BILL ANALYSIS                                                                                                                                                                                                    Ó






                 Senate Committee on Labor and Industrial Relations
                              William W. Monning, Chair

          Date of Hearing: June 26, 2013               2013-2014 Regular  
          Session                              
          Consultant: Gideon L. Baum                   Fiscal:No
                                                       Urgency: No
          
                                  Bill No: AB 1309
                                    Author: Perea
                        As Introduced/Amended: April 25, 2013
          

                                       SUBJECT
          
                    Workers' compensation: professional athletes.


                                      KEY ISSUE

          Should the Legislature limit workers' compensation benefits for  
          professional athletes who end their careers outside of  
          California?
          
          
                                      ANALYSIS
          
           Existing law  establishes a workers' compensation system that  
          provides benefits to an employee who suffers from an injury or  
          illness that arises out of and in the course of employment,  
          irrespective of fault.  This system requires all employers to  
          secure payment of benefits by either securing the consent of the  
          Department of Industrial Relations to self-insure or by securing  
          insurance against liability from an insurance company duly  
          authorized by the state.

           Existing law  provides that 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.  
          (Labor Code §4600)

           Existing law  provides that if an employee  who has been hired or  









          is regularly employed in California  receives personal injury by  
          accident arising out of and in the course of  employment outside  
          of California  , the employee or the employee's dependents shall  
          be  entitled to compensation according to the law of California  .   
          (Labor Code §3600.5)
           
          Existing law  provides that, for employees  hired outside of  
          California and temporarily in California,  the employer and his  
          or her employer  must be exempted from  California's workers'  
          compensation laws while such employee is temporarily within this  
          state doing work for his employer if:

             1)   The employer has furnished workers' compensation  
               insurance coverage under the workers' compensation  
               insurance or similar laws of a state other than California,  
               so as to cover such employee's employment while in this  
               state; and

             2)   The extraterritorial provisions of California's Workers'  
               Compensation law are recognized in such other state and  
               provided employers and employees who are covered in this  
               state are likewise exempted from the application of the  
               workmen's compensation insurance or similar laws of such  
               other state. 

          If the following requirements are met,  the laws of the other  
          state shall be the exclusive remedy against such employer for  
          any injury  , whether resulting in death or not, received by such  
          employee while working for such employer in this state.

          (Labor Code §3600.5)

           Existing law  provides that no claim to workers' compensation  
          benefits shall be maintained unless  within thirty days  after the  
          occurrence of the injury  the employer is served notice  in  
          writing, signed by the person injured or someone in his behalf,  
          or in case of the death of the person injured, by a dependent or  
          someone in the dependent's behalf.  (Labor Code §5400)

           Existing law  also provides  that 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  
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 2

          Senate Committee on Labor and Industrial Relations 
          








          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 of a notice described above.  

          (Labor Code §5402)

           Existing law  specifies that the statute of limitations to being  
          proceedings for the collection a workers' compensation claim is  
           one year from the date of injury.   (Labor Code §5405)
           
          Existing law  specifies that  date of injury in cases of  
          occupational diseases or cumulative injuries  is that date upon  
          which the employee first suffered disability therefrom and  
          either knew, or in the exercise of reasonable diligence should  
          have known, that such disability was caused by his present or  
          prior employment.  (Labor Code §5412)
           
          This bill  would create restrictions on the ability of  
          professional athletes who play outside of California to file in  
          California for workers' compensation benefits.  

           Specifically, this bill would:  

          1)Provides that a professional athlete employed by an out of  
            state team who is temporarily within California performing for  
            that out of state team is not covered by California's workers'  
            compensation system if:

             a)   The employer furnished workers' compensation coverage  
               under the laws of another state;

             b)   That workers' compensation coverage covers the  
               professional athlete's work performed in California.

          2)Specifies that, if the above conditions are met, the laws of  
            the other state shall be the exclusive workers' compensation  
            remedy for injuries to the professional athlete while in this  
            state.

          3)Defines "professional athlete" as an athlete employed at  
            either the minor league or major league level in the sports of  
            football, basketball, baseball, hockey, and soccer.
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 3

          Senate Committee on Labor and Industrial Relations 
          









          4)Defines "temporarily within this state" as an athlete who,  
            within the 365 days immediately prior to the last day he or  
            she performed in this state, had less than 90 days of service  
            for that out of state employer in California.

          5)Provides that where a professional athlete employed by a  
            California team commences employment with an out of state  
            team, he or she has one year from the date the player ended  
            employment with the California team to file a claim for  
            occupational disease or cumulative injury against the  
            California team.

           This bill  would provide an exemption to the above limitation if  
          the professional athlete was employed for eight or more  
          consecutive years by the same California-based employer  pursuant  
          to a contract of hire entered into in California  , and 80 percent  
          or more of the professional athlete's employment as a  
          professional athlete.
          
           This bill  would, with respect to professional athletes who are  
          within the jurisdiction of the California workers' compensation  
          system,  redefine the date of injury for a claim for compensation  
          for occupational disease or cumulative injury to the later of:

             a)   The date of last injurious exposure while employed  
               anywhere as a professional athlete; or

             b)   The date of diagnosis by a licensed physician.

          The date of diagnosis by a licensed physician is the date the  
          physician informed the professional athlete of the medical  
          diagnosis.

           This bill  would also provide that the one-year statute of  
          limitations from the date of injury may be tolled only for the  
          employee's mental incompetence during the period during the  
          one-year limitations period.

           This bill  would also RETROACTIVELY apply to all pending claims  
          for benefits by professional athletes that have not yet been  
          adjudicated.
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 4

          Senate Committee on Labor and Industrial Relations 
          











                                          


                                      COMMENTS
          
          1.  Sports in California: A Tradition of Excellence

            In the United States, there are few institutions that are  
            treated with the reverence and respect of professional sports.  
             Whereas earlier cultures shaped their calendar by the seasons  
            and agricultural cycles, today's calendar is shaped by the  
            sports cycle: baseball in April; football in September;  
            basketball in October; and play-offs and training in-between.   
            As with all great institutions, the foundation of the  
            institution rests on a social contract.  In the case of  
            professional sports, the social contract is between the  
            athletes who play the games, the owners who shape the teams,  
            and the fans who support them both.

            Nowhere is this truer than in California.  With the advent of  
            professional baseball in San Francisco and Oakland in 1887,  
            professional sports began to leave its imprint on the Golden  
            State.  Teams in California have won 12 NBA Championships, 11  
            World Series Championships, and 8 Super Bowls (San Francisco  
            49ers: 5; Oakland Raiders: 3; San Diego Chargers: 0).  This  
            excellence, however, did not come without cost to the players.  
             Both Sandy Koufax and Don Drysdale were forced to retire due  
            to arm and shoulder pain; Steve Young retired due to injuries  
            and concussions; Elgin Baylor retired with chronic knee  
            problems.  For professional athletes, it is the rare player  
            who closes his career for non-injury related reasons.

            AB 1309 addresses under what circumstance a professional  
            athlete may file for workers' compensation benefits in  
            California.  As AB 1309 touches on access to what is  
            fundamentally a public good, this bill also touches on the  
            fundamental relationship between the players and owners, as  
            well as what is the fundamental interest of the people and the  
            State of California in ensuring appropriate medical access to  
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 5

          Senate Committee on Labor and Industrial Relations 
          








            injured professional athletes.  It is, in short, an  
            exploration and discussion of the social contract of  
            professional sports.

          2.  Who Does AB 1309 Impact?  

            As currently written, AB 1309 only applies to professional  
            athletes, and only to specified professional athletes: players  
            at the minor or major league level in of football, basketball,  
            baseball, hockey, and soccer.  For the professional athletes  
            who play at that level in those sports, AB 1309 only applies  
            if you play for a team which is located outside of California  
            (discussed below).  Therefore, an athlete who played his or  
            her entire career in California would not be impacted by AB  
            1309.

            Additionally, an athlete who  signed his or her contract in  
            California  would not be impacted by AB 1309 and would be able  
            to access California's workers' compensation system, even if  
            that athlete never played in California.  This is due to  
            long-standing case law (see Bowen v. Workers' Comp. Appeals  
            Bd. (1999) 73 Cal.App.4th 15), and AB 1309 would not impact  
            these precedents.

            AB 1309, therefore, only impacts athletes who played  
            exclusively for out-of-state teams and  former California  
            players who played outside of California for more than a year  .

          3.  The Montana Exception and Former California Players:  

            As noted above, players who played for California teams, but  
            then leave to play for out-of-state teams for several years,  
            would lose their ability to file for workers' compensation  
            benefits under AB 1309.  This raised some objections in the  
            Assembly, and the author responded with what some refer to as  
            the "Joe Montana" Exception: if a player signs a contract in  
            California and plays for a team for 8 years AND 80% of their  
            career, the player would have standing to file for workers'  
            compensation benefits in California.

            While this addresses some players with long-standing careers,  
            it does lead to some perverse outcomes.  For example, Alex  
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 6

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            Smith was recently traded from the San Francisco 49ers to the  
            Kansas City Chiefs.  Assuming Alex Smith plays for the Kansas  
            City Chiefs for longer than a year, he would lose his ability  
            to file for workers' compensation benefits in California.   
            Even though he played for nearly 100% of his career for the  
            49ers, he was with the team for less than 8 years by 5 months  
            (July 2005 to February 2013).

            Despite the fact that Alex Smith suffered at least one  
            concussion and several shoulder injuries while playing for the  
            49ers, he would be denied the ability to file in California.   
            It is unclear what the policy justification is for such an  
            arbitrary cut-off.  Nor is it clear why a worker who suffered  
            injuries while employed by a California employer should be  
            denied workers' compensation benefits in California, athlete  
            or otherwise.

          4.  Retroactivity and Constitution:  

            As noted above, AB 1309 would apply  retroactively  to pending  
            claims in the California workers' compensation system for  
            injured professional athletes.  Without question, this is  
            totally unprecedented in the State of California.  For  
            example, Senate Bill 863 (DeLeon) of 2012 (Statutes of 2012,  
            Chapter 363) INCREASED benefits to injured workers, but even  
            this increase was for claims on or after the enactment of the  
            bill.  Retroactively halting claims is simply not a part of  
            the legislative history of California's workers' compensation  
            system.

            Additionally, it is almost certainly  unconstitutional  .  By  
            halting the claim of an injured professional athlete, AB 1309  
            would deny payment to medical professionals and others solely  
            because they gave treatment to a professional athlete who,  
            until the passage of AB 1309, was legally and constitutionally  
            entitled to treatment.  There is a strong chance that this  
            would meet the criminal penalty threshold of Calder v. Bull, 3  
            U.S. 386 (1798), and therefore be unconstitutional.  In the  
            meantime, there would be significant litigation and injured  
            workers would be denied treatment.

          5.  Date of Injury and the Statute of Limitations:  
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 7

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            Since 1947, the date of injury for an employee who suffered  
            for an occupational disease is a year from when the employee  
            suffered disability and knew, or should have known, that it  
            was occupationally related.  In 1973, cumulative trauma was  
            added to the date of injury standard.  Therefore, for 66 years  
            and 40 years, respectively, all employers and injured workers  
            in the State of California have operated under this statute of  
            limitations without change.

            As noted above, AB 1309 would change the definition of date of  
            injury, thereby beginning the statute of limitations on when  
            an injured athlete can file for benefits. Noting that AB 1309  
            restricts access to California's workers' compensation system  
            for out-of-state players and former California players, and  
            does so retroactively, it is hard to understand the policy  
            rationale of restricting access for California players who,  
            under all possible scenarios, would qualify for workers'  
            compensation benefits in California.  Moreover, it is unclear  
            what would qualify as a diagnosis, which will almost certainly  
            lead to increased litigation.

          6.  Reciprocity and Similarity:  

            Under current California law, an injured worker is viewed as  
            temporarily in California, and therefore unable to file for  
            workers' compensation benefits in California, if it meets the  
            following four-point test:

             1)   The employee is temporarily in California;
             2)   The employer provides workers' compensation coverage  
               under  similar laws  of another state;  
             3)   The other state's workers' compensation laws cover the  
               employee while he or she was in California; and
             4)   The other state recognizes California's extraterritorial  
               rights and likewise exempts California employers and  
               employees from that state's workers' compensation laws.

            AB 1309 only requires that 2) and 3) apply, though with 2) the  
            standard is changed from "similar" to "equivalent".  This  
            means that professional athletes would be excluded from  
            California's workers' compensation system even if the state  
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 8

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            declines to provide California employers with a similar  
            exclusion or provides a similar level of workers' compensation  
            protection.  The Committee may wish to consider what impact  
            this will have on California employers and employees, as well  
            as professional athletes.

          7.  California Insurance Guarantee Association (CIGA) and AB 1309:  

            The California Insurance Guarantee Association (CIGA) was  
            created in 1969 to pay the claims of insolvent insurers,  
            including insolvent workers' compensation insurers.  Due to  
            the tumultuous workers' compensation market in the late 1990s  
            and early 2000s, there were many insolvent workers'  
            compensation insurers who found their claims dumped into CIGA.  
             This includes insurers of professional athletes, which has  
            led several stakeholders to raise concerns about the rise in  
            claims by injured athletes on CIGA.

            This concern, however, does not appear to take into account  
            recent ruling by the Workers' Compensation Appeals Board.   
            Specifically, Vaughn Booker v. Cincinnati Bengals (2012) and  
            Michael Jameson v. Cleveland Browns (2012) clarify that an  
            injured athlete needs to have actually played a game in  
            California to qualify for benefits.  Noting the rulings in  
            McKinley v. Arizona Cardinals (2013), Wesley Carroll v.  
            Cincinnati Bengals (2013), and Matthews v. National Football  
            League Management Council, 688 F.3d 1107 (2012), it is further  
            clear that the athlete must have significant ties to  
            California in order to file.

            In short, it appears that developing case law will limit  
            liability against CIGA (as well solvent insurers) for claims  
            by out-of-state athletes with limited ties to California.   
            This would include out-of-state athletes that were unable to  
            document an injury in California or played few to no games in  
            California.

          7.  Proponent Arguments  :
            
            According to proponents, out of state professional athletes  
            are taking advantage of loopholes in California's workers'  
            compensation system to the detriment of substantial California  
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 9

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            interests, and to the detriment of California sports teams.   
            Specifically, proponents argue that, as a result of the "last  
            employer over which California has jurisdiction" rule, and the  
            absence of an enforceable one-year limitations period,  
            California teams are facing cumulative injury claims from  
            players with extremely minimal California contacts, but  
            substantial playing histories for teams in other states.   
            Proponents argue that the out of state claims are clogging the  
            workers' compensation courts with cases that should be filed  
            in another state, and causing all insured California employers  
            to absorb rapidly escalating costs being incurred by CIGA.   
            Proponents argue that AB 1309 will resolve this by  
            appropriately requiring that out-of-state athletes file in the  
            home state of their team, rather than in California.

          8.  Opponent Arguments  :

            Opponents argue that AB 1309 is fundamentally unfair, as the  
            costs of the athletes' workers' compensation coverage are paid  
            out of salary cap, which limits available salaries for  
            players.  Opponents also note that the workers' compensation  
            claims made by out-of-state players do not impact California  
            taxpayers and only have a limited impact on CIGA that the  
            athletes are willing to take on.  Additionally, opponents  
            argue AB 1309 creates additional state liabilities, as injured  
            players in California without access to California's workers'  
            compensation system will need state assistance.  Opponents  
            also argue that the retroactivity of AB 1309 is fundamentally  
            unjust and note that the "Joe Montana Exception" sets too high  
            a bar for most injured players to reach.

          9.  Double Referral:  

            This bill has been double referred and, if approved by this  
            committee, it will be sent to the Senate Rules Committee for  
            further review.

          10.   Prior Legislation  :

            SB 863 (DeLeon), Statutes of 2012, Chapter 363, was discussed  
            above.
          
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 10

          Senate Committee on Labor and Industrial Relations 
          









                                       SUPPORT
          
          American International Group
          Anaheim Ducks
          Angels Baseball LP
          Association of California Insurance Companies
          Bay Area Council
          California Chapters of the National Electrical Contractors  
          Association
          California Chiropractic Association
          Chivas USA
          Golden State Warriors
          International Brotherhood of Electrical Workers, Local Union  
          No.18
          Liberty Mutual Group
          Los Angeles Area Chamber of Commerce
          Los Angeles Clippers
          Los Angeles Galaxy
          Los Angeles Kings Hockey Club, LP
          Los Angeles Lakers, Inc.
          Major League Baseball
          Major League Soccer
          National Basketball Association
          National Football League
          National Hockey League
          Sacramento Kings
          San Diego Chargers
          San Diego Padres
          San Francisco 49ers
          San Francisco Giants
          San Jose Earthquakes
          San Jose Sharks
          The Oakland Athletics
          The Oakland Raiders
          The Zenith Insurance Company
          Valley Industry and Commerce Association
          

                                     OPPOSITION
          
          Albert R. Dennis, III
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 11

          Senate Committee on Labor and Industrial Relations 
          








          American Federation of State, County and Municipal Employees,  
            AFL-CIO
          California Alliance for retired Americans
          California Applicants' Attorneys Association
          California Association of Highway Patrolmen
          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists and Aerospace Workers
          California Federation of Teachers
          California Labor Federation, AFL-CIO
          California Neurology Society
          California Nurses Association
          California Professional Firefighters
          California Psychological Association
          California School Employees Association, AFL-CIO
          California Society of Industrial Medicine and Surgery
          California Teamsters Public Affairs Council
          Consumer Attorneys of California
          Engineers and Scientists, IFPTE Local 20
          International Federation of Professional and Technical Engineers  
            AFL-CIO & CLC, Local 21
          International Longshore and Warehouse Union
          JJ Stokes
          Jockeys' Guild
          Labor Coalition
          Laborers International Union of North America
          Laborers' International Union of North America Locals 777 & 792
          Larry Kaminski
          Law Offices of Howard F. Silber
          Los Angeles County Federation of Labor
          Major League Baseball Players
          Major League Baseball Players Association
          Major League Soccer Players Union
          Monterey Bay Central Labor Council
          National Basketball Players Association 
          National Football League Players' Association
          National Hockey League Players Association
          Peace Officers Research Association of California
          Professional and Technical Engineers, IFPTE Local 21, AFL-CIO
          Professional Hockey Players Association
          Service Employees International Union California, AFL-CIO
          State Building and Construction Trades Council of California
          The Building and Construction Trades Department, AFL-CIO
          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 12

          Senate Committee on Labor and Industrial Relations 
          








          The Jockeys Guild
          UNITE HERE, AFL-CIO
          United Food and Commercial Workers, Western States Council
          Utility Workers Union of America, AFL-CIO
          Voters Injured at Work
          Women's National Basketball Players Association



































          Hearing Date:  June 26, 2013                             AB 1309  
          Consultant: Gideon L. Baum                               Page 13

          Senate Committee on Labor and Industrial Relations