BILL NUMBER: AB 110 CHAPTERED 07/16/93 BILL TEXT CHAPTER 121 FILED WITH SECRETARY OF STATE JULY 16, 1993 APPROVED BY GOVERNOR JULY 16, 1993 PASSED THE SENATE JULY 16, 1993 PASSED THE ASSEMBLY JULY 16, 1993 CONFERENCE REPORT NO. 1 PROPOSED IN CONFERENCE JULY 15, 1993 AMENDED IN SENATE MAY 5, 1993 AMENDED IN ASSEMBLY APRIL 15, 1993 AMENDED IN ASSEMBLY APRIL 13, 1993 AMENDED IN ASSEMBLY APRIL 13, 1993 INTRODUCED BY Assembly Members Peace and Brulte JANUARY 11, 1993 An act to amend Sections 675, 11751.35, and 11752.6 of, to amend and repeal Section 11738.5 of, to add Sections 676.8, 11721, 11732.02, 11752.8, and 11759.1 to, to add and repeal Sections 11732.01 and 11737.5 of, and to repeal Section 11745 of, the Insurance Code, and to amend Sections 27, 62.5, 110, 139.2, 139.5, 139.6, 3700, 3702.10, 3761, 4061, 4062, 4064, 4453, 4600, 4621, 4635, 4636, 4638, 4642, 4644, 4645, 4659, 4660, 4702, 5275, 5307.1, 5307.6, 5401, 5401.7, 5500, 5502, 5710, 5811, 6354, and 6355 of, to add Sections 62.7, 138.6, 139.05, 139.31, 3208.4, 3762, 4060, 4061.5, 4062.9, 4065, 4068, 4600.3, 4600.5, 4614, 4614.1, 4635.1, 4635.2, 5404.5, 5813, and 6357 to, to add Part 3.2 (commencing with Section 5150) to Division 4 of, to repeal Sections 5401.5, and 5401.6 of, and to repeal and add Sections 139.3 and 6314.1 of, the Labor Code, relating to workers' compensation, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 110, Peace. Workers' compensation. Existing law provides for a system of workers' compensation to provide compensation for persons injured in the course and scope of employment. This bill would make various revisions in that law. Among other things, it would make the following changes: (1) This bill would require notices of cancellation of workers' compensation insurance to comply with notice requirements, and to be based on certain occurrences. It would prohibit the cancellation of workers' compensation except for certain causes. (2) Existing law regulates workers' compensation insurance rates and, among other things, provides for minimum rates. The bill would provide for a 7% reduction in insurance rates, as specified. The bill would make related changes. (3) The bill would require insurers to maintain or provide occupational safety and health loss control consultation services. (4) The bill would provide for the payment for additional expenses of public members of rating bureaus. The bill would require rating organizations to establish a policyholder ombudsman, and would provide for certain policyholder rights. (5) The bill would establish the Cal-OSHA Targeted Inspection and Consultation Fund. It would provide for the establishment of a program for targeting employers in the high-hazard industries, and a program for identifying categories of occupational safety and health hazards. The bill would make related changes. (6) The bill would delay the repeal date of provisions creating the Workers' Compensation Administration Revolving Fund from January 1, 1994, to January 1, 1999. (7) The bill would require an examination for qualified medical evaluators, would further revise qualifications of those evaluators, and would make related changes. (8) The bill would prohibit certain referrals by physicians. Since a violation of those provisions would be a crime, the bill would impose a state-mandated local program. (9) The bill would revise various provisions relating to vocational rehabilitation. Among other things, it would limit payments for vocational rehabilitation programs, would revise the manner of the provision of those programs, would provide that if an employer offers certain modified work, the employer would not be required to provide vocational rehabilitation services, and would make related changes. The bill would provide for the arbitration of vocational rehabilitation disputes involving represented workers. (10) The bill would require employees to be provided with information relating to the Americans with Disabilities Act. (11) The bill would permit group self-insurance by employers. (12) The bill would require insurers to reimburse employers for premium paid due to the inclusion of a successfully challenged payment, as specified. It would require insurers to discuss claims files with employers. (13) The bill would revise the provisions relating to medical-legal evaluations to, among other things, provide for examinations by the treating physician, and would limit additional examinations. The bill would revise provisions relating to payment for those examinations. It would prohibit medical-legal examinations during the first 60 days, except as specified. (14) The bill would provide for obtaining health coverage for workers' compensation from a health care organization. It would provide for the certification of those organizations. It would provide for the authorization for certain forms of those organizations by the Department of Corporations, operative August 1, 1994, and the payment of certain fees, which in some instances, would be immediately appropriated. Since certain of these provisions would be crimes, the bill would impose a state-mandated local program. (15) The bill would require the administrative director to review and revise the schedule for the determination of the percentage of permanent disabilities. (16) The bill would increase the level of benefits. (17) The bill would revise provisions relating the medical fee schedule and the medical-legal fee schedule. (18) The bill would revise provisions relating to claims forms, and would make additional procedural changes. (19) The bill would authorize the Workers' Compensation Appeals Board to order payment of expenses incurred as the result of bad faith actions, as specified. (20) The bill would make various related changes. 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. This bill would become operative only if AB 119, AB 1300, SB 484, and SB 983 are also enacted. (21) The bill would declare that it is to take effect immediately as an urgency statute. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 675 of the Insurance Code is amended to read: 675. Except as provided in Sections 676.8 and 679.6, this chapter shall apply to policies of insurance, other than automobile insurance and workers' compensation insurance, on risks located or resident in this state which are issued and take effect or which are renewed after the effective date of this chapter and insuring any of the following contingencies: (a) Loss of or damage to real property which is used predominantly for residential purposes and which consists of not more than four dwelling units. (b) Loss of or damage to personal property in which natural persons resident in specifically described real property of the kind described in subdivision (a) have an insurable interest, except personal property used in the conduct of a commercial or industrial enterprise. (c) Legal liability of a natural person or persons for loss of, damage to, or injury to, persons or property, but not including policies primarily insuring risks arising from the conduct of a commercial or industrial enterprise. This chapter shall not be construed so as to modify or negate any of the provisions of Chapter 3 (commencing with Section 330) of Part 1 of Division 1, nor to destroy any rights or remedies therein provided. SEC. 2. Section 676.8 is added to the Insurance Code, to read: 676.8. (a) This section applies only to policies of workers' compensation insurance. (b) After a policy is in effect, no notice of cancellation shall be effective unless it complies with the notice requirements of this section and is based upon the occurrence, after the effective date of the policy, of one or more of the following: (1) The policyholder's failure to make any payment when due. (2) The policyholder's failure to report payroll or to permit the insurer to audit payroll as required by the terms of the policy. (3) The policyholder's material failure to comply with federal or state safety orders or written recommendations of the insurer's designated loss control representative. (4) A material change in ownership or any change in the policyholder's business or operations that materially increases the hazard for frequency or severity of loss, requires additional or different occupational classifications for premium calculations, or contemplates an activity excluded by the insurer's reinsurance treaties. (5) Material misrepresentation by the policyholder or its agent. (6) Failure to cooperate with the insurer in the insurer's investigation of a claim. (c) A policy shall not be canceled for the conditions specified in paragraph (1), (2), (5), or (6) of subdivision (b) except upon 10 days' written notice to the policyholder by the insurer. A policy shall not be canceled for the conditions specified in paragraph (3) or (4) of subdivision (b) except upon 30 days' written notice to the policyholder by the insurer. If the policyholder remedies the condition to the insurer's satisfaction within the specified time period, the policy shall not be canceled by the insurer. (d) Nothing in this section shall preclude, while policies are in force, changes in the premium rate required or authorized by law, regulation, or order of the commissioner, or otherwise agreed to between the policyholder and insurer. SEC. 3. Section 11721 is added to the Insurance Code, to read: 11721. (a) Any insurer desiring to write workers' compensation insurance shall maintain or provide occupational safety and health loss control consultation services certified by the Director of Industrial Relations. The director may fix and collect fees to recover the costs for certifying the loss control consultation services. All fees shall be deposited in the Cal-OSHA Targeted Inspection and Consultation Fund as defined in Section 62.7 of the Labor Code. The insurer may employ qualified personnel to provide these services or provide the services through another entity that has been certified by the commissioner. (b) The program of an insurer for furnishing loss control consultation services shall be adequate to meet minimum standards prescribed by the director. The services shall include the conduct of workplace surveys to identify health and safety problems, review of employer injury records with appropriate personnel, and development of plans to improve employer health and safety loss records, including injury and prevention programs required pursuant to Section 6401.7 of the Labor Code. At the time that an insurance policy is issued and annually thereafter, the insurer shall provide each insured employer with a written description of the consultation services together with a notice that the services are available at no additional charge to the employer. (c) The insurer shall not charge any fee in addition to the insurance premium for safety and health loss control consultation services. (d) Each insurer shall submit to the director, in a form prescribed by the director, an annual health and safety loss control plan for targeting employers with the greatest workers' compensation losses and the most significant and preventable health and safety hazards. The plan shall include a budget and identify the insurer's methodology for selecting the employers and the number, type, and size of employers who will be targeted. The plan shall be accompanied by a description of the insurer's safety and health loss control activities for the prior year, including, but not limited to, costs, the number, type, and size of businesses served, and any additional information required by the director. The information provided to the director under this subdivision shall remain confidential except for aggregate statistical data. The director shall develop guidelines to assist insurers to identify the employers with the highest preventable health and safety hazards. (e) Nothing in this section shall be construed to require insurers to provide loss control services to places of employment that do not pose significant preventable hazards to workers. SEC. 4. Section 11732.01 is added to the Insurance Code, to read: 11732.01. Unless the commissioner approves or issues a premium rate pursuant to subdivision (b), on the effective date of this section the premium rates relating to California workers' compensation insurance shall be reduced 7 percent from the premium rates in effect on July 1, 1993. (b) The commissioner may approve or issue a premium rate that is less than the rate that would otherwise be in effect by operation of subdivision (a), provided that the rate is adequate and that the rate shall fully take into account the reduction required by subdivision (a). (c) The commissioner may not approve or issue a premium rate that is greater than the rate allowed by subdivision (a). (d) This section shall remain in effect only until January 1, 1995, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1995, deletes or extends that date, or Senate Bill 30 of the 1993-94 Regular Session has not been enacted. (e) If Senate Bill 30 of the 1993-94 Regular Session is not enacted, the commissioner may not approve or issue a premium rate that is greater than the rate allowed by subdivisions (a) and (b) unless a later enacted statute amends this article and this section. SEC. 5. Section 11732.02 is added to the Insurance Code, to read: 11732.02. In approving or issuing premium rates under this article, the commissioner shall consider the reduction in workers' compensation costs arising from changes in the law enacted during the 1993 portion of the 1993-94 Regular Session, and thereafter. SEC. 5.5. Section 11737.5 is added to the Insurance Code, to read: 11737.5. (a) An insurer shall not use any plan or methodology for the imposition of surcharges or reserves that is unfairly discriminatory. (b) An insurer shall annually report to the commissioner all income sources from reserves, and the amount of income. (c) An insurer shall annually report to the commissioner all surcharge plans and methodologies. (d) This section shall remain in effect only until January 1, 1995, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1995, deletes or extends that date, or Senate Bill 30 of the 1993-94 Regular Session has not been enacted. SEC. 6. Section 11738.5 of the Insurance Code is amended to read: 11738.5. (a) An insurer shall not use any plan for the payment of dividends to policyholders by reason of a participating provision in a workers' compensation insurance policy which is unfairly discriminatory. (b) Every insurer issuing workers' compensation insurance policies under the laws of this state shall file annually with the commissioner information relating to dividend payments made to its policyholders. Information filed shall be in sufficient detail to permit the commissioner to prepare a report showing for all companies premiums earned, losses incurred, and dividends paid the preceding calendar year under policies containing a participating provision, separately by premium size and loss ratio categories, as may reasonably be prescribed by the commissioner. (c) Information submitted by individual companies pursuant to this section shall be subject to public disclosure. (d) The commissioner shall publish an annual report describing the dividend payments made by insurers issuing workers' compensation insurance policies under the laws of this state during the preceding year. (e) This section shall remain in effect only until January 1, 1995, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1995, deletes or extends that date, or Senate Bill 30 of the 1993-94 Regular Session has not been enacted. SEC. 7. Section 11745 of the Insurance Code is repealed. SEC. 8. Section 11751.35 of the Insurance Code is amended to read: 11751.35. (a) Four members of the public, two representing organized labor and two representing insured employers, appointed pursuant to subdivision (b) of Section 11751.3, shall be entitled to serve on the managing or governing committee of a rating organization licensed under this article. The public members shall be entitled to vote on all issues involving rates, classifications, rating plans, rating systems, manual rules and policy, and endorsement forms which are properly brought before the committee. (b) In the event one or more public members are unable or unwilling to complete their term, after consultation with the California Labor Federation, AFL-CIO, other statewide organized labor organizations, and statewide organizations representing business, as the case may be, the commissioner shall appoint a successor from organized labor or an insured employer to complete the unexpired term. (c) The public members who serve on the governing committee of a rating organization licensed under this article together may, by a majority vote, retain experts who shall include a fellow of the Casualty Actuarial Society, to advise them on any matter specified in subdivision (a). The actuary hired may participate in all proceedings of the actuarial committee of the rating organization. The reasonable expense of retaining these experts shall not exceed one hundred thousand dollars ($100,000) per year and shall be paid from the budget of the department. The commissioner shall increase this amount annually to reflect any needed cost-of-living adjustments. The public members may submit information obtained from these experts, as well as any other information they deem appropriate, to the commissioner for his or her consideration in issuing or approving a change of a classification or system. (d) In addition to the expenses authorized pursuant to subdivision (c), the public members who serve on the governing committee of a rating organization licensed under this article may expend up to an additional one hundred thousand dollars ($100,000) per year, which shall be paid by insurer members of the rating organization. Those funds shall be used to retain staff, who shall be hired by a majority vote of the public members. SEC. 9. Section 11752.6 of the Insurance Code is amended to read: 11752.6. (a) A licensed rating organization shall make available, in writing, to an employer insured under a workers' compensation policy, all policyholder information contained in its records upon request of the employer and after notice to the employer's insurer. (b) As used in this section, "policyholder information" means all information relating to the employer's loss experience, claims, classification assignments, and policy contracts, and includes information relating to rating plans, rating systems, manual rules, and any other information that impact the policyholder's pure premium rates. (c) If the licensed rating organization rejects an employer's request for that information, the rating organization shall notify the employer in writing as to the reasons for the rejection. An employer whose request for that information has been rejected in whole or in part may appeal to the commissioner in accordance with Section 11753.1. If the commissioner finds that the reasons for the rejection are not justified, he or she may order the rating organization to furnish that information to the employer. (d) No licensed rating organization or member thereof, or member of a committee of a licensed rating organization when acting in its capacity as a member of the committee, or officer or employee of a licensed rating organization, when acting within the scope of his or her employment, shall be liable to any person for injury, personal or otherwise, or damages caused or alleged to have been caused, either directly or indirectly, by the disclosure of information to an employer pursuant to this section or for the accuracy or completeness of the information so disclosed. (e) This section shall not be construed as implying the existence of liability in circumstances not defined in this section, nor does it imply a legislative recognition that, except for enactment of this section, a liability has existed or would exist in the circumstances stated in this section. (f) This section shall not be construed as limiting any authority of a licensed rating organization to disclose information contained in its records to others. (g) There shall be established in all licensed rating organizations a policyholder ombudsman. The policyholder ombudsman shall be a person with sufficient knowledge of the workers' compensation ratemaking process to provide information and assistance to policyholders in obtaining and evaluating the information provided in this section. Every rating organization licensed in this state shall provide staff and other necessary resources to allow the ombudsman to provide prompt and complete service to workers' compensation policyholders of this state. The policyholder ombudsman may represent the policyholder in any dispute with insurers or on appeal to the commissioner as provided in this section. (h) For all policies of insurance issued or renewed on or after January 1, 1994, the insurer shall advise the policyholder in writing of the following: (1) The policyholder's right to request a written report containing the information set forth in this section from the licensed rating organization of which the insurer is a member and a statement that the policyholder may contact the policyholder ombudsman to assist in obtaining and evaluating that information, together with the telephone number and address of the ombudsman. (2) If a participating policy, that upon payment or nonpayment of a dividend the policyholder shall be provided a written explanation, in clear and understandable language, setting forth the basis of the calculation and expressing any dividend in both dollar amount and as a percentage of earned premium under the policy. (3) The date when the insurer is required to file the first unit statistical report with the licensed rating organization designated by the commissioner. SEC. 10. Section 11752.8 is added to the Insurance Code, to read: 11752.8. (a) For all policies of insurance issued, or renewed for the first time on or after January 1, 1995, the insurer shall provide a notice, approved by the commissioner, to the policyholder, explaining in easily understandable language the workers' compensation rating laws. For policies issued or renewed between January 1, 1995, and January 1, 1996, inclusive, this notification shall also include a summary of the changes in the rating laws enacted during the 1993-94 Regular Session of the Legislature. (b) The notice required by this section may be combined with the notice required by subdivision (h) of Section 11752.6. SEC. 11. Section 11759.1 is added to the Insurance Code, to read: 11759.1. Every rating organization shall, no later than March 1 of each year, notify the Governor and the Legislature that a report containing an analysis of all losses and expenses for the prior year by all insurers who are members of the organization is available on request. The first report shall be due March 1, 1996. The report shall include, but not be limited to, the following: (a) An analysis of all medical costs identifying separately the amounts paid for medical treatment to hospitals and physicians, and the amounts paid for medical-legal expenses. The amounts paid for medical treatment to physicians shall also identify the amounts paid for each specialty authorized to provide medical services pursuant to Sections 3209.3, 3209.5, and 3209.8 of the Labor Code. The amounts paid for medical-legal evaluations shall also be subcategorized by specialty and shall identify average costs paid per claim. (b) An analysis of indemnity benefits paid for temporary disability, permanent total disability, permanent partial disability, life pensions, death benefits, and funeral expenses. The permanent partial disability benefits also shall be reported according to the degree of impairment in the following categories: .25 to 24.75 percent, 25 to 69.75 percent, and 70 to 99.75 percent. (c) An analysis of amounts paid for vocational rehabilitation subcategorized by amounts paid for maintenance allowance, evaluation, education and training, and job placement. (d) An analysis of expenses of insurers categorized by loss adjustment, acquisition, general expenses, profit, and taxes. Amounts spent for defense attorneys shall be separately identified for both in-house and outside counsel. (e) An analysis of attorney's fees paid to applicant attorneys. (f) An analysis of workers' compensation costs by the type of injury or illness generally following the injury classification in the Supplemental Data System used by the Department of Industrial Relations in its annual report on California work injuries and illnesses. SEC. 12. Section 27 of the Labor Code is amended to read: 27. Whenever the term"workers' compensation judge" is used in this code in connection with the workers' compensation law, the term shall mean "workers' compensation referee." This section shall not apply to settlement conference referees hired to conduct the settlement conferences required by subdivision (d) of Section 5502. SEC. 13. Section 62.5 of the Labor Code is amended to read: 62.5. (a) The Workers' Compensation Administration Revolving Fund is hereby created as a special account in the State Treasury. Proceeds of the fund may be expended by the department, upon appropriation by the Legislature, 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 Section 3702.5, and shall not be used for any other purpose. (b) The fund shall consist of money from the General Fund appropriated for these purposes, and assessments made pursuant to this section. Costs of the program shall be shared on a proportional basis between the General Fund and employer assessments. The General Fund appropriation shall account for 80 percent, and employer assessments shall account for 20 percent, of the total costs of the program. For the 1993-94 fiscal year, however, the aggregate amount of employer assessments shall not be less than the amount assessed for the 1991-92 fiscal year, and that amount shall be available for expenditure in the 1993-94 fiscal year, notwithstanding any reduction in the amount appropriated from the General Fund. (c) Assessments shall be levied by the director upon all employers as defined in Section 3300. The total amount of the assessment 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 promulgate reasonable rules and regulations governing the manner of collection of the assessment. The rules shall require the assessment 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 assessment to be paid by insured employers expressed as a percentage of premium. In no event shall the assessment paid by insured employers be considered a premium for computation of a gross premium tax or agents' commission. (d) This section shall become operative on July 1, 1991. (e) This section shall remain in effect only until January 1, 1999, and as of that date is repealed, unless a later enacted statute, which is enacted before January 1, 1999, deletes or extends that date. SEC. 14. Section 62.7 is added to the Labor Code, to read: 62.7. (a) The Cal-OSHA Targeted Inspection and Consultation Fund is hereby created as a special account in the State Treasury. Proceeds of the fund may be expended by the department, upon appropriation by the Legislature, for the Cal-OSHA targeted inspection program as provided in Section 6314.1, the Cal-OSHA targeted consultation program as provided in subdivision (a) of Section 6354, and certifying loss control consultation services of workers' compensation insurers pursuant to Section 11745 of the Insurance Code. (b) The fund shall consist of any money from the General Fund or Federal Trust Fund appropriated for these purposes, assessments made pursuant to this section, and fees collected pursuant to Section 11721 of the Insurance Code. (c) Assessments shall be levied by the director only on all insured employers with a workers' compensation insurance experience rating modification of 1.25 or more and private self-insured employers with an equivalent experience rating of 1.25 or more. The director shall promulgate reasonable rules and regulations governing the manner of collection of the assessment and to determine the equivalent experience rating of 1.25 or more for self-insured employers. The rules shall require the assessment to be paid by employers expressed as a percentage of premium. In no event shall the assessment paid by insured employers be considered a premium for computation of a gross premium tax or agents' commissions. This assessment shall not be continued after the employer's experience modification or equivalent experience modification drops below 1.25. (d) Amounts assessed pursuant to this section shall not exceed 50 percent of the amounts appropriated from the General Fund for the support of the occupational safety and health program in 1993-94 adjusted for inflation. SEC. 15. Section 110 of the Labor Code is amended to read: 110. As used in this chapter: (a) "Appeals board" means the Workers' Compensation Appeals Board. The title of a member of the board is "commissioner." (b) "Administrative director" means the Administrative Director of the Division of Workers' Compensation. (c) "Division" means the Division of Workers' Compensation. (d) "Medical director" means the physician appointed by the Industrial Medical Council pursuant to Section 122. (e) "Qualified medical evaluator" means physicians appointed by the Industrial Medical Council pursuant to Section 139.2. SEC. 16. Section 138.6 is added to the Labor Code, to read: 138.6. The administrative director, in consultation with the Insurance Commissioner and the Workers' Compensation Insurance Rating Bureau, shall develop a workers' compensation information system to do the following: (a) Assist the department to manage the workers' compensation system in an effective and efficient manner. (b) Facilitate the evaluation of the efficiency and effectiveness of the benefit delivery system. (c) Measure how adequately the system indemnifies injured workers and their dependents. (d) Provide statistical data for research into specific aspects of the workers' compensation program. It is the intent of the Legislature that the information system be compatible with the Electronic Data Interchange System of the International Association of Industrial Accident Boards and Commissions. The director shall issue a report on the development of the system, and recommendations for any necessary legislative action, no later than July 1, 1995, and shall, upon request, make the report available to the Governor, the Legislature, and the public. SEC. 17. Section 139.05 is added to the Labor Code, to read: 139.05. The Industrial Medical Council shall conduct a study of the technical feasibility of requiring objective medical findings for soft tissue injuries. The council shall prepare a report with its findings and submit it to the Legislature by January 1, 1995. SEC. 18. Section 139.2 of the Labor Code is amended to read: 139.2. (a) The Industrial Medical Council shall appoint qualified medical evaluators in each of the respective specialties as required for the evaluation of medical issues. The appointments shall be for two-year terms. (b) The council shall appoint as qualified medical evaluators physicians, as defined in Section 3209.3, who are licensed to practice in this state and who demonstrate that they meet each of the following requirements: (1) Pass an examination written and administered by the Industrial Medical Council for the purpose of demonstrating competence in evaluating medical issues in the workers' compensation system. The council shall administer the first examination on or before July 1, 1994. (2) Devote 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 a qualified medical evaluator. (3) Meet one of the following requirements: (A) Is board certified, or board eligible, within a time period specified by the council, in his or her specialty by an appropriate board recognized by the council or, if a chiropractor, is certified in California workers' compensation evaluation by an appropriate California professional chiropractic association or accredited California college recognized by the council, or, if a psychologist, meets one of the following requirements: (i) Is board certified in clinical psychology by a board recognized by the council. (ii) Holds a doctoral degree in psychology from a university or professional school recognized by the council and has not less than five years' postdoctoral experience in the diagnosis and treatment of emotional and mental disorders. (iii) 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. (B) Served as an agreed medical evaluator on eight or more occasions prior to January 1, 1970. (4) Does not have a conflict of interest as determined under the regulations promulgated by the administrative director pursuant to subdivision (o). (5) Meets any additional medical or professional standards adopted pursuant to paragraph (6) of subdivision (j). (c) The council shall promulgate 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 (1) 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 for appointment and meets all of the following criteria: (1) Has completed all medical evaluations within a reasonable time after assignment. (2) Has not had more than five of his or her evaluations which were considered by a workers' compensation judge at a contested hearing rejected by the judge pursuant to this section during the most recent two-year period during which the physician served as a qualified medical evaluator. If the judge rejects the qualified medical evaluator's report on the basis that it fails to meet the minimum standards for those reports established by the Industrial Medical Council or the appeals board, the judge shall make a specific finding to that effect, and shall give notice to the medical evaluator and to the Industrial Medical Council. (3) Has completed within the previous 48 months at least 24 hours of continuing education in impairment evaluation or workers' compensation-related medical dispute evaluation approved by the Industrial Medical Council. (4) Has not been terminated, suspended, placed on probation, or otherwise disciplined by the council during his or her most recent term as a qualified medical evaluator. If the evaluator does not meet any one of these criteria, the Industrial Medical Council may in its discretion reappoint or deny reappointment according to regulations promulgated by the council. In no event may a physician who does not currently meet the requirements for initial appointment or who has been terminated under subdivision (e) be reappointed. (e) Except as provided in subdivision (k), the evaluator shall not be terminated during his or her term of office unless his or her licensing authority has suspended, revoked, or terminated his or her license to practice in California. (f) The Industrial Medical Council shall furnish a physician, upon request, 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 Industrial Medical Council shall review its 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 council shall establish agreements with qualified medical evaluators to assure the expeditious evaluation of cases assigned to them for comprehensive medical evaluations. (h) When the injured worker is not represented by an attorney, 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. If a panel is not assigned within 15 working days, the employee shall have the right to obtain a medical evaluation from any qualified medical evaluator of his or her choice. 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 selected 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. The Industrial Medical Council shall promulgate a form which shall notify the employee of the physicians selected for his or her panel. 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 judge will consider the evaluation prepared by the doctor you select to decide your claim." When compiling the list of evaluators from which to select randomly, the medical director shall include all qualified medical evaluators who do not have a conflict of interest in the case, as defined by regulations adopted pursuant to subdivision (o) of the appropriate specialty type as recognized by an appropriate, recognized board within the general geographic area of the employee's residence, and shall have no authority to exclude qualified medical evaluators based on any other criteria. When the medical director determines that an employee has requested an evaluation by a type of specialist which 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 5307.4, the council shall promulgate rules and regulations concerning the following medical issues: (1) Standards governing the timeframes within which medical evaluations shall be prepared and submitted by agreed and qualified medical evaluators. 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 council shall develop a written policy governing the provision of extensions of the 45-day period in cases where the evaluator has not received test results or consulting physician's evaluations in time to meet the 45-day deadline. The council shall develop timeframes governing availability of qualified medical evaluators for unrepresented employees under Section 4061. 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 order to produce complete, accurate, uniform, and replicable evaluations, the procedures shall require that an evaluation of anatomical loss, functional loss, and the presence of physical complaints be supported, to the extent feasible, by medical findings based on standardized examinations and testing techniques generally accepted by the medical community. (3) Procedures governing the determination of any disputed medical issues. (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. However, the council may recommend guidelines for evaluations that have been defined and valued pursuant to Section 5307.6 for the purpose of governing the appointment, reappointment, and discipline of qualified medical evaluators. 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 administrative director, the Insurance Commissioner, or the council itself. If, without good cause, the council fails to adopt the guidelines required by subparagraph (A) or (B) by March 31, 1994, or fails, without good cause, to adopt a guideline pursuant to subparagraph (C) within six months after a request by the administrative director or the Insurance Commissioner, then the administrative director shall have the authority to adopt the guideline. (6) Any additional medical or professional standards which a medical evaluator shall meet as a condition of appointment, reappointment, or maintenance in the status of a medical evaluator. (k) The Industrial Medical Council may, in its discretion, suspend or terminate the privilege of a physician to serve as a qualified medical evaluator if the council, after hearing pursuant to subdivision (l), determines, based on substantial evidence, that a qualified medical evaluator: (1) Has violated any non-ministerial statutory or administrative duty. (2) Has failed to follow the medical procedures or qualifications established by the council pursuant to paragraph (2), (3), (4), or (5) of subdivision (j). (3) Has failed to comply with the timeframe standards established by the council 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 Industrial Medical Council or the appeals board. (l) The council 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 council may, in its discretion, place a qualified medical evaluator on probation subject to appropriate conditions, including ordering continuing education or training. The council shall report to the appropriate licensing board the name of any qualified medical evaluator who is disciplined pursuant to this subdivision. (m) The council 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 council shall suspend or terminate as a medical evaluator any physician who has been suspended or placed on probation by the relevant licensing board. (n) Each qualified medical evaluator shall pay a fee, as determined by the Industrial Medical Council, for appointment or reappointment. Any qualified medical evaluator appointed prior to January 1, 1993, shall also pay the same fee as specified herein. These fees shall be based on a sliding scale as established by the council. All revenues from fees paid under this subdivision shall be deposited into the Industrial Medicine Fund, which is hereby created for the administration of the Industrial Medical Council. Moneys paid into the Industrial Medicine Fund for the activities of the Industrial Medical Council shall not be used by any other department or agency or for any purpose other than administration of the council. The funds provided to the council from the Industrial Medicine Fund shall not supplant any funds appropriated to the council from the Workers' Compensation Administration Revolving Fund, the General Fund, or any other governmental source. Any future annual appropriation to the council from the Workers' Compensation Administration Revolving Fund, the General Fund, or any other governmental source shall not be less than the amount appropriated or provided during the 1991-92 fiscal year. (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 council and the Commission on Health and Safety and Workers' Compensation, shall adopt regulations to implement this subdivision on or before July 1, 1994. SEC. 19. Section 139.3 of the Labor Code is repealed. SEC. 20. Section 139.3 is added to the Labor Code, to read: 139.3. (a) Notwithstanding any other provision of law, to the extent those services are paid pursuant to Division 4 (commencing with Section 3200), it is unlawful for a physician to refer a person for clinical laboratory, diagnostic nuclear medicine, radiation oncology, physical therapy, physical rehabilitation, psychometric testing, home infusion therapy, or diagnostic imaging 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. (b) For purposes of this section and Section 139.31, the following shall apply: (1) "Diagnostic imaging" includes, but is not limited to, all X-ray, computed axial tomography magnetic resonance imaging, nuclear medicine, positron emission tomography, mammography, and ultrasound goods and services. (2)"Immediate family" includes the spouse and children of the physician, the parents of the physician, and the spouses of the children of the physician. (3) "Physician" means a physician as defined in Section 3209.3. (4) A "financial interest" includes, but is not limited to, 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 a licensee and a person or entity to whom the physician refers a person for a good or service specified in subdivision (a). A financial interest also exists if there is an indirect relationship between a physician and the referral recipient, including, but not limited to, an arrangement whereby a physician has an ownership interest in any entity that leases property to the referral recipient. Any financial interest transferred by a physician to, or otherwise established in, any person or entity for the purpose of avoiding the prohibition of this section shall be deemed a financial interest of the physician. (5) A "physician's office" is either of the following: (A) An office of a physician in solo practice. (B) An office in which the services are performed personally by an appropriately licensed or certified individual who is employed by the physician and under direct or general supervision appropriate to the scope of practice of the appropriately licensed or certified individual. (6) The "office of a group practice" is an office or offices in which two or more physicians are legally organized as a partnership, professional corporation, or not-for-profit corporation licensed according to subdivision (a) of Section 1204 of the Health and Safety Code for which all of the following are applicable: (A) Each physician who is a member of the group provides substantially the full range of services that the physician routinely provides, including medical care, consultation, diagnosis, or treatment, through the joint use of shared office space, facilities, equipment, and personnel. (B) Substantially all of the services of the physicians who are members of the group are provided through the group and are billed in the name of the group and amounts so received are treated as receipts of the group, and except that in the case of multispecialty clinics, as defined in subdivision (l) of Section 1206 of the Health and Safety Code, physician services are billed in the name of the multispecialty clinic and amounts so received are treated as receipts of the multispecialty clinic. (C) The overhead expenses of, and the income from, the practice are distributed in accordance with methods previously determined by members of the group. (c) (1) It is unlawful for a licensee to enter into an arrangement or scheme, such as a cross-referral arrangement, that the licensee knows, or should know, has a principal purpose of ensuring referrals by the licensee to a particular entity that, if the licensee directly made referrals to that entity, would be in violation of this section. (2) It shall be unlawful for a physician 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 for a referred evaluation or consultation. (d) No claim for payment shall be presented by an entity to any individual, third-party payor, or other entity for a good or service furnished pursuant to a referral prohibited under this section. (e) A physician who refers to or seeks consultation from an organization in which the physician has a financial interest shall disclose this interest to the patient or if the patient is a minor, to the patient's parents or legal guardian in writing at the time of the referral. (f) No insurer, self-insurer, or other payor shall pay a charge or lien for any good or service resulting from a referral in violation of this section. (g) A violation of subdivision (a) shall be a misdemeanor. The appropriate licensing board shall review the facts and circumstances of any conviction pursuant to subdivision (a) and take appropriate disciplinary action if the licensee has committed unprofessional conduct. Violations of this section may also be subject to civil penalties of up to five thousand dollars ($5,000) for each offense, which may be enforced by the Insurance Commissioner, Attorney General, or a district attorney. A violation of subdivision (c), (d), (e), or (f) is a public offense and is punishable upon conviction by a fine not exceeding fifteen thousand dollars ($15,000) for each violation and appropriate disciplinary action, including revocation of professional licensure, by the Medical Board of California or other appropriate governmental agency. SEC. 21. Section 139.31 is added to the Labor Code, to read: 139.31. The prohibition of Section 139.3 shall not apply to or restrict any of the following: (a) A physician may refer a patient for a good or service otherwise prohibited by subdivision (a) of Section 139.3 if the physician's regular practice is located outside a metropolitan statistical area and there is no alternative provider of the service within either 25 miles or 40 minutes traveling time, via the shortest route on a paved road. A physician who refers to, or seeks consultation from, an organization in which the physician has a financial interest under this subdivision shall disclose this interest to the patient or the patient's parents or legal guardian in writing at the time of referral. (b) A physician who has one or more of the following arrangements with another physician, a person, or an entity, is not prohibited from referring a patient to the physician, person, or entity because of the arrangement: (1) A loan between a physician and the recipient of the referral, if the loan has commercially reasonable terms, bears interest at the prime rate or a higher rate that does not constitute usury, is adequately secured, and the loan terms are not affected by either party's referral of any person or the volume of services provided by either party. (2) A lease of space or equipment between a physician and the recipient of the referral, 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 party's referral of any person or the volume of services provided by either party. (3) A physician's ownership of corporate investment securities, 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, do not base profit distributions or other transfers of value on the physician's referral of persons to the corporation, do not have a separate class or accounting for any persons or for any physicians who may refer persons to the corporation, and are in a corporation that had, at the end of the corporation's most recent fiscal year, total gross assets exceeding one hundred million dollars ($100,000,000). (c) (1) A physician may refer a person to a health facility as defined in Section 1250 of the Health and Safety Code, or to any facility owned or leased by a health facility, if the recipient of the referral does not compensate the physician for the patient referral, and any equipment lease arrangement between the physician and the referral recipient complies with the requirements of paragraph (2) of subdivision (b). (2) Nothing shall preclude this subdivision from applying to a physician solely because the physician has an ownership or leasehold interest in an entire health facility or an entity that owns or leases an entire health facility. (3) A physician may refer a person to a health facility for any service classified as an emergency under subdivision (a) or (b) of Section 1317.1 of the Health and Safety Code. For nonemergency outpatient diagnostic imaging services performed with equipment for which, when new, has a commercial retail price of four hundred thousand dollars ($400,000) or more, the referring physician shall obtain a service preauthorization from the insurer, or self-insured employer. Any oral authorization shall be memorialized in writing within five business days. (d) A physician compensated or employed by a university may refer a person to any facility owned or operated by the university, or for a physician service, to another physician employed by the university, provided that the facility or university does not compensate the referring physician for the patient referral. For nonemergency diagnostic imaging services performed with equipment that, when new, has a commercial retail price of four hundred thousand dollars ($400,000) or more, the referring physician shall obtain a service preauthorization from the insurer or self-insured employer. An oral authorization shall be memorialized in writing within five business days. In the case of a facility which is totally or partially owned by an entity other than the university, but which is staffed by university physicians, such physicians may not refer patients to the facility if the facility compensates the referring physician for such referrals. (e) The prohibition of Section 139.3 shall not apply to any service for a specific patient that is performed within, or goods that are supplied by, a physician's office, or the office of a group practice. With respect to diagnostic imaging services performed with equipment that, when new, had a commercial retail price of four hundred thousand dollars ($400,000) or more, or for physical therapy services, or for psychometric testing which exceeds the routine screening battery protocols, with a time limit of two to five hours, established by the Industrial Medical Council, the referring physician obtains a service preauthorization from the insurer or self-insured employer. Any oral authorization shall be memorialized in writing within five business days. (f) The prohibition of Section 139.3 shall not apply where the physician is in a group practice as defined in Section 139.3 and refers a person for services specified in Section 139.3 to a multispecialty clinic, as defined in subdivision (l) of Section 1206 of the Health and Safety Code. For diagnostic imaging services performed with equipment that, when new, had a commercial retail price of four hundred thousand dollars ($400,000) or more, or physical therapy services, or psychometric testing which exceeds the routine screening battery protocols, with a time limit of two to five hours, established by the Industrial Medical Council, performed at the multispecialty facility, the referring physician shall obtain a service preauthorization from the insurer or self insured employer. Any oral authorization shall be memorialized in writing within five business days. (g) The requirement for preauthorization in sections (c), (e), and (f) shall not apply to a patient for which the physician or group accepts payment on a capitated risk basis. (h) The prohibition of Section 139.3 shall not apply to any facility when used to provide health care services to an enrollee of a health care service plan licensed pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code). SEC. 22. Section 139.5 of the Labor Code is amended to read: 139.5. (a) The administrative director shall establish within the Office of Benefit Determination a vocational rehabilitation unit, which shall include appropriate professional staff, and which shall have the following duties: (1) To foster, review, and approve vocational rehabilitation plans developed by a qualified rehabilitation representative of the employer, insurer, state agency, or employee. Plans agreed to by the employer and employee do not require approval by the vocational rehabilitation unit unless the employee is unrepresented. (2) To develop rules and regulations, to be promulgated by the administrative director, providing for a procedure in which an employee may waive the services of a qualified rehabilitation representative where the employee has been enrolled and made substantial progress toward completion of a degree or certificate from a community college, California State University, or the University of California and desires a plan to complete the degree or certificate. These rules and regulations shall provide that any such waiver as well as any plan developed without the assistance of a qualified rehabilitation representative must be approved by the rehabilitation unit. (3) To develop rules and regulations, to be promulgated by the administrative director, which would expedite and facilitate the identification, notification and referral of industrially injured employees to vocational rehabilitation services. (4) To coordinate and enforce the implementation of vocational rehabilitation plans. (5) To develop a fee schedule, to be promulgated by the administrative director, governing reasonable fees for vocational rehabilitation services provided on and after January 1, 1991. The initial fee schedule promulgated under this paragraph shall be designed to reduce the cost of vocational rehabilitation services by 10 percent from the level of fees paid during 1989. On or before July 1, 1994, the administrative director shall establish the maximum aggregate permissible fees that may be charged for counseling. Those fees shall not exceed four thousand five hundred dollars ($4,500) and shall be included within the sixteen thousand dollar ($16,000) cap. The fee schedule shall establish maximum aggregate permissible fees for evaluation, plan development, and job placement services. (6) To develop standards, to be promulgated by the administrative director, for governing the timeliness and the quality of vocational rehabilitation services. (b) The salaries of the personnel of the vocational rehabilitation unit shall be fixed by the Department of Personnel Administration. (c) When an employee is determined to be medically eligible and chooses to participate in a vocational rehabilitation program, he or she shall continue to receive temporary disability indemnity payments only until his or her medical condition becomes permanent and stationary and, thereafter, may receive a maintenance allowance. Rehabilitation maintenance allowance payments shall begin after the employee's medical condition becomes permanent and stationary, upon a request for vocational rehabilitation services. Thereafter, the maintenance allowance shall be paid for a period not to exceed 52 weeks in the aggregate, except where the overall cap on vocational rehabilitation services can be exceeded under this section or Section 4642 or subdivision (d) or (e) of Section 4644. The employee also shall receive additional living expenses necessitated by the vocational rehabilitation services, together with all reasonable and necessary vocational training, at the expense of the employer, but in no event shall the expenses, counseling fees, training, maintenance allowance, and costs associated with, or arising out of, vocational rehabilitation services incurred after the employee's request for vocational rehabilitation services, except temporary disability payments, exceed sixteen thousand dollars ($16,000). The administrative director shall adopt regulations to ensure that the continued receipt of vocational rehabilitation maintenance allowance benefits is dependent upon the injured worker's regular and consistent attendance at, and participation in, his or her vocational rehabilitation training program. (d) The amount of the maintenance allowance due under subdivision (c) shall be two-thirds of the employee's average weekly earnings at the date of injury payable as follows: (1) The amount the employee would have received as continuing temporary disability indemnity, but not more than two hundred forty-six dollars ($246) a week for injuries occurring on or after January 1, 1990. (2) At the employee's option, an additional amount from permanent disability indemnity due or payable, sufficient to provide the employee with a maintenance allowance equal to two-thirds of the employee's average weekly earnings at the date of injury subject to the limits specified in subdivision (a) of Section 4453 and the requirements of Section 4661.5. In no event shall temporary disability indemnity and maintenance allowance be payable concurrently. If the employer disputes the treating physician's determination of medical eligibility, the employee shall continue to receive that portion of the maintenance allowance payable under paragraph (1) pending final determination of the dispute. If the employee disputes the treating physician's determination of medical eligibility and prevails, the employee shall be entitled to that portion of the maintenance allowance payable under paragraph (1) retroactive to the date of the employee's request for vocational rehabilitation services. These payments shall not be counted against the maximum expenditures for vocational rehabilitation services provided by this section. (e) No provision of this section nor of any rule, regulation, or vocational rehabilitation plan developed or promulgated under this section nor any benefit provided pursuant to this section shall apply to an injured employee whose injury occurred prior to January 1, 1975. Nothing in this section shall affect any plan, benefit, or program authorized by this section as added by Chapter 1513 of the Statutes of 1965 or as amended by Chapter 83 of the Statutes of 1972. (f) The time within which an employee may request vocational rehabilitation services is set forth in Sections 5405.5, 5410, and 5803. (g) An offer of a job within state service to a state employee in State bargaining unit 1, 4, 15, 18, or 20 at the same or similar salary and the same or similar geographic location is a prima facie offer of vocational rehabilitation under this statute. (h) It shall be unlawful for a qualified rehabilitation representative or rehabilitation counselor to refer any employee to any work evaluation facility or to any education or training program if the qualified rehabilitation representative or rehabilitation counselor, or a spouse, employer, coemployee, or any party with whom he or she has entered into contract, express or implied, has any proprietary interest in or contractual relationship with the work evaluation facility or education or training program. It shall also be unlawful for any insurer to refer any injured worker to any rehabilitation provider or facility if the insurer has a proprietary interest in the rehabilitation provider or facility or for any insurer to charge against any claim for the expenses of employees of the insurer to provide vocational rehabilitation services unless those expenses are disclosed to the insured and agreed to in advance. (i) Any charges by an insurer for the activities of an employee who supervises outside vocational rehabilitation services shall not exceed the vocational rehabilitation fee schedule, and shall not be counted against the overall cap for vocational rehabilitation or the limit on counselor's fees provided for in this section. These charges shall be attributed as expenses by the insurer and not losses for purposes of insurance rating pursuant to Article 2 (commencing with Section 11730) of Chapter 3 of Division 2 of the Insurance Code. SEC. 23. Section 139.6 of the Labor Code is amended to read: 139.6. (a) The administrative director shall establish and effect within the Division of Workers' Compensation a continuing program to provide information and assistance concerning the rights, benefits, and obligations of the workers' compensation law to employees and employers subject thereto. The program shall include, but not be limited to, the following: (1) The preparation, publishing, and as necessary, updating, of guides to the California workers' compensation system for employees and employers. The guides shall detail, in easily understandable language, the rights and obligations of employees and employers, the procedures for obtaining benefits, and the means provided for resolving disputes. Separate guides may be prepared for employees and employers. The appropriate guide shall be provided to all labor and employer organizations known to the administrative director, and to any other person upon request. (2) The preparation, publishing, and as necessary, updating, of a pamphlet advising injured workers of their basic rights under workers' compensation law, and informing them of rights under the Americans with Disabilities Act, and the provisions of the Fair Employment and Housing Act relating to individuals with a disability. The pamphlet shall be written in easily understandable language. The pamphlet shall be available in both English and Spanish, and shall include basic information concerning the circumstances under which injured employees are entitled to the various types of workers' compensation benefits, the protections against discrimination because of an injury, the procedures for resolving any disputes which arise, and the right to seek information and advice from an information and assistance officer or an attorney. (b) In each district office of the division, the administrative director shall appoint an information and assistance officer, and any other deputy information and assistance officers as the work of the district office may require. The administrative director shall provide office facilities and clerical support appropriate to the functions of these information and assistance officers. (c) Each information and assistance officer shall be responsible for the performance of the following duties: (1) Providing continuing information concerning rights, benefits, and obligations under workers' compensation laws to injured workers, employers, lien claimants, and other interested parties. (2) Upon request by the injured worker, assisting in the prompt resolution of misunderstanding, disputes, and controversies arising out of claims for compensation, without formal proceedings, in order that full and timely compensation benefits shall be furnished. In performing this duty, information and assistance officers shall not be responsible for reviewing applications for adjudication or declarations of readiness to proceed. This function shall be performed by workers' compensation judges. This function may also be performed by settlement conference referees upon delegation by the appeals board. (3) Distributing any information pamphlets in English and Spanish as are prepared and approved by the administrative director to all inquiring injured workers and any other parties that may request copies of these pamphlets. (4) Establishing and maintaining liaison with the persons located in the geographic area served by the district office, with other affected state agencies, and with organizations representing employees, employers, insurers, and the medical community. SEC. 24. Section 3208.4 is added to the Labor Code, to read: 3208.4. In any proceeding under this division involving an injury arising out of alleged conduct that constitutes sexual harassment, sexual assault, or sexual battery, any party seeking discovery concerning sexual conduct of the applicant with any person other than the defendant, whether consensual or nonconsensual or prior or subsequent to the alleged act complained of, shall establish specific facts showing good cause for that discovery on a noticed motion to the appeals board. The motion shall not be made or considered at an ex parte hearing. The procedures set forth in Section 783 of the Evidence Code shall be followed if evidence of sexual conduct of the applicant is offered to attack his or her credibility. Opinion evidence, evidence of reputation, and evidence of specific instances of sexual conduct of the applicant with any person other than the defendant, or any of such evidence, is not admissible by the defendant to prove consent by or the absence of injury to the applicant, unless the injury alleged by the applicant is in the nature of loss of consortium. SEC. 25. Section 3700 of the Labor Code is amended to read: 3700. Every employer except the state shall secure the payment of compensation in one or more of the following ways: (a) By being insured against liability to pay compensation in one or more insurers duly authorized to write compensation insurance in this state. (b) 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, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his or her employees. (c) For any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state, including each member of a pooling arrangement under a joint exercise of powers agreement (but not the state itself), by securing from the Director of Industrial Relations a certificate of consent to self-insure against workers' compensation claims, which certificate may be given upon furnishing proof satisfactory to the director of ability to administer workers' compensation claims properly, and to pay workers' compensation claims that may become due to its employees. On or before March 31, 1979, a political subdivision of the state which, on December 31, 1978, was uninsured for its liability to pay compensation, shall file a properly completed and executed application for a certificate of consent to self-insure against workers' compensation claims. The certificate shall be issued and be subject to the provisions of Section 3702. SEC. 26. 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) Authorizing and encouraging group self-insurance. SEC. 27. Section 3761 of the Labor Code is amended to read: 3761. (a) An insurer securing an employer's liability under this division shall notify the employer, within 15 days, of each claim for indemnity filed against the employer directly with the insurer if the employer has not timely provided to the insurer a report of occupational injury or occupational illness pursuant to Section 6409.1. The insurer shall furnish an employer who has not filed this report with an opportunity to provide to the insurer, prior to the expiration of the 90-day period specified in Section 5402, all relevant information available to the employer concerning the claim. (b) An employer shall promptly notify its insurer in writing at any time during the pendency of a claim when the employer has actual knowledge of any facts which would tend to disprove any aspect of the employee's claim. When an employer notifies its insurer in writing that, in the employer's opinion, no compensation is payable to an employee, at the employer's written request, to the appeal board, the appeals board may approve a compromise and release agreement, or stipulation, that provides compensation to the employee only where there is proof of service upon the employer by the insurer, to the employer's last known address, not less than 15 days prior to the appeals board action, of notice of the hearing at which the compromise and release agreement or stipulation is to be approved. Failure by the insurer to provide the required notice shall not prohibit the board from approving a compromise and release agreement, or stipulation; however, the board shall order the insurer to pay reasonable expenses as provided in Section 5813. (c) In establishing a reserve pursuant to a claim that affects premiums against an employer, an insurer shall provide the employer, upon request, a written report of the reserve amount established. The written report shall include, at a minimum, the following: (1) Estimated medical-legal costs. (2) Estimated vocational rehabilitation costs, if any. (3) Itemization of all other estimated expenses to be paid from the reserve. (d) When an employer properly provides notification to its insurer pursuant to subdivision (b), and the appeals board thereafter determines that no compensation is payable under this division, the insurer shall reimburse the employer for any premium paid solely due to the inclusion of the successfully challenged payments in the calculation of the employer's experience modification. The employee shall not be required to refund the challenged payment. SEC. 28. Section 3762 is added to the Labor Code, to read: 3762. The insurer shall discuss all elements of the claim file with the employer that affect the employer's premium, and shall supply copies of the documents that affect the premium at the employer's expense during reasonable business hours. The right provided by this section shall not extend to any document that the insurer is prohibited from disclosing to the employer under the attorney-client privilege, any other applicable privilege, or statutory prohibition upon disclosure, or under Section 1877.4 of the Insurance Code. SEC. 29. Section 4060 is added to the Labor Code, to read: 4060. (a) This section shall apply to disputes over the compensability of any injury. This section shall not apply where injury to any part or parts of the body is accepted as compensable by the employer. (b) Neither the employer nor the employee shall be liable for any comprehensive medical-legal evaluation performed by other than the treating physician either in whole or in part on behalf of the employee prior to the filing of a claim form and prior to the time the claim is denied or becomes presumptively compensable under Section 5402. However, reports of treating physicians shall be admissible. (c) If a medical evaluation is required to determine compensability at any time after the period specified in subdivision (b), and the employee is represented by an attorney, each party may select a qualified medical evaluator to conduct a comprehensive medical-legal evaluation. Neither party may obtain more than one comprehensive medical-legal report, provided, however, that any party may obtain additional reports at their own expense. The parties may, at any time, agree on one medical evaluator to evaluate the issues in dispute. (d) If the employee is not represented by an attorney, the employer shall not seek agreement with the employee on a physician to prepare a comprehensive medical-legal evaluation. The employee may select a qualified medical evaluator to prepare a comprehensive medical-legal evaluation. The division shall assist unrepresented employees, and shall make available to them the list of medical evaluators compiled under Section 139.2. Neither party may obtain more than one comprehensive medical-legal report, provided, however, that any party may obtain additional reports at their own expense. If an employee has received a comprehensive medical-legal evaluation under this subdivision, and he or she later becomes represented by an attorney, he or she shall not be entitled to an additional evaluation at the employer's expense. (e) Evaluations performed under this section shall not be limited to the issue of the compensability of the injury, but shall address all medical issues in dispute. SEC. 30. Section 4061 of the Labor Code is amended to read: 4061. (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. The notice shall include information concerning how the employee may obtain a formal medical evaluation pursuant to subdivision (c) if he or she disagrees with the position taken by the employer. 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 and whether there is need for continuing medical care. (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 the need for continuing 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. If an employee is provided notice pursuant to this paragraph and the employer later takes the position that the employee has no permanent impairment or limitations resulting from the injury, or later determines permanent disability indemnity is payable, the employer shall in either event, within 14 days of the determination to take either position, provide the employee with the notice specified in paragraph (1). (b) Each notice required by subdivision (a) shall describe the administrative procedures available to the injured employee and advise the employee of his or her right to consult an information and assistance officer or an attorney. It shall contain the following language: "Should you decide to be represented by an attorney, you may or may not receive a larger award, but, unless you are determined to be ineligible for an award, the attorney's fee will be deducted from any award you might receive for disability benefits. The decision to be represented by an attorney is yours to make, but it is voluntary and may not be necessary for you to receive your benefits." (c) If the parties do not agree to a permanent disability rating based on the treating physician's evaluation or the assessment of need for continuing medical care, and the employee is represented by an attorney, the employer shall seek agreement with the employee on a physician to prepare a comprehensive medical evaluation of the employee's permanent impairment and limitations and any need for continuing medical care resulting from the injury. If no agreement is reached within 10 days, or any additional time not to exceed 20 days agreed to by the parties, the parties may not later select an agreed medical evaluator. Evaluations of an employee's permanent impairment and limitations obtained prior to the period to reach agreement shall not be admissible in any proceeding before the appeals board. After the period to reach agreement has expired, either party may select a qualified medical evaluator to conduct the comprehensive medical evaluation. Neither party may obtain more than one comprehensive medical-legal report, provided, however, that any party may obtain additional reports at their own expense. (d) If the parties do not agree to a permanent disability rating based on the treating physician's evaluation, and if the employee is not represented by an attorney, the employer shall not seek agreement with the employee on a physician to prepare an additional medical evaluation. 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 employee shall select a physician from the panel to prepare an independent medical evaluation of the employee's permanent impairment and limitations and any need for continuing medical care resulting from the injury. The report of the qualified medical evaluator and the reports of the treating physician or physicians shall be the only admissible reports and shall be the only reports obtained by the employee or the employer on the issues subject to this section. If the employee has received a comprehensive medical-legal evaluation under this subdivision, and he or she later becomes represented by an attorney, he or she shall not be entitled to an additional evaluation. In no event shall the employer be entitled to obtain another report in these cases. (e) The represented employee shall be responsible for making an appointment with an agreed medical evaluator. (f) The unrepresented employee shall be responsible for making an appointment with a qualified medical evaluator selected from a panel of three qualified medical evaluators. The evaluator shall give the employee, at the appointment, a brief opportunity to ask questions concerning the evaluation process and the evaluator's background. The unrepresented employee shall then participate in the evaluation as requested by the evaluator unless the employee has good cause to discontinue the evaluation. For purposes of this subdivision, "good cause" shall include evidence that the evaluator is biased against the employee because of his or her race, sex, national origin, religion, or sexual preference or evidence that the evaluator has requested the employee to submit to an unnecessary medical examination or procedure. If the unrepresented employee declines to proceed with the evaluation, he or she shall have the right to a new panel of three qualified medical evaluators from which to select one to prepare a comprehensive medical evaluation. If the appeals board subsequently determines that the employee did not have good cause to not proceed with the evaluation, the cost of the evaluation shall be deducted from any award the employee obtains. (g) Upon selection or assignment pursuant to subdivision (c) or (d), the medical evaluator shall perform a comprehensive medical evaluation according to the procedures promulgated by the Industrial Medical Council under paragraphs (2) and (3) of subdivision (j) of Section 139.2 and summarize the medical findings on a form prescribed by the Industrial Medical Council. The comprehensive 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. If, after a comprehensive 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. (h) Except as provided in Section 139.3, the medical evaluator may obtain consultations from other physicians who have treated the employee for the injury whose expertise is necessary to provide a complete and accurate evaluation. (i) 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 Office of Benefit Determination. 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 Office of Benefit Determination shall calculate the permanent disability rating according to Section 4660 and serve the rating on the employee and employer. (j) 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 or 4750 shall first be submitted by the Office of Benefit Determination 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. (k) Within 30 days of receipt of the rating, if the employee is unrepresented, the employee or employer may request that the Office of Benefit Determination 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 of the Industrial Medical Council 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 Office of Benefit Determination 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. (l) 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 or promptly commence proceedings before the appeals board to resolve the dispute for adjudication of claim. 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 Office of Benefit Determination 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. (m) No issue relating to the existence or extent of permanent impairment and limitations or the need for continuing medical care resulting from the injury may be the subject of a declaration of readiness to proceed of claim unless there has first been a medical evaluation by a treating physician or 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 or need for continuing medical care resulting from the injury shall be obtained prior to service of the comprehensive medical evaluation on the employee and employer if the employee is unrepresented, or prior to the attempt to select an agreed medical evaluator if the employee is represented. Evaluations obtained in violation of this prohibition shall not be admissible in any proceeding before the appeals board. However, the testimony, records, and reports offered by the treating physician or physicians who treated the employee for the injury and comprehensive medical evaluations prepared by a qualified medical evaluator selected by an unrepresented employee from a three-member panel shall be admissible. SEC. 31. Section 4061.5 is added to the Labor Code, to read: 4061.5. The treating physician primarily responsible for managing the care of the injured worker or the physician designated by that treating physician shall, in accordance with rules promulgated by the administrative director, render opinions on all medical issues necessary to determine eligibility for compensation. In the event that there is more than one treating physician, a single report shall be prepared by the physician primarily responsible for managing the injured worker's care that incorporates the findings of the various treating physicians. SEC. 32. 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 the permanent and stationary status of the employee's medical condition, the employee's preclusion or likely preclusion to engage in his or her usual occupation, the extent and scope of medical treatment, the existence of new and further disability, or any other medical issues not covered by Section 4060 or 4061, the objecting party shall notify the other party in writing of the objection within 20 days if the employee is represented by an attorney or within 30 days if the employee is not represented by an attorney. These time limits may be extended for good cause or by mutual agreement. Parties shall seek agreement with the other party on a physician, who need not be a qualified medical evaluator, to prepare a report resolving the disputed issue. If no agreement is reached within 10 days, or any additional time not to exceed 20 days agreed upon by the parties, the parties may not later select an agreed medical evaluator. Evaluations obtained prior to the period to reach agreement shall not be admissible in any proceeding before the appeals board. After the period to reach agreement has expired, the objecting party may select a qualified medical evaluator to conduct the comprehensive medical evaluation. Neither party may obtain more than one comprehensive medical-legal report, provided, however, that any party may obtain additional reports at their own expense. The nonobjecting party may continue to rely on the treating physician's report or may select a qualified medical evaluator to conduct an additional evaluation. (b) If the employee is not represented by an attorney, the employer shall not seek agreement with the employee on a physician to prepare the comprehensive medical evaluation. 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 employee shall select a physician from the panel to prepare a comprehensive medical evaluation. The evaluation of the qualified medical evaluator selected from a panel of three and the reports of the treating physician or physicians shall be the only admissible reports and shall be the only reports obtained by the employee or employer on issues subject to this section in a case involving an unrepresented employee. If the employee has received a comprehensive medical-legal evaluation under this subdivision, and he or she later becomes represented by an attorney, he or she shall not be entitled to an additional evaluation. (c) Upon completing a determination of the disputed medical issue, the physician selected under subdivision (a) or (b) to perform the medical evaluation shall summarize the medical findings on a form prescribed by the Industrial Medical Council and shall serve the formal medical evaluation and the summary form on the employee, employer, and administrative director. 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. 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. (d) No disputed medical issue specified in subdivision (a) may be the subject of a declaration of readiness to proceed unless there has first been an evaluation by the treating physician or an agreed or qualified medical evaluator. (e) With the exception of a report or reports prepared by the treating physician or physicians, no report determining disputed medical issues set forth in subdivision (a) shall be obtained prior to the expiration of the period to reach agreement on the selection of an agreed medical evaluator under subdivision (a). Reports obtained in violation of this prohibition shall not be admissible in any proceeding before the appeals board. However, the testimony, records, and reports offered by the treating physician or physicians who treated the employee for the injury shall be admissible. SEC. 33. Section 4062.9 is added to the Labor Code, to read: 4062.9. In cases where an additional comprehensive medical evaluation is obtained under Section 4061 or 4062, the findings of the treating physician are presumed to be correct. This presumption is rebuttable and may be controverted by a preponderance of medical opinion indicating an different level of impairment. However, this presumption shall not apply where both parties select qualified medical examiners. SEC. 34. 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. An unrepresented employee who has already obtained a medical evaluation under Sections 4060, 4061, or 4062 shall not obtain any additional comprehensive medical evaluations at the employer's expense. (b) Subject to Section 4906, if an employer files an application for adjudication and the employee is unrepresented at the time the application is filed, the employer shall be liable for any attorney's fees incurred by the employee in connection with the application for adjudication if the employee does not obtain a rebuttal report. (c) 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, this does not prohibit any party from obtaining any medical evaluation or consultation an 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 subdivisions (d) and (m) of Section 4061 and subdivisions (b) and (e) of Section 4062. (d) This section shall become operative for injuries occurring on and after January 1, 1991. SEC. 35. Section 4065 is added to the Labor Code, to read: 4065. (a) In cases where either the employer or the employee have obtained evaluations of the employee's permanent impairment and limitations from a qualified medical evaluator under Section 4061 and either party contests the comprehensive medical evaluation of the other party, the workers' compensation judge or the appeals board shall be limited to choosing between either party's proposed permanent disability rating. (b) The employee's permanent disability benefit awarded under paragraph (a) shall be adjusted based on the disability rating selected by the appeals board. If the appeals board chooses the permanent disability rating recommended by the employer, then the employee's permanent disability benefit award shall be reduced by the cost of the employee's comprehensive medical-legal evaluation. If the judge chooses the permanent disability rating recommended by the employee, the permanent disability benefit award shall be increased by the cost of the employer's comprehensive medical-legal evaluation. SEC. 36. Section 4068 is added to the Labor Code, to read: 4068. (a) Upon determining that a treating physician's report contains opinions that are the result of conjecture, are not supported by adequate evidence, or that indicate bias, the appeals board shall so notify the administrative director in writing in a manner he or she has specified. (b) If the administrative director believes that any treating physician's reports show a pattern of unsupported opinions, he or she shall notify in writing the physician's applicable licensing body of his findings. If the treating physician is a medical evaluator, the administrative director shall also notify the Industrial Medical Council. SEC. 37. 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 and 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 and 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 and 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 and 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 and 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 and 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 and after July 1, 1996. (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 and 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 and 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 and 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 and 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 and 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 and 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 and 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 and 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 and after July 1, 1996. (6) When the final adjusted permanent disability rating of the injured employee is 70 percent or greater but less than 99.75 percent: (A) not less than one hundred five dollars ($105), nor more than two hundred fifty-two dollars ($252), for injuries occurring on and 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 and after July 1, 1995; and (C) not less than one hundred five dollars ($105), nor more than three hundred forty-five dollars ($345) for injuries occurring on and after July 1, 1996. (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. 38. Section 4600 of the Labor Code is amended to read: 4600. Medical, surgical, chiropractic, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including artificial members, which is reasonably required to cure or relieve from the effects of the injury shall be provided by the employer. In the case of his or her neglect or refusal seasonably to do so, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing treatment. 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. However, 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 an employee requests a change of physician pursuant to Section 4601, the request may be made at any time after the injury, and the alternative physician or chiropractor shall be provided within five days of the request as required by Section 4601. For the purpose of this section, "personal physician" means 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, who has previously directed the medical treatment of the employee, and who retains the employee' s medical records, including his or her medical history. Where at the request of the employer, the employer's insurer, the administrative director, the appeals board, or a workers' compensation 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. 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 the Department of Personnel Administration 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. Where at the request of the employer, the employer's insurer, the administrative director, the appeals board, a workers' compensation 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 Section 11513 or 68566 of the Government Code. SEC. 39. Section 4600.3 is added to the Labor Code, to read: 4600.3. (a) (1) Notwithstanding Section 4600, when a self-insured employer, group of self-insured employers, or the insurer of an employer contracts with at least two health care organizations certified pursuant to Section 4600.5 for health care services required by this article to be provided to injured employees, those employees who are subject to the contract shall receive medical services in the manner prescribed in the contract, providing that the employee may choose to be treated by a personal physician or personal chiropractor he or she has designated prior to the injury who is not affiliated with the health care organization in accordance with Sections 4600 and 4601, in which case the employee shall not be treated by the health care organization. Every employee shall be given an affirmative choice at the time of employment and at least annually thereafter to designate or change the designation of a health care organization or a personal physician or personal chiropractor. The choice shall be memorialized in writing and maintained in the employee's personnel records. The employee who has designated a personal physician or personal chiropractor may change physicians at any time prior to the injury. Any employee who fails to choose between health care organizations or to designate a personal physician or personal chiropractor shall be treated by the health care organization selected by the employer. (2) Each such contract must comply with the certification standards provided in Section 4600.5, and shall provide all medical, surgical, chiropractic, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including artificial members, that is reasonably required to cure or relieve the effects of the injury, as required by this division, without any payment by the employee of deductibles, copayments, or any share of the premium. However, an employee may receive immediate emergency medical treatment that is compensable from a medical service provider who is not a member of the health care organization. (3) The employee shall be allowed to choose from at least two health care organizations, of which at least one must accept payment from the employer on a fee-for-service basis. If one of the health care organizations offered by the employer is the workers' compensation insurer that covers the employee or is an entity that controls or is controlled by that insurer, as defined by Section 1215 of the Insurance Code, the employee shall be allowed to choose from at least three health care organizations, including the workers' compensation insurer described in this paragraph, of which at least one must accept payment from the employer on a fee-for-service basis. (4) Insurers or self-insured employers who contract with a health care organization for medical services shall give notice to employees of eligible medical service providers and such other information regarding the contract and manner of receiving medical services as the administrative director may prescribe. Employees shall be duly notified that if they choose to receive care from the health care organization they must receive treatment for all occupational injuries and illnesses as prescribed by this section. (b) Notwithstanding subdivision (a), no employer which is required to bargain with an exclusive or certified bargaining agent which represents employees of the employer in accordance with state or federal employer-employee relations law shall contract with a health care organization for purposes of Section 4600.5 unless authorized to do so by mutual agreement between the bargaining agent and the employer. If the collective bargaining agreement is subject to the National Labor Relations Act, the employer may contract with a health care organization for purposes of Section 4600.5 at any time when the employer and bargaining agent have bargained to impasse to the extent required by federal law. (c) (1) If the employee is not receiving or is not eligible to receive health care coverage for nonoccupational injuries or illnesses provided by the employer, after 90 days from the date the injury is reported, an employee who has been receiving treatment from a health care organization notifies his or her employer in writing that he or she desires to stop treatment by the health care organization, he or she shall have the right to be treated by a physician or at a facility of his or her own choosing within a reasonable geographic area. (2) If the employee is receiving or is eligible to receive health care coverage for nonoccupational injuries or illnesses provided by the employer, and has agreed to receive care for occupational injuries and illnesses from a health care organization provided by the employer, the employee may be treated for occupational injuries and diseases by a physician of his or her own choice or at a facility of his or her own choice within a reasonable geographic area only after 180 days from the date the injury was reported, or upon the date of contract renewal or open enrollment of the health care organization, whichever occurs first. (3) If the employee is receiving or is eligible to receive health care coverage for nonoccupational injuries or illnesses provided by the employer, and his or her personal physician or personal chiropractor is participating in at least one of the health care organizations offered to the employee, and he or she has chosen treatment by one of these health care organizations for occupational injuries or illnesses, 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 only after 365 days from the date the injury was reported, or upon the date of contract renewal or open enrollment, whichever occurs first. (4) For purposes of this subdivision, an employer shall be deemed to provide health care coverage for nonoccupational injuries and illnesses if the employer pays more than one-half the costs of the coverage, or if the plan is established pursuant to collective bargaining. (d) An employee and employer may agree to other forms of therapy pursuant to Section 3209.7. (e) An employee enrolled in a health care organization shall have the right to no less than one change of physician on request, and shall be given a choice of physicians affiliated with the health care organization. The health care organization shall provide the employee a choice of participating physicians within five days of receiving a request. In addition, the employee shall have the right to a second opinion from an participating physician on a matter pertaining to diagnosis from a participating physician. (f) Nothing in this section or Section 4600.5 shall be construed to prohibit a self-insured employer or workers' compensation insurer that contracts with an employer from engaging in any activities permitted by Section 4600. SEC. 40. Section 4600.5 is added to the Labor Code, to read: 4600.5. (a) Any health care service plan licensed pursuant to the Knox-Keene Health Care Service Plan Act, a disability insurer licensed by the Department of Insurance, or any entity, including, but not limited to, workers' compensation insurers and third-party administrators authorized as a workers' compensation health care provider organization by the Commissioner of Corporations, may make written application to the administrative director to become certified as a health care organization to provide health care to injured employees for injuries and diseases compensable under this article. (b) Each application for certification shall be accompanied by a reasonable fee prescribed by the administrative director. A certificate is valid for such period as the director may prescribe unless sooner revoked or suspended. (c) If the health care organization is a health care service plan licensed pursuant to the Knox-Keene Health Care Service Plan Act, the administrative director shall certify the plan to provide health care pursuant to Section 4600.3 if the director finds that the plan is in good standing with the Department of Corporations and meets the following additional requirements: (1) Proposes to provide all medical and health care services that may be required by this article. (2) Provides a program involving cooperative efforts by the employees, the employer, and the health plan to promote workplace health and safety, consultative and other services, and early return to work for injured employees. (3) Proposes a timely and accurate method to meet the requirements set forth by the administrative director for all carriers of workers' compensation coverage to report necessary information regarding medical and health care service cost and utilization, rates of return to work, average time in medical treatment, and other measures as determined by the administrative director to enable the director to determine the effectiveness of the plan. (4) Agrees to provide the administrative director with information, reports, and records prepared and submitted to the Department of Corporations in compliance with the Knox-Keene Health Care Service Plan Act, relating to financial solvency, provider accessibility, peer review, utilization review, and quality assurance, upon request, if the administrative director determines the information is necessary to verify that the plan is providing medical treatment to injured employees in compliance with the requirements of this code. Disclosure of peer review proceedings and records of the administrative director shall not alter the status of the proceedings or records as privileged and confidential communications pursuant to Sections 1370 and 1370.1 of the Health and Safety Code. (5) Demonstrates the capability to provide occupational medicine and related disciplines. (6) Complies with any other requirement the administrative director determines is necessary to provide medical services to injured employees consistent with the intent of this article, including, but not limited to, a written patient grievance policy. (d) If the health care organization is a disability insurer licensed by the Department of Insurance, the administrative director shall certify the plan to provide health care pursuant to Section 4600.3 if the director finds that the plan is in good standing with the Department of Insurance and in compliance with subdivision (d) of Section 10133 and Section 10133.5 of the Insurance Code, and meets the following additional requirements: (1) Proposes to provide all medical and health care services that may be required by this article. (2) Provides a program involving cooperative efforts by the employees, the employer, and the health plan to promote workplace health and safety, consultative and other services, and early return to work for injured employees. (3) Proposes a timely and accurate method to meet the requirements set forth by the administrative director for all carriers of workers' compensation coverage to report necessary information regarding medical and health care service cost and utilization, rates of return to work, average time in medical treatment, and other measures as determined by the administrative director to enable the director to determine the effectiveness of the plan. (4) Agrees to provide the administrative director with information, reports, and records prepared and submitted to the Department of Insurance in compliance with the Insurance Code relating to financial solvency, provider accessibility, peer review, utilization review, and quality assurance, upon request, if the administrative director determines the information is necessary to verify that the plan is providing medical treatment to injured employees consistent with the intent of this article. Disclosure of peer review proceedings and records of the administrative director shall not alter the status of the proceedings or records as privileged and confidential communications pursuant to subdivision (d) of Section 10133 of the Insurance Code. (5) Demonstrates the capability to provide occupational medicine and related disciplines. (6) Complies with any other requirement the administrative director determines is necessary to provide medical services to injured employees consistent with the intent of this article, including, but not limited to, a written patient grievance policy. (e) If the health care organization is a workers' compensation health care provider organization authorized by the Department of Corporations, the administrative director shall certify the plan to provide health care pursuant to Section 4600.3 if the director finds that the plan is in good standing with the Department of Corporations, and it meets the following additional requirements: (1) Proposes to provide all medical and health care services that may be required by this article. (2) Provides a program involving cooperative efforts by the employees, the employer, and the health plan to promote workplace health and safety, consultative and other services, and early return to work for injured employees. (3) Proposes a timely and accurate method to meet the requirements set forth by the administrative director for all carriers of workers' compensation coverage to report necessary information regarding medical and health care service cost and utilization, rates of return to work, average time in medical treatment, and other measures as determined by the administrative director to enable the director to determine the effectiveness of the plan. (4) Agrees to provide the administrative director with information, reports, and records prepared and submitted to the Department of Insurance in compliance with the Insurance Code relating to financial solvency, provider accessibility, peer review, utilization review, and quality assurance, upon request, if the administrative director determines the information is necessary to verify that the plan is providing medical treatment to injured employees consistent with the intent of this article. Disclosure of peer review proceedings and records of the administrative director shall not alter the status of the proceedings or records as privileged and confidential communications pursuant to subdivision (d) of Section 10133 of the Insurance Code. (5) Demonstrates the capability to provide occupational medicine and related disciplines. (6) Complies with any other requirement the administrative director determines is necessary to provide medical services to injured employees consistent with the intent of this article, including, but not limited to, a written patient grievance policy. (f) The provisions of this section shall not affect the confidentiality or admission in evidence of a claimant's medical treatment records. (g) (1) Charges for services provided by health care organizations paid on a capitated basis certified by this section shall not be subject to the schedules adopted by the administrative director pursuant to Section 5307.1. (2) Nothing in this section shall prohibit a health care facility paid by an employer on a fee-for-service basis from being paid fees different than those set forth in the official medical fee schedule by an employer, insurance carrier, third party administrator on behalf of employers, or preferred provider organization representing an employer or insurance carrier provided that: (A) The fee is an alternative discounted rate which covers all services in lieu of separate fees for itemized services, whether or not the itemized services are specified on the fee schedule, and (B) The administrative director has determined that the alternative discounted rates between the health care organization and a payor, a third party administrator on behalf of employers, or a preferred provider organization will produce greater savings in the aggregate than if each item on facility billings were to be charged at the schedule rate. (h) Nothing in this section shall be construed to expand or constrict any requirements imposed by law on a health care service plan or insurer when operating as other than a health care organization pursuant to this section. (i) In consultation with interested parties, including the Department of Corporations and the Department of Insurance, the administrative director shall adopt rules necessary to carry out this section. (j) This section shall not apply to an employee who is receiving medical treatment for an accepted injury or occupational disease on the operative date of this section until the worker is found to be medically stationary or the worker changes physicians, whichever event first occurs. (k) The administrative director shall refuse to certify or may revoke or suspend the certification of any health care organization under this section if the director finds that: (1) The plan for providing medical treatment fails to meet the requirements of this section. (2) A health care service plan licensed by the Department of Corporations, a workers' compensation health care provider organization authorized by the Department of Corporations, or a carrier licensed by the Department of Insurance is not in good standing with its licensing agency. (3) Services under the plan are not being provided in accordance with the terms of a certified plan. (l) (1) When an injured employee requests chiropractic treatment for work-related injuries, the health care organization shall provide the injured worker with access to the services of a chiropractor pursuant to guidelines for chiropractic care established by paragraph (2). Within five working days of the employee's request to see a chiropractor, the health care organization and any person or entity who directs the kind or manner of health care services for the plan shall refer an injured employee to an affiliated chiropractor for work-related injuries that are within the guidelines for chiropractic care established by paragraph (2). Chiropractic care rendered in accordance with guidelines for chiropractic care established pursuant to paragraph (2) shall be provided by duly licensed chiropractors affiliated with the plan. (2) The health care organization shall establish guidelines for chiropractic care in consultation with affiliated chiropractors who are participants in the health care organization's utilization review process for chiropractic care, which may include qualified medical evaluators knowledgeable in the treatment of chiropractic conditions. The guidelines for chiropractic care shall, at a minimum, explicitly require the referral of any injured employee who so requests to an affiliated chiropractor for the evaluation or treatment, or both of neuromusculoskeletal conditions. (3) Whenever a dispute concerning the appropriateness or necessity of chiropractic care for work-related injuries arises, the dispute shall be resolved by the health care organization's utilization review process for chiropractic care in accordance with the health care organization's guidelines for chiropractic care established by paragraph (2). Chiropractic utilization review for work-related injuries shall be conducted in accordance with the health care organization's approved quality assurance standards and utilization review process for chiropractic care. Chiropractors affiliated with the plan shall have access to the health care organization's provider appeals process and, in the case of chiropractic care for work-related injuries, the review shall include review by a chiropractor affiliated with the health care organization, as determined by the health care organization. (4) The health care organization shall inform employees of the procedures for processing and resolving grievances, including those related to chiropractic care, including the location and telephone number where grievances may be submitted. (5) All guidelines for chiropractic care and utilization review shall be consistent with the standards of this code that require care to cure or relieve the effects of the industrial injury. SEC. 41. Section 4614 is added to the Labor Code, to read: 4614. (a) (1) Where the employee's provider of health care services rendered under this division and paid on a fee-for-service basis is also the provider of health care services under contract with the employee's health benefit program, and the service or treatment provided is included within the range of benefits of the employee's health benefit program, and paid on a fee-for-service basis, the amount of payment for services provided under this division, for a work-related occurrence or illness, shall be no more than the amount that would have been paid for the same services under the health benefit plan, for a non-work-related occurrence or illness. (2) Where the employee's provider of health care services rendered under this division is also the provider of a capitated health care service plan under contract with the employee's health benefit program, it shall be paid for on a capitated basis. (b) (1) Where the employee's provider of health care services rendered under this division as a provider under a managed care contract is not the provider of health care services under contract with the employee's health benefit program or where the services rendered under this division are not within the benefits provided under the employer-sponsored health benefit program, the provider shall receive payment that is no more than the average of the payment that would have been paid by five of the largest health benefit programs by geographic region. Physicians, as defined in Section 3209.3, shall be reimbursed at the same averaged rates, regardless of licensure, for the delivery of services under the same code procedure. This subdivision shall not apply to a health care plan that provides its services on a capitated basis. (2) The administrative director shall identify the regions and the five largest carriers in each region. The carriers shall provide the necessary information to the administrative director in the form and manner requested by the administrative director. The administrative director shall make this information available to the affected providers on an annual basis. (c) Nothing in this section shall prohibit a health care provider from being paid fees different than those set forth in the official medical fee schedule by an employer, insurance carrier, third party administrator on behalf of employers, or preferred provider organization representing an employer or insurance carrier provided that: (1) The fee is an alternative discounted rate which covers all services in lieu of separate fees for itemized services, whether or not the itemized services are specified on the fee schedule, and (2) The administrative director has determined that the alternative discounted rates between the health care organization and a payor, a third party administrator on behalf of employers, or a preferred provider organization will produce greater savings in the aggregate than if each item on facility billings were to be charged at the scheduled rate. SEC. 42. Section 4614.1 is added to the Labor Code, to read: 4614.1. Notwithstanding subdivision (f) of Section 1345 of the Health and Safety Code, a health care service plan licensed pursuant to the Knox-Keene Health Care Service Plan Act and certified by the administrative director pursuant to Section 4600.5 to provide health care pursuant to Section 4600.3 shall be permitted to accept payment from a self-insured employer, a group of self-insured employers, or the insurer of an employer on a fee-for-service basis for the provision of such health care. SEC. 43. Section 4621 of the Labor Code is amended to read: 4621. (a) In accordance with the rules of practice and procedure of the appeals board, the employee, or the dependents of a deceased employee, shall be reimbursed for his or her medical-legal expenses and reasonably, actually, and necessarily incurred, except as provided in Section 4064. The reasonableness of, and necessity for, incurring these expenses shall be determined with respect to the time when the expenses were actually incurred. Costs for medical evaluations, diagnostic tests, and interpreters' services incidental to the production of a medical report shall not be incurred earlier than the date of receipt by the employer, the employer's insurance carrier, or, if represented, the attorney of record, of all reports and documents required by the administrative director incidental to the services. This subdivision is not applicable unless there has been compliance with Section 4620. (b) Except as provided in subdivision (c) and Sections 4061 and 4062, no comprehensive medical-legal evaluations, except those at the request of an employer, shall be performed during the first 60 days after the notice of claim has been filed pursuant to Section 5401, and neither the employer nor the employee shall be liable for any expenses incurred for comprehensive medical-legal evaluations performed within the first 60 days after the notice of claim has been filed pursuant to Section 5401. (c) Comprehensive medical-legal evaluations may be performed at any time after the claim form has been filed pursuant to Section 5401 if the employer has rejected the claim. (d) Where, at the request of the employer, the employer's insurance carrier, the administrative director, the appeals board, or a referee, 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 to the same extent and manner as provided for in Section 4600. SEC. 44. Section 4635 of the Labor Code is amended to read: 4635. As used in this article: (a) "Qualified injured worker" means an employee who meets both of the following requirements: (1) The employee's expected permanent disability as a result of the injury, whether or not combined with the effects of a prior injury or disability, if any, permanently precludes, or is likely to preclude, the employee from engaging in his or her usual occupation or the position in which he or she was engaged at the time of injury, hereafter referred to as "medical eligibility." (2) The employee can reasonably be expected to return to suitable gainful employment through the provision of vocational rehabilitation services, hereafter referred to as "vocational feasibility." (b) "Qualified rehabilitation representative" means a person capable of developing and implementing a vocational rehabilitation plan and whose experience and regular duties involve the evaluation, counseling, or placement of disabled persons, and who is familiar with this article. It is the intent of the Legislature to allow use of an in-house qualified rehabilitation representative. If the injured worker is represented by an attorney, and an in-house qualified rehabilitation representative is utilized, communication directly with that in-house qualified rehabilitation representative by the injured worker's attorney shall not constitute a violation of Rule 2-100 of the State Bar Rules of Professional Conduct. (c) "Independent vocational evaluator" means a qualified rehabilitation representative, who, in addition to the requirements of subdivision (b), has one of the following qualifications: (1) A doctorate or master's degree in vocational counseling or its equivalent and one or more years full-time experience in vocational counseling of industrially injured employees. (2) A doctor of medicine degree and one or more years full-time experience in psychiatric or psychological evaluation of disabled adults in relation to rehabilitation counseling. (3) A doctorate or master's degree in counseling or psychology or their equivalent and two or more years full-time employment using rehabilitation counseling techniques and conducting vocational evaluations of disabled adults under the direct supervision of an independent vocational evaluator. (4) A baccalaureate degree in any field and three or more years full-time employment using rehabilitation counseling techniques and conducting vocational evaluations of disabled adults under the direct supervision of an independent vocational evaluator. (d) "Vocational rehabilitation services" means those services required to determine if an employee can reasonably be expected to return to suitable gainful employment and those services reasonably necessary to provide an employee with the opportunity to return to suitable gainful employment. These services may include, but are not limited to, vocational and medical evaluation, counseling, job analysis, job modification assistance, retraining, including on-the-job training or training for alternative employment, formal training, academic instruction, and job placement assistance. (e) "Vocational rehabilitation plan" means the written description of and rationale for the manner and means by which it is proposed that a qualified injured worker may be returned to suitable gainful employment. The plan may contemplate direct job placement assistance, on-the-job training, formal training, academic instruction, job placement assistance, or self-employment. The plan shall specify the anticipated completion date of vocational rehabilitation services and the amount and source of payments to be made to the qualified injured workers during the pendency of the plan. The plan shall also define the responsibilities of the employee, employer, qualified rehabilitation representative, and any other parties in implementing the plan. The plan may contemplate modification of the employee's occupation at the time of injury or provision for alternative work if the employer has initially failed or refused to provide modified or alternative work to the injured worker. (f) "Suitable gainful employment" means that employment or self-employment which is reasonably attainable and which offers an opportunity to restore the employee as soon as practicable and as near as possible to maximum self-support, due consideration being given to the employee's qualifications, likely permanent disability, vocational interests and aptitudes, preinjury earnings and future earning capacity, and the present and projected labor market. No one factor shall be considered solely in determining suitable gainful employment. SEC. 45. Section 4635.1 is added to the Labor Code, to read: 4635.1. (a) The Legislature finds and declares that vocational rehabilitation provides an important tool for the retraining of injured workers. However, it is equally important that this retraining should be provided in an efficient and cost-effective manner. (b) The Legislature further finds that community colleges can provide a cost-effective alternative to existing vocational rehabilitation services, and declares its intent to encourage the implementation of vocational rehabilitation services at community colleges. SEC. 46. Section 4635.2 is added to the Labor Code, to read: 4635.2. The administrative director and the Chancellor of the Community Colleges shall establish a task force to create vocational rehabilitation schooling plans at the community colleges. This task force should focus on the underutilized potential of the schools to provide meaningful rehabilitation services in an affordable and cost-effective manner. SEC. 47. Section 4636 of the Labor Code is amended to read: 4636. (a) When aggregate total disability continues for 90 days, the employer immediately shall provide to the employee in the form and manner prescribed by the administrative director, information that provides notice of rights under the Americans with Disabilities Act and the provisions of the Fair Employment and Housing Act relating to individuals with a disability, and that explains the employee's rights and obligations pertaining to vocational rehabilitation, the nature and scope of vocational rehabilitation services to which the employee may be entitled, the maintenance allowance payable under Section 139.5, the effect of any delay in the treating physician's determination of medical eligibility, and that additional information may be obtained from an information assistance officer. When aggregate total disability exceeds 90 days and the employee has not previously been identified as meeting the medical eligibility requirements of paragraph (1) of subdivision (a) of Section 4635, the employer shall provide the employee's treating physician with a job description, developed jointly with the employee and the employer, and the physical requirements of the employee's duties at the time of injury in the form and manner prescribed by the administrative director, and request the treating physician to determine the employee's medical eligibility for vocational rehabilitation services. The treating physician's determination of medical eligibility shall take into account the employee's current and probable future medical condition, an estimate of the employee's current and potential functional limitations, the ability of the employee to accept and participate in vocational rehabilitation services if and when indicated, recommendations for subsequent evaluation or services, if any, the ability of the employee to engage in light work in a modified or alternative capacity, if available, and other information as may reasonably be prescribed by rules and regulations of the administrative director. (b) If the employee's treating physician is unable to make the assessment of medical eligibility at the time of initial contact, the employer shall continue to monitor the employee's recovery and request the treating physician to report as soon as the physician is able to determine whether the employee is medically eligible for vocational rehabilitation services. The treating physician shall report to both the employer and the employee no less frequently than every 60 days thereafter. The report also shall include an opinion concerning the physical capabilities of the employee at the time of each report. The reports shall continue to be made until the physician provides a report concluding one of the following: (1) The employee is released to return to work at his or her usual occupation or, if the employee was engaged in another occupation at the time of injury, the occupation the employee was engaged in at the time of injury. (2) The employee's permanent disability as the result of the injury, whether or not combined with the effects of a prior injury or disability, if any, permanently precludes, or is likely to preclude, the employee from engaging in the employee's usual occupation or the occupation in which the employee was engaged at the time of injury. (c) When aggregate total disability exceeds 365 days and the employee has not been previously identified as medically eligible for vocational rehabilitation, there shall be a rebuttable presumption that the employee is medically eligible for vocational rehabilitation services. (d) Immediately upon receipt of the treating physician's final report required by this section, the employer shall provide a copy to the employee together with notice of the procedure to be followed in contesting the treating physician's determination. The notice shall be in writing in the form and manner prescribed by the administrative director, and shall include the following: (1) Notice of whether the employer will be able or unable to offer modified or alternative work. (2) Notice that the employee may be eligible for services if the employee is unable to return either to his or her usual occupation or the occupation in which he or she was engaged at the time of injury. SEC. 48. Section 4638 of the Labor Code is amended to read: 4638. (a) If the employee is determined to be a qualified injured worker, and the employer notifies the injured worker, pursuant to paragraph (1) of subdivision (d) of Section 4636 that the employer will be unable to provide modified or alternative work to that injured worker, the qualified rehabilitation representative and the employee, jointly, shall develop an agreed-upon vocational rehabilitation plan. Vocational rehabilitation plans which utilize an employee's transferable skills and experience shall be preferable to plans that propose training for an occupation in which the employee has no skills or experience. An insured employer in whose employment the injury occurred shall receive a refund, payable in the same manner as a return of a standard insurance premium, from the insurer that provided the security for the payment of compensation on the date of injury when the employer, pursuant to Section 4644, returns the qualified injured worker to modified or alternative work at the employer's place of employment for 12 consecutive months. The refund shall be equal to the standard premium computed on the wages paid by the employer to the qualified injured worker during the 12-month period and shall be calculated as follows: multiply the workers' compensation insurance premium rate times the wages reported for workers' compensation insurance for the qualified injured worker during that 12-month period. For this calculation, the workers' compensation insurance rate shall be the insurance premium rate or rates per one hundred dollars ($100) of payroll which were applicable to the payroll reported for the qualified injured worker during that 12-month period, modified by the experience modification factor or factors, if any, which were applicable to the employer during that 12-month period. During and after the 12-month period, the qualified injured worker shall be protected against discrimination pursuant to Section 132a. (b) Within 90 days after determination of the employee's vocational feasibility, the employer shall do either of the following: (1) Submit a vocational rehabilitation plan agreed to by the employee to the Office of Benefit Determination for review and approval. (2) Request the Office of Benefit Determination to resolve any dispute concerning the provision of vocational rehabilitation services. SEC. 50. Section 4642 of the Labor Code is amended to read: 4642. (a) If the employer fails to assign a qualified rehabilitation representative or to commence vocational rehabilitation service in a timely manner as required by Section 4637, or otherwise causes any delay in the provision of vocational rehabilitation services, the full maintenance allowance shall be paid in its entirety by the employer, including the amount payable under paragraph (2) of subdivision (d) of Section 139.5, for the period of the delay. The maintenance allowance and any costs attributable to the delay shall not be subject to the overall cap on vocational rehabilitation services provided for by Section 139.5. (b) If the failure to meet the requirements of subdivision (a) is primarily the result of actions by the insurer, any increase in the costs that result shall be charged against the insurer's expenses. SEC. 51. Section 4644 of the Labor Code is amended to read: 4644. (a) The liability of the employer for vocational rehabilitation services shall terminate when any of the following events occur: (1) An employee who has received notice of potential eligibility to participate in a rehabilitation plan under Section 4637 declines vocational rehabilitation services in the form and manner prescribed by the administrative director. (2) A qualified injured worker completes a vocational rehabilitation plan except as otherwise provided in subdivisions (c) and (d). (3) The qualified injured worker unreasonably failed to complete a vocational rehabilitation plan. (4) An employee has not requested vocational rehabilitation services within 90 days of the notification that the employee is medically eligible for vocational rehabilitation services. The liability of the employer for vocational rehabilitation services shall not terminate under this paragraph unless the employer, not earlier than 45 days nor later than 70 days after the employee's receipt of the notice required by Section 4637, reminds the employee of his or her right to vocational rehabilitation services or until the 21st day after the employee receives the reminder notification. The reminder notification shall be in writing, in the form and manner prescribed by the administrative director, and shall be served by certified mail. The provisions of this paragraph shall not apply if the employee shows he or she was unable to comprehend the consequences of failing to timely request vocational rehabilitation services, or that, because of conditions beyond the control of the employee, the employee was unable to exercise his or her right to accept or decline vocational rehabilitation services. (5) The employer offers, and the employee accepts or rejects, in the form and manner prescribed by the administrative director, modified work lasting at least 12 months, provided that an employer who offers modified work that is available for the 12-month period required by this paragraph meets the requirements of this paragraph even if the employee voluntarily quits prior to the end of that 12-month period. (6) The employer offers and the employee accepts or rejects, in the form and manner prescribed by the administrative director, alternative work meeting all of the following conditions: (A) The employee has the ability to perform the essential functions of the job provided. (B) The job provided is in a regular position lasting at least 12 months. An employer who offers alternative work that is available for the 12-month period required by this paragraph meets the requirements of this paragraph even if the employee voluntarily quits prior to the end of the 12-month period. (C) The job provided offers wages and compensation that are within 15 percent of those paid to the employee at the time of injury. (D) The job is located within reasonable commuting distance of the employee's residence at the time of injury. (7) The employer offers, and the employee accepts, in the form and manner prescribed by the administrative director, work not meeting the conditions of paragraph (5) or (6) provided that the work lasts at least 12 months. The employee shall be required to reject the offer, in the form and manner prescribed by the administrative director, in order for the employee to be eligible for vocational rehabilitation services. An employer who offers work that is available for the 12-month period meets the requirements of this paragraph, even if the employee voluntarily quits prior to the end of that 12-month period. (b) Nothing in this article shall preclude the deferral or interruption of vocational rehabilitation services upon agreement of the employee and employer or, if no agreement can be reached, upon a good cause determination by the administrative director. (c) Except as provided in this section, vocational rehabilitation plans prepared pursuant to Section 4638 shall be limited to one plan per injured worker. The plans shall be completed within an 18-month period after approval of the plan, and shall not include a period of job placement exceeding 60 days. The employee shall be entitled to one additional vocational rehabilitation plan only if the original plan is determined to be inappropriate due to one of the following: (1) The employee's disability has deteriorated to the point where the worker is unable to meet the physical demands of the first plan. (2) The first plan is disrupted due to circumstances beyond the control of the employee. (3) Failure by the employer to provide timely service required by this article and the vocational rehabilitation plan when the plan has not been completed. The cost of the original and the additional plan plus all other vocational rehabilitation costs shall not exceed the overall cap and the counselor fee cap established in subdivision (c) of Section 139.5. (d) Notwithstanding subdivision (c), an employee may apply to the rehabilitation unit for approval of a second vocational rehabilitation plan which exceeds the overall cap provided for in subdivision (c) of Section 139.5 if all of the following conditions are met: (1) The employee has a permanent disability rating of 25 percent or greater. In reaching this determination, the rehabilitation unit shall consider any treating physicians' reports. (2) The first plan cannot be completed due to circumstances beyond the control of the employee. (3) The rehabilitation unit finds that a second plan is necessary for the proper rehabilitation of the employee. However, in no case shall the cost solely attributable to the second plan exceed the overall cap and the counseling fee cap contained in subdivision (c) of Section 139.5. (e) Notwithstanding subdivision (c), an employee may receive a second vocational rehabilitation plan that exceeds the overall cap provided for in subdivision (c) of Section 139.5 if the rehabilitation unit finds that the employee cannot complete the plan because the school or other training facility has closed or the worker has a sudden and unexpected change in disability that renders the plan inappropriate or other similar circumstances. (f) Notwithstanding paragraph (2) of subdivision (a), if a qualified injured worker returns to modified or alternative work with the same employer or to work with a different employer as a result of direct job placement assistance and that employment terminates, other than for cause, within 12 months of the date the employee was employed at the modified or alternative work, and if that work is unavailable in the labor market, the employer shall be liable, subject to Section 4642, for additional vocational rehabilitation services, provided that the employer's liability for vocational rehabilitation services shall terminate if the employee voluntarily quits prior to the end of that 12-month period. To qualify for additional vocational rehabilitation services, the employee shall demonstrate an inability to compete for suitable gainful employment with his or her existing skills. (g) An employer shall not be liable to provide vocational rehabilitation services at a location outside the state, unless upon agreement of the employer and the employee, or a determination by the Division of Workers' Compensation that those services are more cost-effective than similar services provided in the state. SEC. 52. Section 4645 of the Labor Code is amended to read: 4645. (a) (1) For unrepresented employees, all disputed matters regarding the provision of vocational rehabilitation services shall be submitted initially to the Office of Benefit Determination for its recommendation except as otherwise provided in this section. (2) For represented employees, all disputed matters shall be submitted to arbitration pursuant to Part 3.5 (commencing with Section 5270), except as otherwise provided in this section and Section 4643. (b) Where the question of entitlement to vocational rehabilitation services is first raised before a workers' compensation judge and there are good faith issues which, if resolved against the employee, would defeat his or her right to all compensation, the judge shall determine the issues and, if appropriate, refer the question of entitlement to vocational rehabilitation services to the Office of Benefit Determination or arbitration for its recommendation. (c) Where the question of entitlement to vocational rehabilitation services is first raised before a workers' compensation judge and there are no issues which would bar the employee's right to compensation, the judge shall refer the question of entitlement to the vocational rehabilitation services to the Office of Benefit Determination or arbitration for its recommendations before entering a finding, decision, or award on the issue of vocational rehabilitation. (d) Any determination or recommendation of the Office of Benefit Determination or by the arbitrator shall be binding unless a petition is filed with the appeals board within 20 days after service of the determination or recommendation. Nothing in this section shall affect an employee's rights pursuant to Sections 5405.5, 5410, and 5803. SEC. 52.5. Section 4659 of the Labor Code is amended to read: 4659. (a) If the permanent disability is at least 70 percent but less than 100 percent, 1.5 percent of the average weekly earnings for each 1 percent of disability in excess of 60 percent is to be paid during the remainder of life, after payment for the maximum number of weeks specified in Section 4658 has been made. For the purposes of this subdivision only, average weekly earnings shall be taken at not more than one hundred seven dollars and sixty-nine cents ($107.69). For injuries occurring on or after July 1, 1994, average weekly wages shall not be taken at more than one hundred fifty-seven dollars and sixty-nine cents ($157.69). For injuries occurring on or after July 1, 1995, average weekly wages shall not be taken at more than two hundred seven dollars and sixty-nine cents ($207.69). For injuries occurring on or after July 1, 1996, average weekly wages shall not be taken at more than two hundred fifty-seven dollars and sixty-nine cents ($257.69). (b) If the permanent disability is total, the indemnity based upon the average weekly earnings determined under Section 4453 shall be paid during the remainder of life. SEC. 53. Section 4660 of the Labor Code is amended to read: 4660. (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 age at the time of such injury, consideration being given to the diminished ability of such injured employee to compete in an open labor market. (b) The administrative director may prepare, adopt, and from time to time amend, a schedule for the determination of the percentage of permanent disabilities in accordance with this section. Such 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. (c) Any such schedule and any amendment thereto or revision thereof shall apply prospectively and shall apply to and govern only those permanent disabilities which result from compensable injuries received or occurring on and after the effective date of the adoption of such schedule, amendment or revision, as the fact may be. (d) On or before January 1, 1995, the administrative director shall review and revise the schedule for the determination of the percentage of permanent disabilities. The revision shall include, but not be limited to, an updating of the standard disability ratings and occupations to reflect the current labor market. However, no change in standard disability ratings shall be adopted without the approval of the Commission of Health and Safety and Workers' Compensation. A proposed revision shall be submitted to the commission on or before July 1, 1994. SEC. 53.5. Section 4702 of the Labor Code is amended to read: 4702. (a) Except as otherwise provided in this section and Sections 4553, 4554, 4557, and 4558, the death benefit in cases of total dependency shall be as follows: (1) In the case of two or more total dependents and regardless of the number of partial dependents, ninety-five thousand dollars ($95,000), for injuries occurring on and after January 1, 1991, one hundred fifteen thousand dollars ($115,000), for injuries occurring on or after July 1, 1994, one hundred thirty-five thousand dollars ($135,000), and for injuries occurring on or after July 1, 1996, one hundred forty-five thousand dollars ($145,000). (2) In the case of one total dependent and one or more partial dependents, seventy thousand dollars ($70,000), or for injuries occurring on and after January 1, 1991, ninety-five thousand dollars ($95,000), for injuries occurring on or after July 1, 1994, one hundred fifteen thousand dollars ($115,000), and for injuries occurring on or after July 1, 1996, one hundred twenty-five thousand dollars ($125,000), plus four times the amount annually devoted to the support of the partial dependents, but not more than a total of ninety-five thousand dollars ($95,000), for injuries occurring on and after January 1, 1991, one hundred fifteen thousand dollars ($115,000), for injuries occurring on or after July 1, 1994, one hundred twenty-five thousand dollars ($125,000), and for injuries occurring on or after July 1, 1996, one hundred forty-five thousand dollars ($145,000). (3) In the case of one total dependent and no partial dependents, seventy thousand dollars ($70,000), for injuries occurring on and after January 1, 1991, ninety-five thousand dollars ($95,000), for injuries occurring on or after July 1, 1994, one hundred fifteen thousand dollars ($115,000), and for injuries occurring on or after July 1, 1996, one hundred twenty-five thousand dollars ($125,000). (4) In the case of no total dependents and one or more partial dependents, four times the amount annually devoted to the support of the partial dependents, but not more than seventy thousand dollars ($70,000), for injuries occurring on and after January 1, 1991, a total of ninety-five thousand dollars ($95,000), for injuries occurring on or after July 1, 1994, one hundred fifteen thousand dollars ($115,000), and for injuries occurring on or after July 1, 1996, one hundred twenty-five thousand dollars ($125,000). (5) In the case of three or more total dependents and regardless of the number of partial dependents, one hundred fifty thousand dollars ($150,000) for injuries occurring on and after July 1, 1994, and one hundred sixty thousand dollars ($160,000) on or after July 1, 1996. (b) The death benefit in all cases shall be paid in installments in the same manner and amounts as temporary total disability indemnity would have to be made to the employee, unless the appeals board otherwise orders. However, no payment shall be made at a weekly rate of less than two hundred twenty-four dollars ($224). (c) Disability indemnity shall not be deducted from the death benefit and shall be paid in addition to the death benefit when the injury resulting in death occurs after September 30, 1949. (d) All rights under this section existing prior to January 1, 1990, shall be continued in force. SEC. 54. Part 3.2 (commencing with Section 5150) is added to Division 4 of the Labor Code, to read: PART 3.2. WORKERS' COMPENSATION HEALTH CARE PROVIDER ORGANIZATION ACT CHAPTER 1. GENERAL 5150. This part shall be known and may be cited as the Workers' Compensation Health Care Provider Organization Act of 1993. 5151. Responsibility for the administration and enforcement of this part is vested in the Commissioner of Corporations. All references to commissioner in this part shall be references to the Commissioner of Corporations and all references to department shall be references to the Department of Corporations. 5152. It is the intent of the Legislature that workers' compensation health care provider organizations be subject only to those antitrust prohibitions applicable to the conduct of other presumptively legitimate enterprises. This section does not change existing antitrust law as it relates to any agreement or arrangement to exclude from any of the above-described groups, any person who is lawfully qualified to perform the services to be performed by the members of the group, where the ground for exclusion is failure to possess the same license or certification as is possessed by the members of the group. 5153. The commissioner shall consult with the Director of the Department of Industrial Relations prior to the adoption of regulations applicable to workers' compensation health care provider organizations subject to this part for the purpose of ensuring, to the extent practical, that there is consistency of regulations adopted by the director and the Commissioner of Corporations. 5154. In any proceeding under this part, the burden of providing an exemption or an exception from a definition is upon the person claiming it. 5155. (a) The commissioner may from time to time adopt, amend, and rescind such rules, forms, and orders as are necessary to carry out the provisions of this part, including rules governing applications and reports, and defining any terms, whether or not used in this part, insofar as the definitions are not inconsistent with the provisions of this part. For the purpose of rules and forms, the commissioner may classify persons and matters within the commissioner's jurisdiction, and may prescribe different requirements for different classes. The commissioner may waive any requirement of any rule or form in situations where in the commissioner's discretion such requirement is not necessary in the public interest or for the protection of the public, persons, or organizations subject to this part. (b) The commissioner may honor requests from interested parties for interpretive opinions. (c) No provision of this part imposing any liability applied to any act done or omitted in good faith in conformity with any rule, form, order, or written interpretive opinion of the commissioner, or any such opinion of the Attorney General, notwithstanding that the rule, form, order, or written interpretive opinion may later be amended or rescinded or be determined by judicial or other authority to be invalid for any reason. (d) Notwithstanding the provisions of the Administrative Procedure Act, the Legislature has determined that an emergency exists, and that to promote the public interest, the commissioner is authorized to adopt emergency regulations. After the public comment period required by the Administrative Procedure Act, the Office of Administrative Law shall, immediately upon receiving the regulations adopted by the commissioner, file the regulations with the Secretary of State for immediate effectiveness. 5156. As used in this part: (a) "Advertisement" means any written or printed communication or any communication by means of recorded telephone messages or by radio, television, or similar communications media, published in connection with the offer or sale of health care contracts. (b) "Authorize" means, and "authorized" refers to, an authorization as a workers' compensation health care provider organization pursuant to Section 5163. "Authorize" shall have no legal meaning outside of health care for occupational injuries or illnesses. (c) "Commissioner" means the Commissioner of Corporations. (d) "Disclosure form" means any certificate, agreement, contract, brochure, or other materials issued or otherwise disseminated to an employee and employer setting forth the workers' compensation health care, and terms of that care, as required to be provided by Sections 4600.3 and 4600.5 to which the employee is entitled. (e) "Employee" means an individual who has elected to receive workers' compensation health care from an authorized workers' compensation health care provider organization. (f) "Workers' compensation health care provider organization" or "organization" means a person organized to provide, either directly or indirectly, workers' compensation health care. (g) "Provider" means any professional person or other person licensed by the state to deliver or furnish workers' compensation health care. (h) "Person" means any person, individual, firm, association, organization, partnership, business trust, foundation, labor organization, corporation, public agency, or political subdivision of the state. (i) "Service area" means a geographical area designated by the organization within which the organization shall provide workers' compensation health care. (j) "Solicitation" means any presentation or advertising conducted by, or on behalf of, an organization, where information regarding the organization, or workers' compensation health care offered and charges therefor, is disseminated for the purpose of inducing persons to subscribe to, or enroll in, the organization. (k) "Solicitor" means any person who engages in the acts defined in subdivision (j). (l) "Solicitor firm" means any person, other than an organization, who through one or more solicitors, engages in the acts defined in subdivision (k). (m) "Workers' compensation health care" or "health care" means those services, treatment, and care for work-related injuries required by this code. (n) All references in this part to financial statements, assets, liabilities, and other accounting items mean such financial statements and accounting items prepared or determined in accordance with generally accepted accounting principles, and fairly presenting the matters which they purport to present, subject to any specific requirement imposed by this part or by the commissioner. CHAPTER 2. ADMINISTRATION 5157. The commissioner shall administer and enforce this part. The commissioner shall have the following powers: (a) Recommend and propose the enactment of any legislation necessary to protect and promote the interests of the public, subscribers, enrollees, and providers of workers' compensation health care in workers' compensation health care provider organizations in the State of California. (b) Provide information to federal and state legislative committees and executive agencies concerning organizations. (c) Assist, advise, and cooperate with federal, state, and local agencies and officials to protect and promote the interests of organizations, employees, and the public. (d) Study, investigate, research, and analyze matters affecting the interests of organizations, employees, and the public. (e) Hold public hearings, subpoena witnesses, take testimony, compel the production of books, papers, documents, and other evidence, and call upon other state agencies for information to implement the purposes of and to enforce this part. (f) Conduct audits and examinations of the books and records of organizations and other persons subject to this part, and may prescribe by rule or order the following: (1) The form and contents of financial statements required under this part. (2) The circumstances under which consolidated statements shall be filed. (3) The circumstances under which financial statements shall be audited by independent certified public accountants or public accountants. (g) Conduct necessary onsite medical surveys of the health care delivery system of each organization. (h) Propose, develop, conduct, and assist in educational programs for organizations, employees, and the public. (i) Promote and establish standards of ethical conduct for the administration of organizations and undertake activities to encourage responsibility in the promotion and sale of workers' compensation health care provider organization contracts and the enrollment of employees in the organizations. (j) Advise the Governor on all matters affecting the interests of organizations, employees, and the public. CHAPTER 3. AUTHORIZATION 5158. It is unlawful for any person to engage in business as a workers' compensation health care provider organization in this state or to receive compensation or other consideration in connection with a workers' compensation health care provider organization from or on behalf of persons in this state unless such person has first secured from the commissioner and Administrative Director of the Department of Industrial Relations an authorization and certification, respectively, then in effect, as a workers' compensation health care provider organization to provide health care for work-related injuries under Sections 4600.3 and 4600.5, unless such person is exempted by the provisions of subdivision (c) and (d) of Section 4600.5, engaging in any activities permitted by Section 4600, or exempted by a rule adopted thereunder. 5159. Each application for authorization as an organization under this part shall be verified by an authorized representative of the applicant, and shall be in a form prescribed by the department. Such application shall be accompanied by the fee prescribed by subdivision (a) of Section 5166 and shall set forth or be accompanied by each and all of the following: (a) The basic organizational documents of the applicant, such as, the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents and all amendments thereto. (b) A copy of the bylaws, rules and regulations, or similar documents regulating the conduct of the internal affairs of the applicant. (c) A list of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, which shall include among others, all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers, each shareholder with over 5 percent interest in the case of a corporation, and all partners or members in the case of a partnership or association, and each person who has loaned funds to the applicant for the operation of its business. (d) A copy of any contract made, or to be made, between the applicant and any provider of health care, or persons listed in subdivision (c), or any other person or organization agreeing to perform an administrative function or service for the plan. The commissioner by rule may identify contracts excluded from this requirement and make provision for the submission of form contracts. The payment rendered to or to be rendered to such provider of health care services shall be deemed confidential information that shall not be divulged by the commissioner, except that such payment may be disclosed and become a public record in any legislative, administrative, or judicial proceeding or inquiry. The organization shall also submit the name and address of each provider employed by or contracting with the organization, together with his or her license number. (e) A statement describing the organization, its method of providing for health services, and its physical facilities. If applicable, this statement shall include the health care delivery capabilities of the organization, including the number of full-time and part-time physicians under Section 3209.3, the numbers and types of licensed or state-certified health care support staff, the number of hospital beds contracted for, and the arrangements and the methods by which health care will be provided, as defined by the Administrative Director of the Department of Industrial Relations under Sections 4600.3 and 4600.5. (f) A copy of the disclosure forms or materials which are to be issued to employees. (g) A copy of the form of the contract which is to be issued to any employer, insurer of an employer, or a group of self-insured employers. (h) Financial statements accompanied by a report, certificate, or opinion of an independent certified public accountant. However, financial statements from public entities or political subdivisions of the state need not include a report, certificate, or opinion by an independent certified public accountant if the financial statement complies with such requirements as may be established by regulation of the commissioner. (i) A description of the proposed method of marketing the organization and a copy of any contract made with any person to solicit on behalf of the organization or a copy of the form of agreement used and a list of the contracting parties. (j) A power of attorney duly executed by any applicant, not domiciled in this state, appointing the commissioner the true and lawful attorney in fact of such applicant in this state for the purposes of service of all lawful process in any legal action or proceeding against the organization on a cause of action arising in this state. (k) A statement describing the service area or areas to be served, including the service location for each provider rendering professional services on behalf of the organization and the location of any other organization facilities where required by the commissioner. (l) A description of organization grievance procedures to be utilized as required by this part, and a copy of the form specified by subdivision (c) of Section 5178. (m) A description of the procedures and programs for internal review of the quality of health care pursuant to the requirements set forth in this part. (n) Evidence of adequate insurance coverage or self-insurance to respond to claims for damages arising out of the furnishing of workers' compensation health care. (o) Evidence of adequate insurance coverage or self-insurance to protect against losses of facilities where required by the commissioner. (p) Evidence of adequate workers' compensation coverage to protect against claims arising out of work-related injuries that might be brought by the employees and staff of an organization against the organization. (q) Such other information as the commissioner may reasonably require. 5160. In addition to the requirements of Section 5159 and upon request of the commissioner, each application shall be accompanied by authorization for disclosure to the commissioner of financial records of each organization authorized under this part pursuant to Section 7473 of the Government Code. For the purpose of this part, the authorization for disclosure shall also include the financial records of any association, partnership, or corporation controlling, controlled by, or otherwise affiliated with an organization. 5161. (a) An authorized organization shall, within 30 days after any change in the information contained in its application, other than financial or statistical information, file an amendment thereto in the manner the commissioner may by rule prescribe setting forth the changed information. However, the addition of any association, partnership, or corporation in a controlling, controlled, or affiliated status relative to the organization shall necessitate the filing, within a 30-day period, of an authorization for disclosure to the commissioner of financial records of the person pursuant to Section 7473 of the Government Code. (b) Prior to any material modification of its contracts or operations, an organization shall give notice thereof to the commissioner, who shall, within 20 business days or such additional time as the organization may specify, by order approve, disapprove, suspend, or postpone the effectiveness of any such change, subject to Section 5164. (c) An organization shall, within five days, give written notice to the commissioner in the form as by rule may be prescribed, of any change in the officers, directors, partners, controlling shareholders, principal creditors, or persons occupying similar positions or performing similar functions, of the organization and of any management company of the organization, and of any parent company of the organization or management company. The commissioner may by rule define the positions, duties, and relationships which are referred to in this subdivision. (d) The fee for filing a notice of major modification pursuant to subdivision (b) shall be the actual cost to the commissioner of processing the notice, including overhead, but shall not exceed seven hundred fifty dollars ($750). 5162. (a) Except as provided in subdivision (b), no organization shall enter into any new or modified contract or publish or distribute, or allow to be published or distributed on its behalf, any disclosure form, unless (1) a true copy thereof has first been filed with the commissioner, at least 30 days prior to any such use, or any shorter period as the commissioner by rule or order may allow, and (2) the commissioner by notice has not found the contract, disclosure form, or evidence of coverage wholly or in part, to be untrue, misleading, deceptive, or otherwise not in compliance with this part or the rules thereunder, and specified the deficiencies, within at least 30 days or any shorter time as the commissioner by rule or order may allow. (b) Except as provided in subdivision (c), an authorized organization which has been continuously authorized under this part for the preceding 18 months and which has had group contracts in effect at all times during that period may enter a new or modified contract or may publish or distribute, or allow to be published or distributed on its behalf, any disclosure form without having filed the same for the commissioner's prior approval, if the contracts and the materials comply with each of the following conditions: (1) The contract, disclosure form, or any material provision thereof, has not been previously disapproved by the commissioner by written notice to the organization and the organization reasonably believes that the contract and disclosure form do not violate any requirements of this part or the rules thereunder. (2) The organization files the contract and any related disclosure form with the commissioner not later than 10 business days after entering the contract, or within any additional period as the commissioner by rule or order may provide. (c) The commissioner by order may require an organization which has entered any contract or published or distributed, or allowed to be published or distributed on its behalf, any disclosure form in violation of this part or the rules thereunder to comply with subdivision (a) prior to entering contracts and prior to publishing or distributing, or allowing to be published or distributed on its behalf, related disclosure forms. An order issued pursuant to this subdivision shall be effective for 12 months from its issuance, and may be renewed by order if the contracts or disclosure forms submitted under this subdivision indicate difficulties of voluntary compliance with the applicable provisions of this part and the rules thereunder. (d) An authorized organization or other person regulated under this part may, within 30 days after receipt of any notice or order under this section, file a written request for a hearing with the commissioner. 5163. (a) The commissioner shall issue an authorization to any person filing an application pursuant to this chapter, if the commissioner, upon due consideration of the application and of the information obtained in any investigation, including, if necessary, an onsite inspection, determines that the applicant has satisfied the provisions of this part and that, in the judgment of the commissioner, a disciplinary action pursuant to Section 5191 would not be warranted against such applicant. Otherwise, the commissioner shall deny the application. (b) Prior to the operative date of this part, an applicant may file an application for authorization on the first five business days of the fourth month prior to the operative date. The commissioner shall provide a written comment letter to the applicant within the 60-day period from the date of the filing of an application. 5164. Upon denial of application for authorization, or the issuance of an order pursuant to Section 5161 disapproving, suspending, or postponing a material modification, the commissioner shall notify the applicant in writing, stating the reason for the denial and that the applicant has the right to a hearing if the applicant makes written request within 30 days after the date of mailing of the notice of denial. Service of the notice required by this subdivision may be made by certified mail addressed to the applicant at the latest address filed by the applicant in writing with the department. 5165. Every organization's authorization issued under this part shall remain in effect until revoked or suspended by the commissioner. 5166. (a) Each organization applying for licensure under this part shall reimburse the commissioner for the actual cost of processing the application, including overhead, up to an amount not to exceed twelve thousand five hundred dollars ($12,500). The cost shall be billed not more frequently than monthly and shall be remitted by the applicant to the commissioner within 30 days of the date of billing. The commissioner shall not issue a license to any applicant prior to receiving payment in full for all amounts charged pursuant to this subdivision. (b) In addition to other fees and reimbursements required to be paid under this part, each organization authorized under this part shall pay to the commissioner an amount as estimated by the commissioner for the ensuing fiscal year, as a reimbursement of its share of all costs and expenses, including routine financial examinations, medical surveys, and overhead, reasonably incurred in the administration of this part and not otherwise recovered by the commissioner under this part or from the State Corporations Fund. The amount may be paid in two equal installments. The first installment shall be paid on or before July 1 of each year, and the second installment shall be paid on or before December 15 of each year. (c) The amount paid by each organization shall be an amount calculated by multiplying a number which equals the ratio of the gross revenues of the organization attributable to the provisions of workers' compensation health care as of the preceding March 31 to the total gross revenues attributable to the provision of workers' compensation health care of all of those organizations for the same period multiplied by the total assessment for the ensuing year. An additional assessment shall be imposed during the first four years to pay back the initial loan to the Department of Corporations for implementation of this act. The assessment shall be fixed by the commissioner by notice to all organizations authorized under this part on or before May 15 of each year. In determining the amount assessed, the commissioner shall consider all appropriations from the State Corporations Fund for the support of this part and all reimbursements provided for in this part. (d) In no case shall the reimbursement, payment, or other fee authorized by this section exceed the cost, including overhead, reasonably incurred in the administration of this part. (e) During the first 12 months after the operative date of this part, the commissioner may levy a special assessment at the end of the first six months from the operative date to cover unanticipated costs of administration of this part, over and above the initial appropriation from the General Fund as provided for in this chapter. The assessment shall be calculated pursuant to subdivision (c) and shall be paid by the organization within 30 days of notice of the assessment. Funds deposited in the State Corporations Fund from this special assessment shall be immediately appropriated from that fund to the commissioner for the support of this part. 5167. Notwithstanding subdivision (e) of Section 4876, if the commissioner determines that the charges and assessments set forth in this part for any year are in excess of the amount necessary, or are insufficient, to meet the expenses of administration of this part, for that year, the assessments and charges for the following year shall be adjusted on a pro rata basis in accordance with the percentage of the excess or insufficiency as related to the actual charges and assessments for the year for which the excess or insufficiency occurred, in order to recover the actual costs of administration. CHAPTER 4. SOLICITORS 5168. (a) The commissioner may require that solicitors and solicitor firms, and principal persons engaged in the supervision of solicitation for organizations of solicitor firms, meet such reasonable and appropriate standards with respect to training, experience, and other qualifications as the commissioner finds necessary and appropriate in the public interest or for the protection of organizations and employees. For such purposes, the commissioner may do the following: (1) Appropriately classify such persons and individuals. (2) Specify that all or any portion of such standards shall be applicable to any such class. (3) Require individuals in any such class to pass examinations prescribed in accordance with such rules. (b) The commissioner may prescribe by rule reasonable fees and charges to defray the costs of carrying out this section, including, but not limited to, fees for any examination administered by the commissioner or under his or her direction. (c) The commissioner may consult with the Director of the Department of Industrial Relations and the Industrial Medical Council in promulgating advertising requirements in order to minimize duplicative requirements under Sections 139.4, 139.43, and 139.45. 5169. (a) No organization, solicitor, solicitor firm, or representative shall use or permit the use of any advertising or solicitation which is untrue or misleading, or any form of disclosure that is deceptive. For purposes of this chapter: (1) A written or printed statement or item of information shall be deemed untrue if it does not conform to fact in any respect which is or may be significant to an employer or employee, or potential employer or employee. (2) A written or printed statement or item of information shall be deemed misleading whether or not it may be literally true, if, in the total context in which the statement is made or such item of information is communicated, such statement or item of information may be understood by a person not possessing special knowledge regarding health care coverage, as indicating any benefit or advantage, or the absence of any exclusion, limitation, or disadvantage of possible significance to an employer or employee, or potential employer or employee. (3) A disclosure form shall be deemed to be deceptive if the disclosure form taken as a whole and with consideration given to typography and format, as well as language, shall be such as to cause a reasonable person, not possessing special knowledge of workers' compensation health care, and the disclosure form therefor, to expect benefits, service charges, or other advantages which the disclosure form does not provide or which the organization issuing such disclosure form does not regularly make available to employees. (b) No organization, solicitor, or representative shall use or permit the use of any verbal statement which is untrue, misleading, or deceptive or make any representations about health care offered by the organization or its cost that does not conform to fact. All verbal statements are to be held to the same standards as those for printed matter provided in subdivision (a). 5170. It is unlawful for any person, including an organization, subject to this part to represent or imply in any manner that the person or organization has been sponsored, recommended, or approved, or that the person's or organization's abilities or qualifications have in any respect been passed upon, by the commissioner. 5171. (a) Except as provided in subdivision (b), no organization shall publish or distribute, or allow to be published or distributed on its behalf, any advertisement not subject to Section 5162 unless (1) a true copy thereof has first been filed with the commissioner, at least 30 days prior to any such use, or any shorter period as the commissioner by rule or order may allow, and (2) the commissioner by notice has not found the advertisement, wholly or in part, to be untrue, misleading, deceptive, or otherwise not in compliance with this part or the rules thereunder, and specified the deficiencies, within the 30 days or any shorter time as the commissioner by rule or order may allow. (b) Except as provided in subdivision (c), an authorized organization which has been continuously authorized under this part for the preceding 18 months may publish or distribute or allow to be published or distributed on its behalf an advertisement not subject to Section 5162 without having filed the same for the commissioner's prior approval, if the organization and the material comply with each of the following conditions: (1) The advertisement or a material provision thereof has not been previously disapproved by the commissioner by written notice to the organization and the organization reasonably believes that the advertisement does not violate any requirement of this part or the rules thereunder. (2) The organization files a true copy of each new or materially revised advertisement, used by it or by any person acting on behalf of the organization, with the commissioner not later than 10 business days after publication or distribution of the advertisement or within such additional period as the commissioner may allow by rule or order. (c) If the commissioner finds that any advertisement of an organization has materially failed to comply with this part or the rules thereunder, the commissioner may, by order, require the organization to publish in the same or similar medium, an approved correction or retraction of any untrue, misleading, or deceptive statement contained in the advertising, and may prohibit the organization from publishing or distributing, or allowing to be published or distributed on its behalf, the advertisement or any new materially revised advertisement without first having filed a copy thereof with the commissioner, 30 days prior to the publication or distribution thereof, or any shorter period specified in the order. An order issued under this subdivision shall be effective for 12 months from its issuance, and may be renewed by order if the advertisements submitted under this subdivision indicate difficulties of voluntary compliance with the applicable provisions of this part and the rules thereunder. (d) An authorized organization or other person regulated under this part may, within 30 days after receipt of any notice or order under this section, file a written request for a hearing with the commissioner. (e) The commissioner by rule or order may classify organizations and advertisements and exempt certain classes, wholly or in part, either unconditionally or upon specified terms and conditions or for specified periods, from the application of subdivisions (a) and (b). 5172. As used in Sections 5173 and 5174: (a) "Presenting for examination or sale" means either (1) publication and dissemination of any brochure, mailer, advertisement, or form which constitutes a presentation of the provisions of a contract and which provides an organization enrollment or application form, or (2) consultations or discussions between prospective organization members or their contract agents and solicitors or representatives of an organization, when such consultations or discussions include presentation of formal, organized information about the organization which is intended to influence or inform the prospective employer, such as brochures, summaries, charts, slides, or other modes of information. (b) "Disclosure form" means the disclosure form, material, or information required pursuant to Section 5173. 5173. (a) The commissioner shall require the use by each organization of disclosure forms or materials containing such information regarding the health care and terms of the workers' compensation health care contract as the commissioner may require, so as to afford the public, employers, and employees with a full and fair disclosure of the provisions of the contract in readily understood language and in a clearly organized manner. The commissioner may require that the materials be presented in a reasonably uniform manner so as to facilitate comparisons between contracts of the same or other types of organizations. The disclosure form shall describe the health care that is required by the Director of the Department of Industrial Relations under Sections 4600.3 and 4600.5, and shall provide that all information be in concise and specific terms, relative to the contract, together with such additional information as may be required by the commissioner, in connection with the organization or contract. (b) All organizations, solicitors, and representatives of a medical group shall, when presenting any contract for examination or sale to a prospective employee, provide the employee with a properly completed disclosure form, as prescribed by the commissioner pursuant to this section for each contract so examined or sold. (c) In addition to the other disclosures required by this section, every organization and any agent or employee of the organization shall, when representing an organization for examination or sale to any individual purchaser or the representative of a group consisting of 25 or fewer individuals, disclose in writing the ratio of premium costs to health care paid for contracts with individuals and with groups of the same or similar size for the organization's preceding fiscal year. An organization may report that information by geographic area, provided the organization identifies the geographic area and reports information applicable to that geographic area. 5174. Where the commissioner finds it necessary in the interest of full and fair disclosure, all advertising and other consumer information disseminated by an organization for the purpose of influencing persons to become members of an organization shall contain such supplemental disclosure information as the commissioner may require. 5175. (a) No organization shall refuse to enter into any contract or shall cancel or decline to renew or reinstate any contract because of the race, color, national origin, ancestry, religion, sex, marital status, sexual orientation, or age of any contracting party, prospective contracting party, or person reasonably expected to benefit from that contract as an employee or otherwise. (b) The terms of any contract shall not be modified, and the benefits or coverage of any contract shall not be subject to any limitations, exceptions, exclusions, reductions, copayments, coinsurance, deductibles, reservations, or premium, price, or charge differentials, or other modifications because of the race, color, national origin, ancestry, religion, sex, marital status, sexual orientation, or age of any contracting party, potential contracting party, or person reasonably expected to benefit from that contract as an employee or otherwise; except that premium, price, or charge differentials because of the sex or age of any individual when based on objective, valid, and up-to-date statistical and actuarial data are not prohibited. Nothing in this section shall be construed to permit an organization to charge different rates to individual employees within the same group solely on the basis of the employee's sex. (c) It shall be deemed a violation of subdivision (a) for any organization to utilize marital status, living arrangements, occupation, gender, beneficiary designation, ZIP Codes or other territorial classification, or any combination thereof for the purpose of establishing sexual orientation. Nothing in this section shall be construed to alter in any manner the existing law prohibiting organizations from conducting tests for the presence of human immunodeficiency virus or evidence thereof. (d) This section shall not be construed to limit the authority of the commissioner to adopt or enforce regulations prohibiting discrimination because of sex, marital status, or sexual orientation. 5176. (a) No organization may use in its name, any of the words "insurance," "casualty," "health care service plan," "health plan," "surety," "mutual," or any other words descriptive of the health plan, insurance, casualty, or surety business or use any name similar to the name or description of any health care service plan, insurance, or surety corporation doing business in this state unless such organization controls or is controlled by an entity licensed as a health care service plan or insurer pursuant to the provisions of the Health and Safety Code or the Insurance Code and the organization employs a name related to that of such controlled or controlling entity. (b) Section 2415 of the Business and Professions Code, pertaining to fictitious names, shall not apply to organizations. (c) No organization or solicitor firm may adopt a name style that is deceptive, or one that could cause the public to believe the organization is affiliated with or recommended by any governmental or private entity unless such affiliation or endorsement exists. CHAPTER 5. STANDARDS 5177. Each organization shall meet the following requirements: (a) All facilities located in this state, including, but not limited to, clinics, hospitals, and skilled nursing facilities, to be utilized by the organization shall be licensed by the State Department of Health Services, if such licensure is required by law. Facilities not located in this state shall conform to all licensing and other requirements of the jurisdiction in which they are located. (b) All personnel employed by or under contract to the organization shall be licensed or certified by their respective board or agency, where such licensure or certification is required by law. (c) All equipment required to be licensed or registered by law shall be so licensed or registered and the operating personnel for such equipment shall be licensed or certified as required by law. (d) The organization shall furnish services in a manner providing continuity of care and ready referral of patients to other providers at such times as may be appropriate consistent with good professional practice. (e) All health care shall be readily available at reasonable times to all employees. To the extent feasible, the organization shall make all health care readily accessible to all employees. (f) The organization shall employ and utilize allied health manpower for the furnishing of health care to the extent permitted by law and consistent with good health care practice. (g) The organization shall have the organizational and administrative capacity to provide services to employees. The organization shall be able to demonstrate to the department that health care decisions are rendered by qualified providers, unhindered by fiscal and administrative management. (h) All contracts with employers, insurers of employers, and self-insured employers and all contracts with providers, and other persons furnishing services, equipment, or facilities to or in connection with the medical group, shall be fair, reasonable, and consistent with the objectives of this part. (i) Each organization shall provide to employees all workers' compensation health care required by this code. The commissioner shall not determine the scope of workers' compensation health care to be offered by an organization. 5178. (a) Every organization shall establish and maintain a grievance system approved by the commissioner under which employees may submit their grievances to the organization. Each system shall provide reasonable procedures in accordance with regulations adopted by the commissioner which shall ensure adequate consideration of employee grievances and rectification when appropriate. (b) Every organization shall inform employees upon enrollment and annually thereafter of such procedures for processing and resolving grievances. Such information shall include the location and telephone number where grievances may be submitted. (c) Every organization shall provide forms for complaints to be given to employees who wish to register written complaints. The forms used by organizations authorized pursuant to Section 5163 shall be approved by the commissioner in advance as to format. (d) The organization shall keep in its files all copies of complaints, and the responses thereto, for a period of five years. 5179. Every organization shall establish procedures in accordance with department regulations for continuously reviewing the quality of care, performance of medical personnel, utilization of services and facilities, and costs. Notwithstanding any other provision of law, there shall be no monetary liability on the part of, and no cause of action for damages shall arise against, any person who participates in quality of care or utilization reviews by peer review committees which are composed chiefly of physicians, as defined by Section 3209.3, for any act performed during the reviews if the person acts without malice, has made a reasonable effort to obtain the facts of the matter, and believes that the action taken is warranted by the facts, and neither the proceedings nor the records of the reviews shall be subject to discovery, nor shall any person in attendance at the reviews be required to testify as to what transpired thereat. Disclosure of the proceedings or records to the governing body of an organization or to any person or entity designated by the organization to review activities of the committees shall not alter the status of the records or of the proceedings as privileged communications. The above prohibition relating to discovery or testimony shall not apply to the statements made by any person in attendance at a review who is a party to an action or proceeding the subject matter of which was reviewed, or to any person requesting hospital staff privileges, or in any action against an insurance carrier alleging bad faith by the carrier in refusing to accept a settlement offer within the policy limits, or to the commissioner in conducting surveys pursuant to Section 5186. This section shall not be construed to confer immunity from liability on any medical group. In any case in which, but for the enactment of the preceding provisions of this section, a cause of action would arise against an organization, the cause of action shall exist notwithstanding the provisions of this section. 5180. Nothing in this chapter shall be construed to prevent an organization from utilizing subcommittees to participate in peer review activities, nor to prevent a plan from delegating the responsibilities required by Section 5179 as it determines to be appropriate, to subcommittees including subcommittees composed of a majority of nonphysician health care providers licensed pursuant to the Business and Professions Code, as long as the organization controls the scope of authority delegated and may revoke all or part of this authority at any time. Persons who participate in the subcommittees shall be entitled to the same immunity from monetary liability and actions for civil damages as persons who participate in organization or provider peer review committees pursuant to Section 5179. CHAPTER 6. REGULATION 5181. (a) Every organization shall have and shall demonstrate to the commissioner that it has all of the following: (1) A fiscally sound operation. (2) Adequate provision for continuity of care. (3) A procedure for prompt payment and denial of provider claims. (b) In determining whether the conditions of this section have been met, the commissioner shall consider, but not be limited to, the following: (1) The financial soundness of the organization's arrangements for health care and the schedule of rates and charges used by the organization. (2) The adequacy of working capital. (3) Agreements with providers for the provision of health care. 5182. (a) No organization shall conduct any activity regulated by this part in contravention of such rules and regulations as the commissioner may prescribe as necessary or appropriate in the public interest or for the protection of organizations and employees to provide safeguards with respect to the requirements of the preceding section. (b) Each solicitor and solicitor firm shall handle funds received for the account of medical groups, subscribers, or groups in accordance with such rules as the commissioner may adopt pursuant to this subdivision. 5183. (a) No organization shall provide or undertake to arrange for the provision of health care to employees, or to pay for or to reimburse any part of the cost for such health care in return for a prepaid or periodic charge paid by or on behalf of such employees. (b) Every organization shall operate on a "fee-for-service" basis. As used in this part, "fee-for-service" refers to the situation where the amount of reimbursement paid by the employee to the organization or providers of health care is determined by the amount and type of health care rendered by the organization or provider of health care. (c) An authorized organization is prohibited from assuming risk. 5184. No organization shall expend for administrative costs in any fiscal year an excessive amount of the aggregate payments received by the organization for providing health care to employees. The term "administrative costs," as used herein, includes costs incurred in connection with the solicitation of subscribers or enrollees for the organization. This section shall not preclude an organization from expending additional sums of money for administrative costs provided such money is not derived from revenue obtained from subscribers or enrollees of the organization. 5185. Every contract between an organization and an employer or insurer of an employer, and every contract between an organization and a provider of health care, shall be in writing. 5186. (a) The commissioner shall conduct periodically an onsite medical survey of the health care delivery system of each organization. The survey shall include a review of the procedures for obtaining health care, the procedures for regulating utilization, peer review mechanisms, internal procedures for assuring quality of care, and the overall performance of the organization in providing health care and meeting the health needs of employees. (b) The survey shall be conducted by a panel of qualified health professionals experienced in evaluating the delivery of workers' compensation health care. The commissioner shall be authorized to contract with professional organizations or outside personnel to conduct medical surveys. These organizations or personnel shall have demonstrated the ability to objectively evaluate the delivery of such health care. (c) Surveys performed pursuant to this section shall be conducted as often as deemed necessary by the commissioner to assure the protection of employees, but not less frequently than once every five years. Nothing in this section shall be construed to require the survey team to visit each clinic, hospital office, or facility of the organization. (d) Nothing in this section shall be construed to require the medical survey team to review peer review proceedings and records conducted and compiled under Section 5179 or medical records. However, the commissioner shall be authorized to require onsite review of these peer review proceedings and records or medical records where necessary to determine that quality health care is being delivered to employees. Where medical record review is authorized, the survey team shall ensure that the confidentiality of the physician-patient relationship is safeguarded in accordance with existing law and neither the survey team nor the commissioner or the commissioner' s staff may be compelled to disclose such information except in accordance with the physician-patient relationship. The commissioner shall ensure that the confidentiality of the peer review proceedings and records is maintained. The disclosure of the peer review proceedings and records to the commissioner or the medical survey team shall not alter the status of the proceedings or records as privileged and confidential communications pursuant to Sections 5179 and 5180. (e) The procedures and standards utilized by the survey team shall be made available to the organizations prior to the conducting of medical surveys. (f) During the survey, the members of the survey team shall offer such advice and assistance to the organization as deemed appropriate. (g) The commissioner shall notify the organization of deficiencies found by the survey team. The commissioner shall give the organization a reasonable time to correct the deficiencies, and failure on the part of the organization to comply to the commissioner's satisfaction shall constitute cause for disciplinary action against the organization. (h) Reports of all surveys, deficiencies, and correction plans shall be open to public inspection, except that no surveys, deficiencies, or correction plans shall be made public unless the organization has had an opportunity to review the survey and file a statement or response within 30 days, to be attached to the report. Deficiencies shall not be made public if they are corrected within 30 days of the date that the organization was notified. (i) Nothing in this section shall be construed as affecting the commissioner's authority pursuant to Chapter 7 (commencing with Section 5191) or Chapter 8 (commencing with Section 5195). 5187. (a) All records, books, and papers of an organization, management company, solicitor, solicitor firm, and any provider or subcontractor providing medical or other services to an organization, management company, solicitor, or solicitor firm shall be open to inspection during normal business hours by the commissioner. (b) To the extent feasible, all such records, books, and papers described in subdivision (a) shall be located in this state. In examining such records outside this state, the commissioner shall consider the cost to the organization, consistent with the effectiveness of the commissioner's examination, and may upon reasonable notice require that such records, books, and papers, or a specified portion thereof, be made available for examination in this state, or that a true and accurate copy of such records, books, and papers, or a specified portion thereof, be furnished to the commissioner. 5188. (a) The commissioner shall conduct an examination of the fiscal and administrative affairs of any organization, and each person with whom the organization has made arrangements for administrative, management, or financial services, as often as deemed necessary to protect the interest of employees, but not less frequently than once every five years. (b) The expense of conducting any additional or nonroutine examinations pursuant to this section, and the expense of conducting any additional or nonroutine medical surveys pursuant to Section 5186 shall be charged against the organization being examined or surveyed. The amount shall include the actual salaries or compensation paid to the persons making the examination or survey, the expenses incurred in the course thereof, and overhead costs in connection therewith as fixed by the commissioner. In determining the cost of examinations or surveys, the commissioner may use the estimated average hourly cost for all persons performing examinations or surveys of medical groups for the fiscal year. The amount charged shall be remitted by the organization to the commissioner. If recovery of these costs cannot be made from the organization, these costs may be added to, but subject to the limitation of, the assessment provided for in subdivision (b) of Section 5166. (c) Reports of all examinations shall be open to public inspection, except that no examination shall be made public, unless the organization has had an opportunity to review the examination report and file a statement or response within 30 days, to be attached to the report. Deficiencies shall not be made public if they are corrected within 30 days of the date that the organization was notified of the deficiency. (d) Upon receipt of the written request of the Director of the Department of Industrial Relations, the commissioner may, consistent with Section 6254.5 of the Government Code, permit the Department of Industrial Relations to review the organization's examination report. 5189. (a) Within 90 days after receipt of a request from the commissioner, an organization or other person subject to this part shall submit to the commissioner an audit report containing audited financial statements covering the 12 calendar months next preceding the month of receipt of the request, or such other period as the commissioner may require. (b) An organization whose authorization has been surrendered or revoked shall submit to the commissioner on or before 105 days after the effective date of such surrender or revocation, a closing audit report containing audited financial statements as of such effective date for the 12 months ending with such effective date, or for such other period as the commissioner may specify. Such report shall include other relevant information as specified by rule of the commissioner. (c) Each organization shall submit financial statements prepared as of the close of its fiscal year within 120 days after the close of such fiscal year. The financial statements referred to in this subdivision and in subdivisions (a) and (b) shall be accompanied by a report, certificate, or opinion of an independent certified public accountant or independent public accountant. The audits shall be conducted in accordance with generally accepted auditing standards and the rules and regulations of the commissioner. However, financial statements from public entities or political subdivisions of the state need not include a report, certificate, or opinion by an independent certified public accountant or independent public accountant, and the audit shall be conducted in accordance with governmental auditing standards. (d) An organization, solicitor, or solicitor firm shall make such special reports to the commissioner as the commissioner may from time to time require. (e) For good cause and upon written request, the commissioner may extend the time for compliance with subdivisions (a), (b), and (h). (f) An organization, solicitor, or solicitor firm shall, when requested by the commissioner, for good cause, submit its unaudited financial statement, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet and statement of income, as of the date and for the period specified by the commissioner. The commissioner may require the submission of such reports on a monthly or other periodic basis. (g) If the report, certificate, or opinion of the independent accountant referred to in subdivision (c) is in any way qualified, the commissioner may require the organization to take such action as the commissioner deems appropriate to permit an independent accountant to remove such qualification from the report, certificate, or opinion. (h) The commissioner may reject any financial statement, report, certificate, or opinion filed pursuant to this section by notifying the organization, solicitor, or solicitor firm required to make such filing of its rejection and the cause thereof. Within 30 days after the receipt of such notice, such person shall correct such deficiency, and the failure so to do shall be deemed a violation of this part. The commissioner shall retain a copy of all filings so rejected. (i) The commissioner may make rules and regulations specifying the form and content of the reports and financial statements referred to in this section, and may require that such reports and financial statements be verified by the organization or other person subject to this part in such manner as the commissioner may prescribe. 5190. Each organization, solicitor, and solicitor firm shall keep and maintain current such books of account and other records as the commissioner may by rule require for the purposes of this part. Every organization shall require all providers who contract with the organization to report to the organization in writing all surcharge and copayment moneys paid by employees directly to such providers, unless the commissioner expressly approves otherwise. CHAPTER 7. DISCIPLINE 5191. (a) The commissioner may suspend or revoke any authorization issued under this part to an organization or assess civil penalties if the commissioner determines that the licensee has committed any of the acts or omissions constituting grounds for disciplinary action. (b) The following acts or omissions constitute grounds for disciplinary action by the commissioner: (1) The organization is operating at variance with the basic organizational documents as filed pursuant to Section 5159 or 5161 or with its published plan, or in any manner contrary to that described in, and reasonably inferred from, the contract as contained in its application for authorization and annual report, or any modification thereof, unless amendments allowing the variation have been submitted to, and approved by, the commissioner. (2) The organization has issued, or permits others to use, a disclosure form or uses a schedule of charges for health care which do not comply with those published in the latest disclosure form found unobjectionable by the commissioner. (3) The organization does not provide health care to its employees as set forth in the disclosure form. (4) The organization is no longer able to meet the standards set forth in Chapter 5 (commencing with Section 5177). (5) The continued operation of the organization will constitute a substantial risk to employees. (6) The organization has violated or attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate any provision of this part or any rule or regulation adopted by the commissioner pursuant to this part. (7) The organization has engaged in any conduct which constitutes fraud or dishonest dealing or unfair competition, as defined by Section 17200 of the Business and Professions Code. (8) The organization has permitted, or aided or abetted, any violation by an employee or contractor who is a holder of any certificate, license, permit, registration, or exemption issued pursuant to the Business and Professions Code, the Health and Safety Code, or this code which would constitute grounds for discipline against the certificate, license, permit, registration, or exemption. (9) The organization has aided or abetted or permitted the commission of any illegal act. (10) The engagement of a person as an officer, director, employee, associate, or provider of the organization contrary to the provisions of an order issued by the commissioner pursuant to subdivision (c) or pursuant to subdivision (d) of Section 5193. (11) The engagement of a person as a solicitor or supervisor of solicitation contrary to the provisions of an order issued by the commissioner pursuant to Section 5193. (12) The organization, its management company, or any other affiliate of the organization, or any controlling person, officer, director, or other person occupying a principal management or supervisory position in the organization, management company, or affiliate, has been convicted of or pleaded nolo contendere to a crime, or committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this part. The commissioner may revoke or deny an authorization hereunder irrespective of a subsequent order under the provisions of Section 1203.4 of the Penal Code. (c) The commissioner may prohibit any person from serving as an officer, director, employee, associate, or provider of any organization or solicitor firm, or of any management company of any organization, or as a solicitor, if (1) the prohibition is in the public interest and the person has committed or caused, participated in, or had knowledge of a violation of this part by an organization, management company, or solicitor firm, or (2) the person was an officer, director, employee, associate, or provider of an organization or of a management company or solicitor firm of any organization whose license has been suspended or revoked pursuant to this section and the person had knowledge of, or participated in, any of the prohibited acts for which the license was suspended or revoked. A proceeding for the issuance of an order under this subdivision may be included with a proceeding against an organization under this section or may constitute a separate proceeding, subject in either case to appropriate notice and opportunity for hearing to the person affected in accordance with subdivision (a) of Section 5207. 5192. (a) Any person who violates any provision of this part, or who violates any rule or order adopted or issued pursuant to this part, shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the commissioner in any court of competent jurisdiction. (b) As applied to the civil penalties for acts in violation of this part, the remedies provided by this section and by other sections of this part are not exclusive, and may be sought and employed in any combination to enforce this part. (c) No action shall be maintained to enforce any liability created under subdivision (a), unless brought before the expiration of four years after the act or transaction constituting the violation. 5193. (a) The commissioner may, after appropriate notice and opportunity for hearing, by order censure a person acting as a solicitor or solicitor firm, or suspend for a period not exceeding 24 months or bar a person from operating as a solicitor or solicitor firm, or assess civil penalties against a person acting as a solicitor or solicitor firm if the commissioner determines that such person has committed any of the acts or omissions constituting grounds for disciplinary action. (b) The following acts or omissions constitute grounds for disciplinary action by the commissioner: (1) The continued operation of the solicitor or solicitor firm in a manner which may constitute a substantial risk to an organization or employees. (2) The solicitor or solicitor firm has violated or attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate any provision of this part or any rule or regulation adopted by the commissioner pursuant to the part. (3) The solicitor or solicitor firm has engaged in any conduct which constitutes fraud or dishonest dealing or unfair competition, as defined by Section 17200 of the Business and Professions Code. (4) The engagement of a person as an officer, director, employee, or associate of the solicitor firm contrary to the provisions of an order issued by the commissioner pursuant to subdivision (d) of this section or subdivision (c) of Section 5191. (5) The solicitor or solicitor firm, or its management company, or any other affiliate of the solicitor firm, or any controlling person, officer, director, or other person occupying a principal management or supervisory position in such solicitor firm, management company, or affiliate, has been convicted of or pleaded nolo contendere to a crime, or committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with the provisions of this part. The commissioner may issue an order hereunder irrespective of a subsequent order under the provisions of Section 1203.4 of the Penal Code. (c) The commissioner shall notify organizations of any order issued pursuant to subdivision (a) which suspends or bars a person from engaging in operations as a solicitor or solicitor firm. It shall be unlawful for any organization, after receipt of notice of such an order, to receive any new subscribers or enrollees through such a person or to otherwise utilize any solicitation services of such person in violation thereof. (d) The commissioner may prohibit any person from serving as an officer, director, employee, or associate of any organization or solicitor firm, or as a solicitor, if such person was an officer, director, employee, or associate of a solicitor firm which has been the subject of an order of suspension or bar from engaging in operations as a solicitor firm pursuant to this section and such person had knowledge of, or participated in, any of the prohibited acts for which such order was issued. A proceeding for the issuance of an order under this subdivision may be included with a proceeding against a solicitor firm under this section or may constitute a separate proceeding, subject in either case to appropriate notice and opportunity for hearing to the person affected in accordance with the provisions of subdivision (a) of Section 5207. 5194. (a) A person whose authorization has been revoked, or suspended for more than one year, may petition the commissioner to reinstate the license as provided by Section 11522 of the Government Code. No petition may be considered if the petitioner is under criminal sentence for a violation of this part, or any offense which would constitute grounds for discipline, or denial of licensure under this part, including any period of probation or parole. (b) A person who is barred, or suspended for more than one year, from acting as a solicitor or solicitor firm pursuant to Section 5193, or who is subject to an order, pursuant to subdivision (c) of Section 5191 or subdivision (d) of Section 5193, which by its terms is effective for more than one year, may petition the commissioner to reduce by order such penalty in a manner generally consistent with the provisions of Section 11522 of the Government Code. No petition may be considered if the petitioner is under criminal sentence for a violation of this part, or any offense which would constitute grounds for discipline under this part, including any period of probation or parole. (c) The petition for restoration shall be in the form prescribed by the commissioner and the commissioner may condition the granting of such petition upon such additional information and undertakings as the commissioner may require in order to determine whether such person, if restored, would engage in business in full compliance with the objectives and provisions of this part and the rules and regulations adopted by the commissioner pursuant to this part. (d) The fee for the filing of a petition for restoration pursuant to this section is two hundred fifty dollars ($250). In addition, the commissioner may condition the granting of such a petition to an organization upon payment of the assessment due and unpaid pursuant to subdivision (b) of Section 5166 as of the 15th day of December occurring within the preceding 12 calendar months and, if the organization's suspension or revocation was in effect for more than 12 months, upon the filing of a new organization application and the payment of the fee prescribed by subdivision (a) of Section 5166. CHAPTER 8. CRIMES 5195. Any person who willfully violates any provision of this part or of any rule or order thereunder shall upon conviction be fined not more than ten thousand dollars ($10,000) or imprisoned in the state prison, or in a county jail for not more than one year, or be punished by both such fine and imprisonment, but no person may be imprisoned for the violation of any rule or order if it is proven that such person had no knowledge of the rule or order. 5196. (a) The commissioner may issue an order directing an organization, solicitor firm, or any representative thereof, or a solicitor to cease and desist from engaging in any act or practice in violation of the provisions of this part. If that person fails to file a written request for a hearing within one year from the date of service of the order, the order shall be deemed a final order of the commissioner and shall not be subject to review by any court or agency, notwithstanding subdivision (b) of Section 5207. (b) If a timely request for a hearing is made by an authorized organization, the request shall automatically stay the effect of the order only to the extent that the order requires the cessation of operation of the organization or prohibits acceptance of new members by the organization or both. However, no automatic stay shall be issued if any examination or inspection of the organization performed by the commissioner discloses, or reports or documents submitted to the commissioner by the organization on their face show, that the organization is in violation of any fiscal requirement of this part or in violation of any requirement of Section 5189 or 5190. In the event of an automatic stay, only that portion of the order requiring cessation of operation or prohibiting contracting shall be stayed and all other portions of the order shall remain effective. If a hearing is held, and a finding is made that the health or safety of the employees and potential employees to be provided health care by the organization might be adversely affected by its continued operation, the stay shall be terminated. Such a finding shall be made, if at all, not later than 30 days after the date of the hearing. (c) If a timely request for a hearing is made by an unauthorized organization the commissioner may stay the effect of the order to the extent that the order requires the cessation of operation of the organization or prohibits acceptance of new members by the organization, for such period and subject to such conditions as the commissioner may require, upon a determination by the commissioner that the action would be in the public interest. 5197. (a) In the case of any violation of the provisions of this part, the commissioner may institute a proceeding, or the commissioner may request the Attorney General to institute a proceeding, to obtain injunctive or other equitable relief, including the appointment of a receiver or conservator for the defendant or the defendant's assets, in the superior court in and for the county in which the violation occurs, or in which the principal place of business of the organization is located. The proceeding under this section shall conform with the requirements of Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure, except that the commissioner shall not be required to allege facts necessary to show lack of adequate remedy at law, or to show irreparable loss or damage. (b) Upon a proper showing, the court shall grant the relief provided by law and requested by the commissioner. (c) A receiver or conservator appointed by the superior court pursuant to this section may, with the approval of the court, exercise all of the powers of the officers and directors of the organization, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver or conservator, by reason of their exercising the powers of the officers and directors of an organization pursuant to the order of, or with the approval of, the superior court. 5198. (a) The superior court of the county in which is located the principal office of the organization in this state shall, upon the filing by the commissioner of a verified application showing any of the conditions enumerated in Section 5191 to exist, issue its order vesting title to all of the assets of the organization, wheresoever situated, in the commissioner or the commissioner's successor in office, in his or her official capacity as such, and direct the commissioner to take possession of all of its books, records, property, real and personal, and assets, and to conduct, as conservator, the business or portion of the business of the person to the commissioner as may seem appropriate, and enjoining the person and its officers, directors, agents, servants, and employees from the transaction of its business or disposition of its property until the further order of the court. (b) Whenever it appears to the commissioner that irreparable loss and injury to the property and business of the organization has occurred or may occur unless the commissioner acts immediately, the commissioner, without notice and before applying to the court for any order, shall take possession of the property, business, books, records, and accounts of such organization, and of the offices and premises occupied by it for the transaction of its business, and retain possession subject to the order of the court. Any person having possession of and refusing to deliver any of the books, records, or assets of an organization against whom a seizure order has been issued by the commissioner, shall be guilty of a misdemeanor and punishable by fine not exceeding one thousand dollars ($1,000) or imprisonment not exceeding one year, or both such fine and imprisonment. 5199. (a) A person who violates Section 5158, or any person who directly or indirectly participates in the direction of the management or policies of the person in violation of Section 5158, including, but not limited to, any officer, director, partner, or other person occupying a principal management or supervisory position, shall be liable for civil penalties as follows: (1) A sum not exceeding two thousand five hundred dollars ($2,500), and (2) A sum not exceeding five hundred dollars ($500) for each employee under a contract that was entered into or renewed while such person was in violation of Section 5158. (b) The civil penalty may be assessed and recovered only in a civil action. The cause of action may be brought in the name of the people of the State of California by the Attorney General or the commissioner, as determined by the commissioner. 5200. The civil, criminal, and administrative remedies available to the commissioner pursuant to this chapter are not exclusive, and may be sought and employed in a combination deemed advisable by the commissioner to enforce the provisions of this part. 5201. Notwithstanding any other provision of law, the commissioner may file a verified complaint for involuntary dissolution of an organization on any one or more of the grounds specified in subdivision (b) of Section 5191. The complaint shall be filed in the superior court of the county where the principal executive office of the organization is located or, if the principal executive office of the organization is not located in this state, or the organization has no such office, the County of Sacramento. 5202. Notwithstanding any other provision of law, in any involuntary dissolution of an organization as provided for in Section 5201, or other insolvency proceeding involving an organization, the following expenses and claims have priority in the following order: (a) First, administrative expenses allowed by the superior court and any fees and charges assessed against the estate of the dissolved organization in conjunction with the dissolution of the estate. (b) Second, taxes due the State of California. (c) Third, claims having preference by the laws of the United States and by the laws of this state. (d) Fourth, claims of organization contract holders for reimbursement for health care rendered by providers to employees. (e) Fifth, any and all claims, including all officers' and directors' claims for indemnity, arising against the estate of the dissolved organization. 5203. Except as provided for in Sections 5201 and 5202, the involuntary dissolution of an organization shall be in accordance with either: (1) Chapter 18 (commencing with Section 1800) of Division 1 of Title 1 of the Corporations Code if the organization is incorporated under the General Corporation Law. (2) Chapter 15 (commencing with Section 8510) of Part 3 of Division 2 of Title 1 of the Corporations Code if the organization is incorporated under the Nonprofit Corporation Law. CHAPTER 8.5. SERVICE OF PROCESS 5204. When any person, including any nonresident of this state, engages in conduct prohibited or made actionable by this chapter of any rule, regulation, or order adopted hereunder, whether or not the person has filed a power of attorney under subdivision (j) of Section 5159, and personal jurisdiction equivalent over the person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to the appointment of the commissioner or the commissioner's successor in office to be the attorney in fact to receive any lawful process in any noncriminal suit, action, or proceeding instituted by him or her, with the same force and validity as if personally served. Service may be made by leaving a copy of the process in the office of the commissioner, but it is not effective unless the plaintiff or petitioner, who may be the commissioner in a suit, action, or proceeding instituted by him or her, forthwith sends notice of the service and a copy of the process by registered or certified mail to the defendant or respondent at his or her last known address or takes other steps which are reasonably calculated to give actual notice, and in a court action, an affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within such further time as the court allows. In the case of administrative orders issued by the commissioner, the affidavit of compliance need not be filed with the administrative tribunal unless the respondent requests a hearing. CHAPTER 9. MISCELLANEOUS 5205. Notwithstanding Article 6 (commencing with Section 650) of Chapter 1 of Division 2 of the Business and Professions Code, any organization may, except as limited by this subdivision, solicit or advertise with regard to the cost of subscription or enrollment, facilities and services rendered, provided, however, Article 5 (commencing with Section 600) of Chapter 1 of Division 2 of the Business and Professions Code remains in effect. Any price advertisement shall be exact, without the use of such phrases as "as low as," "and up," "lowest prices," or words or phrases of similar import. Any advertisement which refers to health care, or costs for such health care, and which uses words of comparison must be based on verifiable data substantiating the comparison. Any organization so advertising shall be prepared to provide information sufficient to establish the accuracy of such comparison. Price advertising shall not be fraudulent, deceitful, or misleading, nor contain any offers of discounts, premiums, gifts, or bait of similar nature. In connection with price advertising, the price for health care shall be clearly identifiable. The price advertised for products shall include charges for any related professional services, including dispensing and fitting services, unless the advertisement specifically and clearly indicates otherwise. Nothing in this part shall be construed to repeal, abolish, or diminish the effect of Section 431 of the Health and Safety Code. 5206. It is unlawful for any person willfully to make any untrue statement of material fact in any application, notice, amendment, report, or other submission filed with the commissioner under this part or regulations adopted thereunder, or willfully to omit to state in any application, notice, or report any material fact which is required to be stated therein. 5207. (a) Whenever reference is made in this part to a hearing before or by the commissioner, the hearing shall be held in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and the commissioner shall have all of the powers granted under that act. (b) Every final order, decision, license, or other official act of the commissioner under this part is subject to judicial review in accordance with the law. 5208. Neither the commissioner nor any employee of the Department of Corporations shall be precluded from choosing to receive care from an organization which is subject to the provisions of this part, subject to such rules as may be adopted hereunder or pursuant to other proper authority. 5209. (a) Surrender of an organization's authorization becomes effective 30 days after receipt of an application to surrender the authorization or within a shorter period of time as the commissioner may determine, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the surrender is instituted within 30 days after the application is filed. If such a proceeding is pending or instituted, surrender becomes effective at the time and upon the conditions as the commissioner by order determines. (b) If the commissioner finds that any organization is no longer in existence, or has ceased to do business or has failed to initiate business activity as a licensee within six months after authorization, or cannot be located after reasonable search, the commissioner may by order summarily revoke such authorization. (c) The commissioner may summarily suspend or revoke the authorization of an organization upon (1) failure to pay any fee required by this part within 15 days after notice by the commissioner that such fee is due and unpaid, or (2) failure to file any amendment or report required under this part within 15 days after notice by the commissioner that the report is due. 5210. This part shall become operative August 1, 1994. However, this part shall not be implemented unless the Legislature appropriates money to the Department of Corporations for costs related to the department's initial duties in authorizing workers' compensation health care provider organizations. SEC. 55. Section 5275 of the Labor Code is amended to read: 5275. (a) Disputes involving the following issues shall be submitted for arbitration: (1) Insurance coverage. (2) Right of contribution in accordance with Section 5500.5. (3) Permanent disability, where an informal rating has indicated that the permanent disability will be 15 percent standard or less, and the presiding judge determines that the case will not be set for hearing within 110 calendar days from the date of the filing of the application for adjudication. (4) Permanent disability, where an informal rating has indicated that the permanent disability will be 20 percent standard or less, and the presiding judge determines that the case will not be set for hearing within 150 calendar days from the date of the filing of the application for adjudication. (5) Requests for rehabilitation unit dispute resolution if the administrative director determines that the matter will not be set for conference within 90 calendar days from the date of the filing of the request. (6) Appeals from decisions and orders of the vocational rehabilitation unit within the Office of Benefit Determination if the presiding judge determines that the appeal will not be set for hearing within 120 calendar days from the date of the filing of the appeal. (b) Paragraphs (3) and (4) of subdivision (a) shall not be applicable if the applicant has requested and received a continuance or delay in the time periods for proceedings set forth in Section 5502. (c) Paragraphs (3) and (4) of subdivision (a) shall become operative on January 1, 1991, and paragraphs (5) and (6) of subdivision (a) shall become operative January 1, 1994, regardless of the date of injury. (d) By agreement of the parties, any issue arising under Division 1 (commencing with Section 50) or Division 4 (commencing with Section 3200) may be submitted for arbitration, regardless of the date of injury. SEC. 56. 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, no less frequently than biennially, an official medical fee schedule which shall establish reasonable maximum fees paid for medical services provided pursuant to this division. No later than January 1, 1995, the administrative director shall have revised the schedule. By no later than January 1, 1996, the schedule shall include services for health care facilities licensed pursuant to Section 1250 of the Health and Safety Code, and drugs and pharmacy services. The fee schedule for health care facilities shall take into consideration cost and service differentials for various types of facilities. (2) The administrative director shall include services provided by physical therapists in the official fee schedule adopted and revised pursuant to paragraph (1). Nothing in this paragraph shall affect the ability of physicians to continue to be reimbursed for their services in accordance with the official medical fee schedule adopted pursuant to paragraph (1) for the provision of services within their scope of practice. (3) The administrative director shall consult with statewide professional organizations representing affected providers on the update of the official medical fee schedule. (b) Nothing in this section shall prohibit a medical provider or a licensed health care facility from being paid by an employer or carrier fees in excess of those set forth on the official medical fee schedule, provided that the fee is: (1) Reasonable. (2) Accompanied by itemization and justified by an explanation of extraordinary circumstances related to the unusual nature of the medical services rendered. In no event shall a physician charge in excess of his or her usual fee. (c) In the event of a dispute between the physician and the employer or carrier concerning the medical fees charged, the physician may be allowed a reasonable fee for testimony, if a physician testifies pursuant to the employer's or carrier's subpoena, and the referee determines that the medical fee charged was reasonable. (d) Except as provided in Section 4626, the official medical fee schedule shall not apply to medical-legal expenses as defined by Section 4620. SEC. 57. Section 5307.6 of the Labor Code is amended to read: 5307.6. (a) The administrative director shall adopt and revise a fee schedule for medical-legal expenses as defined by Section 4620, which shall be prima facie evidence of the reasonableness of fees charged for medical-legal expenses at the same time he or she adopts and revises the medical fee schedule pursuant to Section 5307.1. The schedule shall consist of a series of procedure codes, relative values, and a conversion factor producing fees which provide remuneration to physicians performing medical-legal evaluations at a level equivalent to that provided to physicians for reasonably comparable work, and which additionally recognizes the relative complexity of various types of evaluations, the amount of time spent by the physician in direct contact with the patient, and the need to prepare a written report. (b) A provider shall not be paid fees in excess of those set forth in the fee schedule established under this section unless the provider provides an itemization and explanation of the fee that shows that it is both a reasonable fee and that extraordinary circumstances relating to the medical condition being evaluated justify a higher fee; provided, however, that in no event shall a provider charge in excess of his or her usual fee. (c) In the event of a dispute between the provider and the employer or carrier concerning the fees charged, the provider may be allowed a reasonable fee for testimony if the provider testified pursuant to the employer's or carrier's subpoena and the judge or referee determines that the fee charged was reasonable and justified by extraordinary circumstances. (d) No evaluator may request nor accept any compensation, including, but not limited to, any kind of remuneration, discount, rebate, refund, dividend, distribution, subsidy, or other form of direct or indirect payment, whether in money or otherwise, from any source for medical-legal expenses if such compensation is in addition to the fees authorized by this section. In addition to being subject to discipline pursuant to the provisions of subdivision (k) of Section 139.2, any provider violating this subdivision is subject to disciplinary action by the appropriate licensing board. SEC. 58. Section 5401 of the Labor Code is amended to read: 5401. (a) Within one working day of receiving notice or knowledge of injury under Section 5400 or 5402, which injury results in lost time beyond the date of injury or which results in medical treatment beyond first aid, the employer shall provide, personally or by first-class mail, a claim form and a notice of potential eligibility for benefits under this division to the injured employee, or in the case of death, to his or her dependents. As used in this subdivision, "first aid" means any one-time treatment of minor scratches, cuts, burns, splinters, or other minor industrial injury. "Minor industrial injury" shall not include serious exposure to a hazardous substance as defined in subdivision (i) of Section 6302. The claim form shall request the injured employee's name and address, social security number, the time and address where the injury occurred, and the nature of and part of the body affected by the injury. The notice shall include a description of the procedures and assistance available to the employee on his or her own behalf, the procedure to be used to commence proceedings for the collection of compensation for the purposes of this chapter, the telephone number of the division's information and assistance services, and a statement that the employee has a right to consult an attorney or information and assistance officer, or both, for assistance. Claims forms shall be available at district offices of the Employment Development Department and the division. Claims forms may be made available to the employee from any other source. (b) The completed claim form shall be filed with the employer by the injured employee, or, in the case of death, by a dependent of the injured employee, or by an agent of the employee or dependent. Except as provided in subdivision (c), a claim form is deemed filed when it is personally delivered to the employer or received by the employer by first-class or certified mail. A dated copy of the completed form shall be provided by the employer to the employer's insurer and to the employee, dependent, or agent who filed the claim form. (c) The claim form shall be filed with the employer prior to the injured employee's entitlement to late payment supplements under subdivision (d) of Section 4650, or prior to the injured employee's request for a medical evaluation under Section 4061 or 4062. Filing of the claim form with the employer shall toll the time limitations set forth in Sections 5405 and 5406 until the claim is denied by the employer or the injury becomes presumptively compensable pursuant to Section 5402. For purposes of this subdivision, a claim form is deemed filed when it is personally delivered to the employer or mailed to the employer by first-class or certified mail. SEC. 59. Section 5401.5 of the Labor Code is repealed. SEC. 60. Section 5401.6 of the Labor Code is repealed. SEC. 61. Section 5401.7 of the Labor Code is amended to read: 5401.7. The claim form shall contain, prominently stated, the following statement: "Any person who makes or causes to be made any knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying workers' compensation benefits or payments is guilty of a felony." SEC. 62. Section 5404.5 is added to the Labor Code, to read: 5404.5. (a) Where a claim form has been filed prior to January 1, 1994, and where the claim is denied by the employer, the claim may be dismissed if there has been no activity for the previous 180 days and if the claims adjuster has served notice pursuant to Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of the Code of Civil Procedure. The notice shall specify that the claim will be dismissed by operation of law unless an application for adjudication of the claim is filed within 180 days of service of the notice. (b) Where a claim form has been filed prior to January 1, 1994, and where benefits have been furnished by the employer, the claim may be dismissed if there has been no activity for the previous 180 days and if the claims adjuster has served notice pursuant to Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of the Code of Civil Procedure. The notice shall specify that the claim will be dismissed by operation of law unless an application for adjudication of the claim is filed within five years of the date of injury or within one year of the last furnishing of benefits, whichever is later. (c) The administrative director may adopt rules of practice and procedure consistent with this section. (d) The provisions of subdivisions (a) and (b) do not limit the jurisdiction of the appeals board. SEC. 63. Section 5500 of the Labor Code is amended to read: 5500. No pleadings other than the application and answer shall be required. Both shall be in writing and shall conform to forms prescribed by the appeals board in its rules of practice and procedure, simply but clearly and completely delineating all relevant matters of agreement and all issues of disagreement within the jurisdiction of the appeals board, and providing for the furnishing of any additional information as the appeals board may properly determine necessary to expedite its hearing and determination of the claim. The amendment of this section made during the 1993 portion of the 1993-94 Regular Session shall apply to all applications filed on or after January 1, 1994. SEC. 64. 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 or readiness to proceed is filed. (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: (1) The employee's entitlement to medical treatment pursuant to Section 4600. (2) The employee's entitlement to, or the amount of, temporary disability indemnity payments. (3) The employee's entitlement to vocational rehabilitation services, or the termination of an employer's liability to provide these services to an employee. (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 report quarterly to the Governor and to the Legislature concerning the frequency and types of issues which are not heard and decided within the period prescribed in this section and the reasons therefor. (d) (1) In all cases, a mandatory settlement 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 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 judge or by a referee who is eligible to be a workers' compensation judge or eligible to be an arbitrator under Section 5270.5. At the mandatory settlement conference, the referee or workers' compensation 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 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 the Department 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. SEC. 65. 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. 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) Where 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) A 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) A reasonable allowance for interpreter's fees for the deponent, if interpretation services are needed and provided by a language interpreter certified or deemed certified pursuant to Section 11513 or 68566 of the Government Code. The fee shall be in accordance with the fee schedule set by the administrative director and paid by the employer or his or her insurer. Payment for interpreter's services shall be allowed for deposition of a non-English-speaking injured worker, and for such other deposition-related events as permitted by the administrative director. SEC. 65.5. 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) It shall be the responsibility of any party producing a witness requiring an interpreter to arrange for the presence of a qualified interpreter. A qualified interpreter is a language interpreter who is certified, or deemed certified, pursuant to Section 11513 or 68566 of the Government Code. Interpreter fees which are reasonably, actually, and necessarily incurred shall be allowed as cost under this section, provided they are in accordance with the fee schedule set by the administrative director. A qualified interpreter may render services during the following: (1) A deposition. (2) An appeals board hearing. (3) During those settings which the administrative director determines are reasonably necessary to ascertain the validity or extent of injury to an employee who cannot communicate in English. SEC. 66. Section 5813 is added to the Labor Code, to read: 5813. (a) The appeals board may order a party, the party's attorney, or both, to pay any reasonable expenses, including attorney's fees and costs, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay. In addition, the appeals board, in its sole discretion, may order additional sanctions not to exceed two thousand five hundred dollars ($2,500) to be transmitted to the General Fund. (b) The determination of sanctions shall be made after written application by the party seeking sanctions or upon the appeal board's own motion. (c) This section shall apply to all applications for adjudication that are filed on or after January 1, 1994. SEC. 67. Section 6314.1 of the Labor Code is repealed. SEC. 68. Section 6314.1 is added to the Labor Code, to read: 6314.1. (a) The division shall establish a program for targeting employers in high hazardous industries with the highest incidence of preventable occupational injuries and illnesses and workers' compensation losses. The employers shall be identified from any or all of the following data sources: the California Work Injury and Illness program, the Occupational Injuries and Illness Survey, the federal hazardous employers' list, experience modification and other relevant data maintained and furnished by all rating organizations as defined in Section 11750.1 of the Insurance Code, histories of violations of Occupational Safety and Health Act standards, and any other source deemed to be appropriate that identifies injury and illness rates. (b) The division shall establish procedures for ensuring that the highest hazardous employers in the most hazardous industries are inspected on a priority basis. The division may send a letter to the high hazard employers who are identified pursuant to this section informing them of their status and directing them to submit a plan, including the establishment of joint labor-management health and safety committees, within a time determined by the division for reducing their occupational injury and illness rates. Employers who submit plans that meet the requirements of the division may be placed on a secondary inspection schedule. Employers on that schedule shall be inspected on a random basis as determined by the division. Employers who do not submit plans meeting the requirements of the division within the time specified by the division shall be placed on the primary inspection list. Every employer on the primary inspection list shall be subject to an inspection. The division shall employ sufficient personnel to meet minimum federal targeted inspection standards. (c) The division shall establish and maintain regional plans for allocating the division's resources for the targeted inspection program in addition to the inspections required or authorized in Sections 6309, 6313, and 6320. Each regional plan shall focus on industries selected from the targeted inspection program as well as any other scheduled inspections that the division determines to be appropriate to the region, including the cleanup of hazardous waste sites. All targeted inspections shall be conducted on a priority basis, targeting the worst employers first. (d) In order to maximize the impact of the regional plans, the division shall coordinate its education, training, and consulting services with the priorities established in the regional plans. SEC. 69. Section 6354 of the Labor Code is amended to read: 6354. The division shall, upon request, provide a full range of occupational safety and health consulting services to any employer or employee group. These consulting services shall include: (a) A program for identifying categories of occupational safety and health hazards causing the greatest number and most serious preventable injuries and illnesses and workers' compensation losses and the places of employment where they are occurring. The hazards, industries, and places of employment shall be identified from the data system that is used in the targeted inspection program pursuant to Section 6314.1. The division shall develop procedures for offering consultation services to high hazard employers who are identified pursuant to this section. The services may include the development of educational material and procedures for reducing or eliminating safety and health hazards, conducting workplace surveys to identify health and safety problems, and development of plans to improve employer health and safety loss records. The program shall include a component for reducing the number of work-related, repetitive motion injuries, including, but not limited to, back injuries. The division may formulate recommendations for reducing repetitive motion injuries after conducting a survey of the workplace of the employer who accepts services of the division. The recommendations shall include, wherever appropriate, the application of generally accepted ergonomic and engineering principles to eliminate repetitive motions that are generally expected to result in injuries to workers. The recommendations shall also include, wherever appropriate, training programs to instruct workers in methods for performing job-related movements, such as lifting heavy objects, in a manner that minimizes strain and provides safeguards against injury. The division shall establish model injury and illness prevention training programs to prevent repetitive motion injuries, including recommendations for the minimum qualifications of instructors. The model programs shall be made available to employers, employer associations, workers' compensation insurers, and employee organizations on request. (b) A program for providing assistance in the development of injury prevention programs for employees and employers. The highest priority for the division's consulting services shall be given to development of these programs for businesses with fewer than 250 employees in industries identified in the regional plans developed pursuant to subdivision (b) of Section 6314.1. (c) A program for providing employers or employees with information, advice, and recommendations on maintaining safe employment or place of employment, and on applicable occupational safety and health standards, techniques, devices, methods, practices, or programs. SEC. 70. Section 6355 of the Labor Code is amended to read: 6355. If the employer requests or accepts consulting services offered pursuant to Section 6354, the division in providing such services at the employer's employment or place of employment shall neither institute any prosecution under Section 6423 nor issue any citations for a violation of any standard or order adopted pursuant to Chapter 6 (commencing with Section 140) of Division 1. In any instance in which the division representative providing the consulting service finds that the conditions of employment, place of employment, any work procedure, or the operation of any machine, device, apparatus, or equipment constitutes an imminent hazard or danger, within the meaning of Section 6325, to the lives, safety, or health of employees, entry therein, or the use thereof, as the case may be, shall be prohibited by the division pursuant to Section 6325. The employer shall not, however, be liable to prosecution under Section 6423, nor shall the division issue any citations or assess any civil penalties, except in any case where the employer fails to comply with the division's prohibition of entry or use, or in any case where the provisions of Section 6326 apply. SEC. 71. Section 6357 is added to the Labor Code, to read: 6357. On or before January 1, 1995, the Occupational Safety and Health Standards Board shall adopt standards for ergonomics in the workplace designed to minimize the instances of injury from repetitive motion. SEC. 72. The Legislature finds that significant reductions in workers' compensation losses experienced by employers over a period of more than one year prior to the effective date of this act justify a premium rate reduction. The amount of the reduction required by Section 11732.01 the Insurance Code has been established by the Legislature to provide needed relief to insured employers from the high cost of workers' compensation insurance while being adequate for insurers. SEC. 74. Notwithstanding Section 13.60 of the Budget Act of 1993, all revenues derived from the imposition of fines and penalties assessed pursuant to Sections 129.5 and 4628 of the Labor Code shall be exempt from transfer to the unappropriated surplus of the General Fund. SEC. 75. Nothing in this act shall be deemed to supersede or limit the operation of pilot projects approved by the administrative director pursuant to Section 4612 of the Labor Code. No provision or requirement of this act shall be deemed applicable to those pilot projects, or impose any requirements on them for any purpose. SEC. 76. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs which may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, changes the definition of a crime or infraction, changes the penalty for a crime or infraction, or eliminates a crime or infraction. Notwithstanding Section 17580 of the Government Code, unless otherwise specified in this act, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution. SEC. 77. Except for those provisions amending, adding, or repealing sections of the Insurance Code, the provisions of this act apply only to injuries occurring on or after January 1, 1994. SEC. 78. This act shall become operative only if Assembly Bill 119, Assembly Bill 1300, Senate Bill 484, and Senate Bill 983 are all enacted and become effective on or before January 1, 1994. SEC. 79. If any provision of this act or the application thereof to any person or circumstances is held invalid, that invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable. SEC. 80. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to make changes to California's workers' compensation system that are needed to provide immediate relief to California businesses and workers, it is necessary for this act to take effect immediately.