BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1105
                                                                  Page  1


          SENATE THIRD READING
          SB 1105 (Lieu)
          As Amended  June 13, 2012
          Majority vote 

           SENATE VOTE  :39-0  
           
           INSURANCE           13-0        APPROPRIATIONS      17-0        
           
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          |Ayes:|Solorio, Hagman,          |Ayes:|Fuentes, Harkey,          |
          |     |Bradford, Fong, Carter,   |     |Blumenfield, Bradford,    |
          |     |Feuer, Beth Gaines,       |     |Charles Calderon, Campos, |
          |     |Hayashi, Miller, Olsen,   |     |Davis, Donnelly, Gatto,   |
          |     |Skinner, Torres,          |     |Hall, Hill, Lara,         |
          |     |Wieckowski                |     |Mitchell, Nielsen, Norby, |
          |     |                          |     |Solorio, Wagner           |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
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           SUMMARY  :  Adds self-insured employee welfare benefit plans to 
          the list of entities entitled to file a lien for the cost of 
          living expense services provided to an injured worker.  
          Specifically,  this bill  :   

          1)Provides that a self-insured employee welfare benefit plan may 
            file a living expense lien against an award of temporary 
            disability benefits in cases where the plan has paid the cost 
            of living expenses for the same days that the temporary 
            disability benefits are being awarded.

          2)Defines a self-insured employee welfare benefit plan as a 
            plan, fund, or program established or maintained by an 
            employer, employee organization, or both, where it provides 
            benefits other than through insurance for hospital, medical or 
            surgical expenses, or other benefits in the event of sickness, 
            accident, disability, death, or unemployment.

           EXISTING LAW  :

          1)Establishes a comprehensive system for providing benefits to 
            workers for injuries or conditions arising out of or in the 
            course of employment, including temporary disability indemnity 
            benefits.








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          2)Allows for liens against these temporary disability indemnity 
            benefits where certain entities, including where benefits are 
            paid by a group disability policy, have paid loss-of-income 
            benefits to the injured worker.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, minor and absorbable costs to the Department of 
          Industrial Relations.
           
          COMMENTS  :   

          According to the author, this bill seeks to address a narrow 
          area of workers' compensation liens:  living expense liens filed 
          by self-insured employee welfare benefit plans.  Unlike 
          medical-legal liens, which have been the focus of recent 
          legislation and studies and are a mechanism for contesting 
          employer determinations on appropriate medical care or 
          reimbursement, this area of the liens world is largely stable 
          and non-controversial.  This is due to long-standing statutes 
          and case law on claims and debts in the workers' compensation 
          system.  The type of benefits provided by an employee welfare 
          benefit plan are the same as those provided by other types of 
          coverage, so these plans should have the same standing to file a 
          lien as others similarly situated.

          Since 1917, the workers' compensation system has prohibited 
          anyone from taking any portion of a workers' compensation award 
          due to debt.  The only mechanism available to settle claims 
          against a workers' compensation award is through the workers' 
          compensation liens process, which is somewhat narrow.  As 
          discussed in Ogden v. WCAB (1974) and favorably quoted in 
          Prudential v. WCAB, 22 Cal. 3d 776 (1978):

          ÝT]he chapter on the payment of claims was intended to remove 
          workers' compensation awards from the operation of the usual 
          remedies available to creditors, to limit and regulate the kinds 
          of debts for which liens are allowed, and to insure the award is 
          available to the injured employee for his recovery and 
          rehabilitation.

          In the Prudential decision, the California Supreme Court further 
          shielded injured workers for the possibility of predatory 
          collection against workers' compensation awards.  In that case, 








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          a worker had received payments in lieu of salary through a group 
          disability policy through Prudential Insurance and the policy 
          provided that such payments would be reduced by a workers' 
          compensation award.  When the injured worker sought benefits 
          through the workers' compensation system, Prudential Insurance 
          sought to recover funds paid in excess of the workers' 
          compensation award through the workers' compensation liens 
          process.

          In their decision, the Court refused to allow Prudential to 
          recover funds they had paid.  Instead, the Court interpreted the 
          Legislature's statutory lien provisions as limiting liens to 
          medical costs and benefits or services provided directly 
          relating to those medical costs.  In 1979, the Legislature 
          largely codified the spirit of the Prudential decision, creating 
          a narrow addition to allowable living expense liens for group 
          disability plans, but made clear that the lien could not be in 
          excess of awarded temporary disability benefits.

          The California Correctional Peace Officers Association (CCPOA) 
          argues that the bill would allow the CCPOA Benefit Trust Fund 
          (Trust), and other self-insured employee welfare benefit plans, 
          to recover, through a lien, amounts advanced to its members for 
          living expenses while their workers' compensation case is being 
          delayed for investigation or pending resolution before the 
          Workers' Compensation Appeals Board.  CCPOA argues that, 
          currently, the Trust has to initiate a civil case if the member 
          does not comply with her/his agreement and return the funds 
          advanced by the Trust upon resolution of the case by the Board.  
          This bill would simply allow the Trust to place a lien with the 
          Board to directly recover the monies in a straight-forward and 
          efficient manner.


           Analysis Prepared by  :    Mark Rakich / INS. / (916) 319-2086


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