by the appeals
board or a workers' compensation judge to investigate and report upon
any scientific or medical question.
   (c) Reports of employers, containing copies of timesheets, book
accounts, reports, and other records properly authenticated.
   (d) Properly authenticated copies of hospital records of the case
of the injured employee.
   (e) All publications of the Division of Workers' Compensation.
   (f) All official publications of the State of California and
United States governments.
   (g) Excerpts from expert testimony received by the appeals board
upon similar issues of scientific fact in other cases and the prior
decisions of the appeals board upon similar issues.
   (h) Relevant portions of medical treatment protocols published by
medical specialty societies. To be admissible, the party offering
such a protocol or portion of a protocol shall concurrently enter
into evidence information regarding how the protocol was developed,
and to what extent the protocol is evidence-based, peer-reviewed, and
nationally recognized. If a party offers into evidence a portion of
a treatment protocol, any other party may offer into evidence
additional portions of the protocol. The party offering a protocol,
or portion thereof, into evidence shall either make a printed copy of
the full protocol available for review and copying, or shall provide
an Internet address at which the entire protocol may be accessed
without charge.
   (i) The medical treatment utilization schedule in effect pursuant
to Section 5307.27 or the guidelines in effect pursuant to Section
4604.5.
   (j) Reports of vocational experts. If vocational expert evidence
is otherwise admissible, the evidence shall be produced in the form
of written reports. Direct examination of a vocational witness shall
not be received at trial except upon a showing of good cause. A
continuance may be granted for rebuttal testimony if a report that
was not served sufficiently in advance of the close of discovery to
permit rebuttal is admitted into evidence.
   (1) Statements concerning any bill for services are admissible
only if they comply with the requirements applicable to statements
concerning bills for services pursuant to subdivision (a).
   (2) Reports are admissible under this subdivision only if the
vocational expert has further stated in the body of the report that
the contents of the report are true and correct to the best knowledge
of the vocational expert. The statement shall be made in compliance
with the requirements applicable to medical reports pursuant to
subdivision (a).
  SEC. 82.  Section 5710 of the Labor Code is amended to read:
   5710.  (a) The appeals board, a workers' compensation judge, or
any party to the action or proceeding, may, in any investigation or
hearing before the appeals board, cause the deposition of witnesses
residing within or without the state to be taken in the manner
prescribed by law for like depositions in civil actions in the
superior courts of this state under Title 4 (commencing with Section
2016.010) of Part 4 of the Code of Civil Procedure. To that end the
attendance of witnesses and the production of records may be
required. Depositions may be taken outside the state before any
officer authorized to administer oaths. The appeals board or a
workers' compensation judge in any proceeding before the appeals
board may cause evidence to be taken in other jurisdictions before
the agency authorized to hear workers' compensation matters in those
other jurisdictions.
   (b) If the employer or insurance carrier requests a deposition to
be taken of an injured employee, or any person claiming benefits as a
dependent of an injured employee, the deponent is entitled to
receive in addition to all other benefits:
   (1) All reasonable expenses of transportation, meals, and lodging
incident to the deposition.
   (2) Reimbursement for any loss of wages incurred during attendance
at the deposition.
   (3) One copy of the transcript of the deposition, without cost.
   (4) A reasonable allowance for attorney's fees for the deponent,
if represented by an attorney licensed by the State Bar of this
state. The fee shall be discretionary with, and, if allowed, shall be
set by, the appeals board, but shall be paid by the employer or his
or her insurer.
   (5) If interpretation services are required because the injured
employee or deponent does not proficiently speak or understand the
English language, upon a request from either, the employer shall pay
for the services of a language interpreter certified or deemed
certified pursuant to Article 8 (commencing with Section 11435.05) of
Chapter 4.5 of Part 1 of Division 3 of Title 2 of, or Section 68566
of, the Government Code. The fee to be paid by the employer shall be
in accordance with the fee schedule adopted by the administrative
director and shall include any other deposition-related events as
permitted by the administrative director.
  SEC. 83.  Section 5811 of the Labor Code is amended to read:
   5811.  (a) No fees shall be charged by the clerk of any court for
the performance of any official service required by this division,
except for the docketing of awards as judgments and for certified
copies of transcripts thereof. In all proceedings under this division
before the appeals board, costs as between the parties may be
allowed by the appeals board.
   (b) (1) It shall be the responsibility of any party producing a
witness requiring an interpreter to arrange for the presence of a
qualified interpreter.
   (2) A qualified interpreter is a language interpreter who is
certified, or deemed certified, pursuant to Article 8 (commencing
with Section 11435.05) of Chapter 4.5 of Part 1 of Division 3 of
Title 2 of, or Section 68566 of, the Government
                      Code. The duty of an interpreter is to
accurately and impartially translate oral communications and
transliterate written materials, and not to act as an agent or
advocate. An interpreter shall not disclose to any person who is not
an immediate participant in the communications the content of the
conversations or documents that the interpreter has interpreted or
transliterated unless the disclosure is compelled by court order. An
attempt by any party or attorney to obtain disclosure is a bad faith
tactic that is subject to Section 5813.
   Interpreter fees that are reasonably, actually, and necessarily
incurred shall be paid by the employer under this section, provided
they are in accordance with the fee schedule adopted by the
administrative director.
   A qualified interpreter may render services during the following:
   (A) A deposition.
   (B) An appeals board hearing.
   (C) A medical treatment appointment or medical-legal examination.
   (D) During those settings which the administrative director
determines are reasonably necessary to ascertain the validity or
extent of injury to an employee who does not proficiently speak or
understand the English language.
  SEC. 84.  This act shall apply to all pending matters, regardless
of date of injury, unless otherwise specified in this act, but shall
not be a basis to rescind, alter, amend, or reopen any final award of
workers' compensation benefits.
  SEC. 85.  Section 66.5 of this bill incorporates amendments to
Section 4903.1 of the Labor Code proposed by both this bill and
Senate Bill 1105. It shall only become operative if (1) both bills
are enacted and become effective on or before January 1, 2013, (2)
each bill amends Section 4903.1 of the Labor Code, and (3) this bill
is enacted after Senate Bill 1105, in which case Section 66 of this
bill shall not become operative.
  SEC. 86.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.