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 Senate Committee on Labor and Industrial Relations 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 Senate Committee on Labor and Industrial Relations 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 Senate Committee on Labor and Industrial Relations 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 Senate Committee on Labor and Industrial Relations 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