BILL ANALYSIS Ó
SENATE INSURANCE COMMITTEE
Senator Ronald Calderon, Chair
AB 1394 (Committee on Insurance) Hearing Date: June 26, 2013
As Introduced: March 4, 2013
Fiscal: No
Urgency: No
VOTES: Asm. Floor (04/18/13)76-0/Pass
Asm. Ins. (04/10/13)13-0/Pass
SUMMARY: Would authorize the State Compensation Insurance Fund
(SCIF) Board of Directors to appoint four additional chief
officer positions.
DIGEST
Existing law
1.Establishes the State Compensation Insurance Fund (SCIF), a
quasi-state agency, for the purpose of transacting workers'
compensation insurance and insurance against the expense of
defending any suit for serious and willful misconduct, against
an employer or his or her agent, and insurance to employees
and other persons of the compensation fixed by the workers'
compensation laws for employees and their dependents.
2.Requires the SCIF board of directors to appoint a president, a
chief financial officer, a chief operating officer, a chief
information technology officer, a chief investment officer, a
chief risk officer, and a general counsel.
3.Exempts those positions from provisions of the Government Code
and Public Contract Code that are otherwise applicable to
state agencies and public entities.
4.Prohibits former employees of a state administrative agency
AB
1394 (Committee on Insurance), Page 2
from representing for compensation another person before the
governing body on which they served, within the one-year
period after leaving that office or employment position.
(Milton Marks Postgovernment Employment Restrictions Act of
1990, Govt. Code §§ 87406 et seq.)
This bill
1. Would authorize the Board of Directors of SCIF to appoint
four additional exempt employees:
A. Chief Medical Officer;
B. Chief Actuarial Officer;
C. Chief Claims Operations Officer; and
D. Chief of Internal Affairs.
2. Would subject these new position to the Milton Marks
Postgovernment Employment Restrictions Act.
COMMENTS
1. Purpose of the bill . According to the State Compensation
Insurance Fund (SCIF), AB 1394 is designed to continue
improvements in its operational efficiency by providing its
Board the discretion to appoint highly skilled, specialized
experts and executives needed in order for SCIF to be
competitive with other insurers and provide lower costs and
better service to California's employers.
2. Background
A. SCIF. SCIF was created in 1914 to help ensure all
employers have a strong and stable option for their
workers' compensation needs. Today, it is the largest
provider of workers' compensation insurance in
California, providing workers compensation insurance to
any interested employer, including those that are unable
to self-insure or find private sector alternatives.
Because SCIF is a quasi-public entity, it has significant
autonomy in its internal governance but is bound by
civil-service hiring provisions of the Government Code
and Public Contract Code. Certain positions are exempt
from civil-service requirements and may be appointed by
SCIF's board of directors pursuant to Insurance Code
AB
1394 (Committee on Insurance), Page 3
Section 11785.
B. Proposed Positions. According to SCIF, the proposed
positions would have the same powers and authority as the
seven existing exempt positions. They would be appointed
by the Board of Directors and would be executive
positions with program managers reporting directly to
them. The positions would be eligible for benefits
through the CalPERS system and would have the same
benefit package as existing exempt positions. More
specifically, the proposed exempt positions are described
as follows:
i. Chief Actuarial Officer . Would manage and
oversee all actuarial functions at SCIF.
Responsibilities would include setting reserves and
rates - two areas that are critical to the long-term
operation of an insurance company.
ii. Chief Medical Officer . Would administer the
Medical Provider Network (MPN) and Utilization Review
(UR) programs. Qualifications would include a medical
degree and previous experience managing MPN and UR
programs.
iii. Chief Claims Operations Officer . Would
oversee SCIF's claims operations ensuring compliance
with performance and strategic goals, and regulatory
and legislative requirements. Responsibilities would
also include identifying opportunities to improve the
California workers' compensation system.
iv. Chief of Internal Affairs . Would oversee the
Internal Audit, Governance, Compliance and Privacy and
the Special Investigation Unit functions and reports
directly to the Audit Committee of the Board of
Directors and administratively to the General Counsel.
Qualifications include previous experience in audit,
internal controls and risk management with
certification as a Certified Internal Auditor (CIA),
Certified Government Auditing Professional (CGAP), or
AB
1394 (Committee on Insurance), Page 4
Certified Public Accountant (CPA).
1. Argument in Support
SCIF states that it must be able to attract and retain
industry experts to fulfill its mandated role as a viable,
competitive option for California employers. It contends
that it has not been able to find the talent it needs, such
as medical directors, actuaries and other industry experts,
within the civil service system.
2. Arguments in Opposition
None received.
3. Prior and Related Legislation
A. SB 1145 (Machado), Chapter 344, Statutes of 2008,
authorized SCIF to employ six additional "exempt"
employees, and requires SCIF to comply with the "Open
Meetings" Law, subject to certain exceptions.
B. SB 1406 (Emmerson), 2011-12 Legislative Session, would
have allowed the SCIF board of directors to appoint up to
20 positions exempted from the civil service appointment
system.
POSITIONS
Support
State Compensation Insurance Fund (Sponsor)
Opposition
None received.
Consultant: Asia Canady, (916) 651-4110
AB
1394 (Committee on Insurance), Page 5