BILL NUMBER: AB 749 CHAPTERED
BILL TEXT
CHAPTER 6
FILED WITH SECRETARY OF STATE FEBRUARY 19, 2002
APPROVED BY GOVERNOR FEBRUARY 15, 2002
PASSED THE SENATE FEBRUARY 4, 2002
PASSED THE ASSEMBLY FEBRUARY 4, 2002
AMENDED IN SENATE FEBRUARY 4, 2002
AMENDED IN SENATE JANUARY 31, 2002
AMENDED IN SENATE JULY 9, 2001
AMENDED IN ASSEMBLY APRIL 30, 2001
AMENDED IN ASSEMBLY MARCH 27, 2001
INTRODUCED BY Assembly Member Calderon
(Principal coauthor: Assembly Member Diaz)
(Principal coauthors: Senators Alarcon and Burton)
(Coauthors: Assembly Members Hertzberg, Koretz, and Shelley)
FEBRUARY 22, 2001
An act to amend Section 9109 of the Commercial Code, to amend
Sections 1871, 1871.4, 1872.83, 11721, 11734, 11737, 11770, 11783,
11784, 11785, 11786, 11787, 11820, 11822, and 11860 of, to add
Section 11771.5 to, to add and repeal Section 11741 of, and to repeal
Section 11823 of, the Insurance Code, and to amend Sections 62.6,
75, 77, 78, 90.5, 110, 123, 123.3, 123.5, 123.6, 124, 127, 129,
129.5, 133, 138, 138.1, 138.2, 138.4, 3501, 3550, 3551, 3722, 3762,
3820, 4061, 4062, 4062.9, 4064, 4067, 4453, 4455, 4600.3, 4600.5,
4628, 4644, 4646, 4651, 4658, 4659, 4702, 4703.5, 5275, 5305, 5307,
5310, 5311.5, 5401, 5405, 5500.3, 5502, 5814, 5814.5, and 6354.5 of,
to amend the heading of Chapter 5 (commencing with Section 110) of
Division 1 of, to add Sections 90.3, 127.5, 127.6, 139.47, 3201.7,
3201.9, 3822, 4600.1, 4600.2, 4600.35, 4603.4, 4903.5, 5307.2,
5307.21, and 6354.7 to, to add and repeal Sections 139.48 and 139.49
of, and to repeal Sections 139.05, 3552, and 4065 of the Labor Code,
relating to workers' compensation.
LEGISLATIVE COUNSEL'S DIGEST
AB 749, Calderon. Workers' compensation: administration and
benefits.
(1) Existing law provides for an annual assessment of employers by
the Department of Industrial Relations for the purpose of funding
increased investigation and prosecution of workers' compensation
fraud by the Bureau of Fraudulent Claims of the Department of
Insurance and by district attorneys. Existing law provides for the
assessment of civil penalties for acts constituting workers'
compensation fraud.
This bill would also authorize use of these funds for
investigation and prosecution of an employer's willful failure to
secure payment of workers' compensation. This bill would require the
Bureau of State Audits to evaluate the effectiveness of the efforts
of the Fraud Assessment Commission, the Bureau of Fraudulent Claims,
the Department of Industrial Relations, and local law enforcement
agencies in identifying, investigating, and prosecuting workers'
compensation fraud and the willful failure to secure payment of
workers' compensation. It would expand the membership of the Fraud
Assessment Commission from 5 to 7 members by adding 2 representatives
of organized labor. The bill would increase the civil penalty
amounts that could be imposed for workers' compensation fraud. These
funds would be deposited in the Workers' Compensation Fraud Account
in the Insurance Fund.
(2) Existing law requires workers' compensation insurers to
maintain or provide occupational safety and health loss control
consultation services certified by the Director of Industrial
Relations.
This bill would eliminate the requirement that these services be
certified by the director, would eliminate fees imposed on insurers
for that certification, would accordingly eliminate the Loss Control
Certification Fund in which these fees are deposited, would require
an expansion of the scope of these services, and would make
legislative findings in this regard. The bill would eliminate the
requirement that each insurer submit an annual health and safety loss
control plan to the director for identifying employers with the
greatest workers' compensation losses and the most significant and
preventable health and safety hazards.
The bill would require the Department of Industrial Relations to
establish an insurance loss control services coordinator position to
provide information to employers about the availability of these loss
control consultation services, to be funded from the Workers'
Occupational Safety and Health Education Fund that would be created
by the bill. The bill would require the Commission on Health and
Safety and Workers' Compensation to establish and maintain a worker
occupational safety and health training and education program. The
bill would require the director to levy and collect fees from workers'
compensation insurers for purposes of the program, with the fees to
be deposited in the Workers' Occupational Safety and Health Education
Fund. Moneys in the fund could be expended for the above purposes
upon appropriation by the Legislature.
(3) Existing law requires the Insurance Commissioner to designate
a rating organization to assist him or her in developing, among other
things, a classification system.
This bill would require the designated rating organization to
develop and file with the Insurance Commissioner a weekly premium per
employee for each classification used or proposed by the designated
rating organization for use in determining the premium for an
uninsured employer.
(4) Existing law provides for the Insurance Commissioner to
approve rates for workers' compensation insurance.
This bill, notwithstanding any other provision of law, would
authorize an insurer to increase rates on policies with inception
dates prior to January 1, 2003, to reflect the changes in benefit
levels enacted by this bill. It would also provide that the
Insurance Commissioner would not have the authority to disapprove a
rate, discount, or credit established by an insurer for any policy
issued to an employer for coverage of employees participating in a
specified program established under a collective bargaining
agreement.
(5) Existing law provides for a 6-member board of directors to
administer the State Compensation Insurance Fund, with the Director
of Industrial Relations serving as a nonvoting, ex officio member.
This bill would add the Speaker of the Assembly and the President
pro Tempore of the Senate, or their designees, to the board as ex
officio members.
(6) Existing law specifies the authority of the State Compensation
Insurance Fund.
This bill would commission an independent study, with the
assistance of an investment banking firm, to determine the
feasibility of the State Compensation Insurance Fund issuing bonds or
securities. The bill would require advertising of the fund to
include a specified disclaimer.
(7) Existing law provides for a manager of the State Compensation
Insurance Fund.
This bill would change the title of this officer to president.
(8) Existing law requires the rates of the State Compensation
Insurance Fund to be fixed at a percentage of the payroll of any
employer which, in the long run and on average, will produce a
sufficient sum, when invested at 31/2% interest, to meet specified
goals.
This bill would replace the 31/2% interest standard with a
standard that the investment be made in a way so as to realize the
maximum return consistent with safe and prudent management practices.
(9) Existing law makes certain conclusive presumptions regarding a
child's or spouse's dependency on a deceased employee for support as
it pertains to workers' compensation benefits.
This bill would make similar presumptions with respect to a
deceased employee who has no person who qualifies as dependent on the
support of the deceased employee.
(10) Existing law generally provides for settlement and
commutation of workers' compensation benefits, but does not allow
settlement or commutation of prospective vocational rehabilitation
services except upon a specified finding by a workers' compensation
judge.
This bill would additionally authorize an employee and a
represented employee to settle the employee's right to prospective
vocational rehabilitation services with a one-time payment under
certain conditions.
(11) Existing law provides for the Department of Industrial
Relations to be divided into at least 6 divisions, including the
Division of Workers' Compensation, which is under the direction of an
administrative director. Existing law provides that the
administrative director has various powers and duties with respect to
the Workers' Compensation Appeals Board and workers' compensation
administrative law judges who hear appeals of workers' compensation
claims.
This bill would create the position of court administrator with
respect to the workers' compensation adjudicatory process at the
trial level, who would be appointed by the Governor with the advice
and consent of the Senate. This bill would specify the court
administrator's powers and duties. The bill would add various other
provisions, including certain qualifications and ethics requirements
for workers' compensation administrative law judges and other
provisions relating to the operation of the workers' compensation
courts.
(12) Existing law requires the administrative director to conduct
audits of insurers, self-insured employers, and 3rd-party
administrators to ensure that injured workers are promptly and
accurately receiving the full measure of compensation they are
entitled to receive.
This bill would require the administrative director to conduct a
profile audit review of each audit subject at least once every 5
years and to conduct a full compliance audit on each audit subject
that fails to meet or exceed the profile audit review performance
standard established by the director. The bill would provide for the
assessment of penalties on audit subjects that fail to meet
established audit standards, and based on the results of these
audits, the administrative director would be required to publish and
make available on request a list ranking all insurers, self-insured
employers, and 3rd-party administrators audited.
(13) Existing law requires that specified notices be provided to
injured employees.
This bill would specify the contents of various notices that are
required to be posted, given to, or mailed to an employee. The bill
would provide for specified procedures to be used in notifying
employees regarding benefits and required actions in pursuing a
workers' compensation claim.
(14) Existing law provides that the Commission on Health and
Safety and Workers' Compensation in the Department of Industrial
Relations is to be funded by appropriations from the Workplace Health
and Safety Revolving Fund, into which certain civil and
administrative penalties are deposited.
This bill would instead provide for the deposit of these penalties
in the Workers' Compensation Administration Revolving Fund, and
would provide funding for the commission from this fund, upon
appropriation by the Legislature.
(15) Existing law requires the Industrial Medical Council to,
among other things, counsel and assist the administrative director
and suggest standards for improving care furnished to injured
employees.
This bill would require the administrative director, in
consultation with the council and other specified entities, on or
before July 1, 2003, to begin to conduct a study of medical treatment
provided to workers who have sustained industrial injuries and
illnesses. It would require the administrative director, on or
before July 1, 2004, to make recommendations based on the study to
the Legislature.
This bill, commencing July 1, 2004, until January 1, 2009, would
require the administrative director to establish the Return-to-Work
Program in order to promote the early and sustained return to work of
the employee following a work-related injury or illness. The bill
would create the Workers' Compensation Return-to-Work Fund, subject
to appropriation by the Legislature, from which reimbursement would
be made to employers meeting specified criteria relating to program
participation. It would also require the administrative director to
contract with an independent research organization to conduct a study
and issue a report on the program, and to make this report available
to the public and the Legislature on or before January 1, 2008.
(15.5) Existing law makes it a crime for any person to make false
or fraudulent statements, or take certain other actions, with respect
to any claim under the workers' compensation system.
This bill would also make it a crime to make or cause to be made
any knowingly false or fraudulent material statement or
representation in connection with claims and reimbursements under the
Return-to-Work Program. The creation of these new crimes would
impose a state-mandated local program.
(16) Existing law provides for the Director of Industrial
Relations to issue and serve on any employer that has failed to
secure the payment of workers' compensation a stop order prohibiting
the use of employee labor, and to also issue and serve on the
employer a penalty assessment order in the amount of $1,000 per
employee employed, as specified.
This bill would authorize the director to assess a higher amount
upon a determination that an employer has been uninsured for a period
in excess of one week during the calendar year preceding the
determination. The bill would enact other related changes with
respect to these provisions. It would require the director to
establish and maintain a program to encourage, facilitate, and
educate employers to provide early and sustained return to work after
occupational injury or illness.
This bill would also authorize the appeals board to provide for a
summary hearing on the issue of compensability if a claim is settled
by the director by means of a compromise and release or stipulations
with request for award.
(17) Existing law specifies the medical information about an
injured employee that an insurer or a claim administrator may
disclose to an employer, including the diagnosis of the injury if
that diagnosis would affect the employer's premium.
This bill would permit disclosure to an employer of the mental or
physical condition for which workers' compensation is claimed and the
treatment provided for this condition.
(18) Existing law generally provides that the report of the
qualified medical evaluator and the report of the treating physician
with respect to a workers' compensation injury shall be the only
admissible reports relative to making a determination with regard to
an employer's workers' compensation liability. Existing law provides
that once a worker has received a comprehensive medical-legal
evaluation, the worker is not entitled to another evaluation if he or
she later becomes represented by an attorney.
This bill would delete the limitation on obtaining another
evaluation and would make various other changes to these and other
related provisions.
(19) Existing law generally provides that the findings of the
treating physician are presumed to be correct, unless rebutted, in
cases where an additional comprehensive medical evaluation is
obtained.
This bill would limit the operation of this presumption to
situations involving the treatment of a worker by his or her personal
physician or personal chiropractor, who was predesignated prior to
the date of injury.
(20) Existing law requires injured employees to be provided with
medical services, including prescription drugs.
This bill would require the use of generic drugs and would require
the Administrative Director of the Division of Workers' Compensation
to adopt by July 1, 2003, and revise no less frequently than
biennially, an official pharmaceutical fee schedule. The bill would
additionally require that the injured employee have access to a
pharmacy within a reasonable distance from his or her residence. It
would also provide that the administrative director has the sole
authority to develop an outpatient surgery facility fee schedule for
services not performed under contract.
(21) Existing law provides certain methods for determining workers'
compensation benefits payable to a worker or his or her dependents
for purposes of temporary disability, permanent total disability,
permanent partial disability, and in case of death.
This bill would provide for increased temporary disability and
permanent partial disability and death benefits for injuries or
deaths occurring on or after January 1, 2003, with additional
increases in benefits phased in over several years. The bill would
also revise the computation of the permanent disability benefit by
increasing the number of weeks, as specified, for injuries occurring
on or after January 1, 2004.
(22) Existing law requires that a disability indemnity payment
made by any written instrument be immediately negotiable and payable
in cash on demand.
This bill would provide that it is not a violation of this
provision if a delay in the negotiation of a written instrument is
caused solely by the application of state or federal banking laws or
regulations.
(23) Existing law provides for the payment of workers'
compensation death benefits to wholly dependent children, as defined,
of a deceased employee-parent until the youngest child attains 18
years of age.
This bill would also provide these benefits to children who are
physically or mentally incapacitated from earning until the death of
these children.
(23.5) Existing law authorizes collective bargaining agreements
between a private employer or groups of employers engaged in
construction, construction maintenance, and related activities and a
recognized or certified exclusive bargaining representative that
establishes a dispute resolution process for workers' compensation
instead of the hearing before the Workers' Compensation Appeals Board
and its workers' compensation administrative law judges, or that
provides for specified other alternative workers' compensation
programs.
This bill would enact similar provisions with respect to employers
in the aerospace and timber industries. By requiring certain
information in connection with these provisions to be submitted by an
employer under penalty of perjury, this bill would expand the
definition of the crime of perjury, thereby imposing a state-mandated
local program.
(24) Existing law requires certain disputes relating to workers'
compensation to be submitted to arbitration, including certain
disputes relating to permanent disability rating and vocational
rehabilitation.
This bill would delete the requirement for the arbitration of
these disputes.
(25) Existing law provides that medical and disability benefits
may be claimed for up to one year from specific triggering events.
This bill would additionally establish timeframes whereby lien
claimants must file liens against compensation.
(26) This bill would also require the Director of Industrial
Relations to establish 8 additional workers' compensation
administrative law judge positions and the same number of other
associated positions.
(27) This bill would exempt a claim or right under workers'
compensation from provisions relating to secured transactions.
(28) This bill would declare the intent of the Legislature
relative to various matters.
(29) This bill would make various technical, nonsubstantive
changes and other related changes.
(30) 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares as follows:
(a) The prevention of workplace injuries and illnesses is an
essential component of California's workers' compensation system.
(b) The provision of loss control services by insurers is an
important tool in preventing injuries.
(c) The development and use of injury and illness prevention
education programs also help reduce unnecessary injuries and
illnesses.
(d) The certification program funded by the Loss Control
Certification Fund is ineffective and should be redirected to more
useful injury prevention programs.
(e) All existent funding available in, and all current fees used
to maintain, the Loss Control Certification Fund should be used to
establish the Loss Control Ombudsperson Fund and the Workers'
Occupational Safety and Health Education Fund.
SEC. 2. Section 9109 of the Commercial Code is amended to read:
9109. (a) Except as otherwise provided in subdivisions (c) and
(d), this division applies to each of the following:
(1) A transaction, regardless of its form, that creates a security
interest in personal property or fixtures by contract.
(2) An agricultural lien.
(3) A sale of accounts, chattel paper, payment intangibles, or
promissory notes.
(4) A consignment.
(5) A security interest arising under Section 2401 or 2505, or
under subdivision (3) of Section 2711, or subdivision (5) of Section
10508, as provided in Section 9110.
(6) A security interest arising under Section 4210 or 5118.
(b) The application of this division to a security interest in a
secured obligation is not affected by the fact that the obligation is
itself secured by a transaction or interest to which this division
does not apply.
(c) This division does not apply to the extent that any of the
following conditions is satisfied:
(1) A statute, regulation, or treaty of the United States preempts
this division.
(2) Another statute of this state expressly governs the creation,
perfection, priority, or enforcement of a security interest created
by this state or a governmental unit of this state. These statutes
include statutes that provide for pledges, liens, or security
interests to secure bonds or other obligations (including, without
limitation, leases) of this state or a governmental unit, whether the
statute is of general application like Sections 5450 and 5451 of the
Government Code, or is specific to particular types of obligations
of this state or of governmental units or to particular governmental
units.
(3) A statute of another state, a foreign country, or a
governmental unit of another state or a foreign country, other than a
statute generally applicable to security interests, expressly
governs creation, perfection, priority, or enforcement of a security
interest created by the state, country, or governmental unit.
(4) The rights of a transferee beneficiary or nominated person
under a letter of credit are independent and superior under Section
5114.
(d) This division does not apply to any of the following:
(1) A landlord's lien, other than an agricultural lien.
(2) A lien, other than an agricultural lien, given by statute or
other rule of law for services or materials, but Section 9333 applies
with respect to priority of the lien.
(3) An assignment of a claim for wages, salary, or other
compensation of an employee.
(4) A sale of accounts, chattel paper, payment intangibles, or
promissory notes as part of a sale of the business out of which they
arose.
(5) An assignment of accounts, chattel paper, payment intangibles,
or promissory notes which is for the purpose of collection only.
(6) An assignment of a right to payment under a contract to an
assignee that is also obligated to perform under the contract.
(7) An assignment of a single account, payment intangible, or
promissory note to an assignee in full or partial satisfaction of a
preexisting indebtedness.
(8) Any loan made by an insurance company pursuant to the
provisions of a policy or contract issued by it and upon the sole
security of the policy or contract.
(9) An assignment of a right represented by a judgment, other than
a judgment taken on a right to payment that was collateral.
(10) A right of recoupment or setoff, provided that both of the
following sections apply:
(A) Section 9340 applies with respect to the effectiveness of
rights of recoupment or setoff against deposit accounts.
(B) Section 9404 applies with respect to defenses or claims of an
account debtor.
(11) The creation or transfer of an interest in or lien on real
property, including a lease or rents thereunder, except to the extent
that provision is made for each of the following:
(A) Liens on real property in Sections 9203 and 9308.
(B) Fixtures in Section 9334.
(C) Fixture filings in Sections 9501, 9502, 9512, 9516, and 9519.
(D) Security agreements covering personal and real property in
Section 9604.
(12) An assignment of a claim arising in tort, other than a
commercial tort claim, but Sections 9315 and 9322 apply with respect
to proceeds and priorities in proceeds.
(13) An assignment of a deposit account in a consumer transaction,
but Sections 9315 and 9322 apply with respect to proceeds and
priorities in proceeds.
(14) Any security interest created by the assignment of the
benefits of any public construction contract under the Improvement
Act of 1911 (Division 7 (commencing with Section 5000), Streets and
Highways Code).
(15) Transition property, as defined in Section 840 of the Public
Utilities Code, except to the extent that the provisions of this
division are referred to in Article 5.5 (commencing with Section 840)
of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code.
(16) A claim or right of an employee or employee's dependents to
receive workers' compensation under Division 1 (commencing with
Section 50) or Division 4 (commencing with Section 3200) of the Labor
Code.
SEC. 2.5. Section 1871 of the Insurance Code is amended to read:
1871. The Legislature finds and declares as follows:
(a) The business of insurance involves many transactions that have
the potential for abuse and illegal activities. There are numerous
law enforcement agencies on the state and local levels charged with
the responsibility for investigating and prosecuting fraudulent
activity. This chapter is intended to permit the full utilization of
the expertise of the commissioner and the department so that they
may more effectively investigate and discover insurance frauds, halt
fraudulent activities, and assist and receive assistance from
federal, state, local, and administrative law enforcement agencies in
the prosecution of persons who are parties in insurance frauds.
(b) Insurance fraud is a particular problem for automobile
policyholders; fraudulent activities account for 15 to 20 percent of
all auto insurance payments. Automobile insurance fraud is the
biggest and fastest growing segment of insurance fraud and
contributes substantially to the high cost of automobile insurance
with particular significance in urban areas.
(c) Prevention of automobile insurance fraud will significantly
reduce the incidence of severity and automobile insurance claim
payments and will therefore produce a commensurate reduction in
automobile insurance premiums.
(d) Workers' compensation fraud harms employers by contributing to
the increasingly high cost of workers' compensation insurance and
self-insurance and harms employees by undermining the perceived
legitimacy of all workers' compensation claims.
(e) Prevention of workers' compensation insurance fraud may reduce
the number of workers' compensation claims and claim payments
thereby producing a commensurate reduction in workers' compensation
costs. Prevention of workers' compensation insurance fraud will
assist in restoring confidence and faith in the workers' compensation
system, and will facilitate expedient and full compensation for
employees injured at the workplace.
(f) The actions of employers who fraudulently underreport payroll
or fail to report payroll for all employees to their insurance
company in order to pay a lower workers' compensation premium result
in significant additional premium costs and an unfair burden to
honest employers and their employees.
(g) The actions of employers who fraudulently fail to secure the
payment of workers' compensation as required by Section 3700 of the
Labor Code harm employees, cause unfair competition for honest
employers, and increase costs to taxpayers.
(h) Health insurance fraud is a particular problem for health
insurance policyholders. Although there are no precise figures, it
is believed that fraudulent activities account for billions of
dollars annually in added health care costs nationally. Health care
fraud causes losses in premium dollars and increases health care
costs unnecessarily.
SEC. 2.7. Section 1871.4 of the Insurance Code is amended to read:
1871.4. (a) It is unlawful to do any of the following:
(1) Make or cause to be made any knowingly false or fraudulent
material statement or material representation for the purpose of
obtaining or denying any compensation, as defined in Section 3207 of
the Labor Code.
(2) Present or cause to be presented any knowingly false or
fraudulent written or oral material statement in support of, or in
opposition to, any claim for compensation for the purpose of
obtaining or denying any compensation, as defined in Section 3207 of
the Labor Code.
(3) Knowingly assist, abet, conspire with, or solicit any person
in an unlawful act under this section.
(4) Make or cause to be made any knowingly false or fraudulent
statements with regard to entitlement to benefits with the intent to
discourage an injured worker from claiming benefits or pursuing a
claim.
For the purposes of this subdivision, "statement" includes, but is
not limited to, any notice, proof of injury, bill for services,
payment for services, hospital or doctor records, X-ray, test
results, medical-legal expense as defined in Section 4620 of the
Labor Code, other evidence of loss, injury, or expense, or payment.
(5) Make or cause to be made any knowingly false or fraudulent
material statement or material representation for the purpose of
obtaining or denying any of the benefits or reimbursement provided in
the Return-to-Work Program established under Section 139.48 of the
Labor Code.
(6) Make or cause to be made any knowingly false or fraudulent
material statement or material representation for the purpose of
discouraging an employer from claiming any of the benefits or
reimbursement provided in the Return-to-Work Program established
under Section 139.48 of the Labor Code.
(b) Every person who violates subdivision (a) shall be punished by
imprisonment in county jail for one year, or in the state prison,
for two, three, or five years, or by a fine not exceeding fifty
thousand dollars ($50,000) or double the value of the fraud,
whichever is greater, or by both imprisonment and fine. Restitution
shall be ordered, including restitution for any medical evaluation or
treatment services obtained or provided. The court shall determine
the amount of restitution and the person or persons to whom the
restitution shall be paid.
(c) Any person who violates subdivision (a) and who has a prior
felony conviction of that subdivision, of former Section 556, of
former Section 1871.1, or of Section 548 or 550 of the Penal Code,
shall receive a two-year enhancement for each prior conviction in
addition to the sentence provided in subdivision (b).
The existence of any fact that would subject a person to a penalty
enhancement shall be alleged in the information or indictment and
either admitted by the defendant in open court, or found to be true
by the jury trying the issue of guilt or by the court where guilt is
established by plea of guilty or nolo contendere or by trial by the
court sitting without a jury.
(d) This section shall not be construed to preclude the
applicability of any other provision of criminal law that applies or
may apply to any transaction.
SEC. 3. Section 1872.83 of the Insurance Code is amended to read:
1872.83. (a) The commissioner shall ensure that the Bureau of
Fraudulent Claims aggressively pursues all reported incidents of
probable workers' compensation fraud, as defined in Sections 11760
and 11880, in subdivision (a) of Section 1871.4, and in Section 549
of the Penal Code, and forwards to the appropriate disciplinary body
the names, along with all supporting evidence, of any individuals
licensed under the Business and Professions Code who are suspected of
actively engaging in fraudulent activity. The Bureau of Fraudulent
Claims shall forward to the Insurance Commissioner or the Director of
Industrial Relations, as appropriate, the name, along with all
supporting evidence, of any insurer, as defined in subdivision (c) of
Section 1877.1, suspected of actively engaging in the fraudulent
denial of claims.
(b) To fund increased investigation and prosecution of workers'
compensation fraud, and of willful failure to secure payment of
workers' compensation, in violation of Section 3700.5 of the Labor
Code, there shall be an annual assessment as follows:
(1) The aggregate amount of the assessment shall be determined by
the Fraud Assessment Commission, which is hereby established. The
commission shall be composed of seven members consisting of two
representatives of organized labor, two representatives of
self-insured employers, one representative of insured employers, one
representative of workers' compensation insurers, and the President
of the State Compensation Insurance Fund, or his or her designee.
The Governor shall appoint members representing organized labor,
self-insured employers, insured employers, and insurers. The term of
office of members of the commission shall be four years, and a
member shall hold office until the appointment of a successor. The
President of the State Compensation Insurance Fund shall be an ex
officio, voting member of the commission. Members of the commission
shall receive one hundred dollars ($100) for each day of actual
attendance at commission meetings and other official commission
business, and shall also receive their actual and necessary traveling
expenses incurred in the performance of commission duties. Payment
of per diem and travel expenses shall be made from the Workers'
Compensation Fraud Account in the Insurance Fund, established in
paragraph (4), upon appropriation by the Legislature.
(2) In determining the aggregate amount of the assessment, the
Fraud Assessment Commission shall consider the advice and
recommendations of the Bureau of Fraudulent Claims and the
commissioner.
(3) The aggregate amount of the assessment shall be collected by
the Director of Industrial Relations pursuant to Section 62.6 of the
Labor Code. The Fraud Assessment Commission shall annually advise
the Director of Industrial Relations, not later than March 15, of the
aggregate amount to be assessed for the next fiscal year.
(4) The amount collected, together with the fines collected for
violations of the unlawful acts specified in Sections 1871.4, 11760,
and 11880, Section 3700.5 of the Labor Code, and Section 549 of the
Penal Code, shall be deposited in the Workers' Compensation Fraud
Account in the Insurance Fund, which is hereby created, and may be
used, upon appropriation by the Legislature, only for enhanced
investigation and prosecution of workers' compensation fraud and of
willful failure to secure payment of workers' compensation as
provided in this section.
(c) For each fiscal year, the total amount of revenues derived
from the assessment pursuant to subdivision (b) shall, together with
amounts collected pursuant to fines imposed for unlawful acts
described in Sections 1871.4, 11760, and 11880, Section 3700.5 of the
Labor Code, and Section 549 of the Penal Code, not be less than
three million dollars ($3,000,000). Any funds appropriated by the
Legislature pursuant to subdivision (b) that are not expended in the
fiscal year for which they have been appropriated, and that have not
been allocated under subdivision (f), shall be applied to satisfy for
the immediately following fiscal year the minimum total amount
required by this subdivision. In no case may that money be
transferred to the General Fund.
(d) After incidental expenses, at least 40 percent of the funds to
be used for the purposes of this section shall be provided to the
Bureau of Fraudulent Claims of the Department of Insurance for
enhanced investigative efforts, and at least 40 percent of the funds
shall be distributed to district attorneys, pursuant to a
determination by the commissioner with the advice and consent of the
bureau and the Fraud Assessment Commission, as to the most effective
distribution of moneys for purposes of the investigation and
prosecution of workers' compensation fraud cases and cases relating
to the willful failure to secure the payment of workers'
compensation. Each district attorney seeking a portion of the funds
shall submit to the commissioner an application setting forth in
detail the proposed use of any funds provided. A district attorney
receiving funds pursuant to this subdivision shall submit an annual
report to the commissioner with respect to the success of his or her
efforts. Upon receipt, the commissioner shall provide copies to the
bureau and the Fraud Assessment Commission of any application, annual
report, or other documents with respect to the allocation of money
pursuant to this subdivision. Both the application for moneys and
the distribution of moneys shall be public documents. Information
submitted to the commissioner pursuant to this section concerning
criminal investigations, whether active or inactive, shall be
confidential.
(e) If a district attorney is determined by the commissioner to be
unable or unwilling to investigate and prosecute workers'
compensation fraud claims or claims relating to the willful failure
to secure the payment of workers' compensation, the commissioner
shall discontinue distribution of funds allocated for that county and
may redistribute those funds according to this subdivision.
(1) The commissioner shall promptly determine whether any other
county could assert jurisdiction to prosecute the fraud claims or
claims relating to the willful failure to secure the payment of
workers' compensation that would have been brought in the
nonparticipating county, and if so, the commissioner may award funds
to conduct the prosecutions redirected pursuant to this subdivision.
These funds may be in addition to any other fraud prosecution funds
or claims relating to the willful failure to secure the payment of
workers' compensation prosecution otherwise awarded under this
section. Any district attorney receiving funds pursuant to this
subdivision shall first agree that the funds shall be used solely for
investigating and prosecuting those cases of workers' compensation
fraud or claims relating to the willful failure to secure the payment
of workers' compensation that are redirected pursuant to this
subdivision and submit an annual report to the commissioner with
respect to the success of the district attorney's efforts. The
commissioner shall keep the Fraud Assessment Commission fully
informed of all reallocations of funds under this paragraph.
(2) If the commissioner determines that no district attorney is
willing or able to investigate and prosecute the workers'
compensation fraud claims or claims relating to the willful failure
to secure the payment of workers' compensation arising in the
nonparticipating county, the commissioner, with the advice and
consent of the Fraud Assessment Commission, may award to the Attorney
General some or all of the funds previously awarded to the
nonparticipating county. Before the commissioner may award any
funds, the Attorney General shall submit to the commissioner an
application setting forth in detail his or her proposed use of any
funds provided and agreeing that any funds awarded shall be used
solely for investigating and prosecuting those cases of workers'
compensation fraud or claims relating to the willful failure to
secure the payment of workers' compensation that are redirected
pursuant to this subdivision. The Attorney General shall submit an
annual report to the commissioner with respect to the success of the
fraud prosecution efforts of his or her office.
(3) Neither the Attorney General nor any district attorney shall
be required to relinquish control of any investigation or prosecution
undertaken pursuant to this subdivision unless the commissioner
determines that satisfactory progress is no longer being made on the
case or the case has been abandoned.
(4) A county that has become a nonparticipating county due to the
inability or unwillingness of its district attorney to investigate
and prosecute workers' compensation fraud or the willful failure to
secure the payment of workers' compensation shall not become eligible
to receive funding under this section until it has submitted a new
application that meets the requirements of subdivision (d) and the
applicable regulations.
(f) If in any fiscal year the Bureau of Fraudulent Claims does not
use all of the funds made available to it under subdivision (d), any
remaining funds may be distributed to district attorneys pursuant to
a determination by the commissioner in accordance with the same
procedures set forth in subdivision (d).
(g) The commissioner shall adopt rules and regulations to
implement this section in accordance with the rulemaking provisions
of the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code). Included in the rules and regulations shall be the criteria
for redistributing funds to district attorneys and the Attorney
General. The adoption of the rules and regulations shall be deemed
to be an emergency and necessary for the immediate preservation of
the public peace, health, and safety, or general welfare.
(h) The department shall report on an annual basis to the
Legislature and the Fraud Assessment Commission on the activities of
the Bureau of Fraudulent Claims and district attorneys supported by
the funds provided by this section.
The annual report shall include, but is not limited to, all of the
following information for the department and each district attorney'
s office:
(1) All allocations, distributions, and expenditures of funds.
(2) The number of search warrants issued.
(3) The number of arrests and prosecutions, and the aggregate
number of parties involved in each.
(4) The number of convictions and the names of all convicted fraud
perpetrators.
(5) The estimated value of all assets frozen, penalties assessed,
and restitutions made for each conviction.
(6) Any additional items necessary to fully inform the Fraud
Assessment Commission and the Legislature of the fraud-fighting
efforts financed through this section.
(i) In order to meet the requirements of subdivision (g), the
department shall submit a biannual information request to those
district attorneys who have applied for and received funding through
the annual assessment process under this section.
(j) Assessments levied or collected to fight workers' compensation
fraud and insurance fraud are not taxes. Those funds are entrusted
to the state to fight fraud and the willful failure to secure the
payment of workers' compensation by funding state and local
investigation and prosecution efforts. Accordingly, any funds
resulting from assessments, fees, penalties, fines, restitution, or
recovery of costs of investigation and prosecution deposited in the
Insurance Fund shall not be deemed "unexpended" funds for any purpose
and, if remaining in that account at the end of any fiscal year,
shall be applied as provided in subdivision (f) and to offset or
augment subsequent years' program funding.
(k) The Bureau of State Audits shall evaluate the effectiveness of
the efforts of the Fraud Assessment Commission, the Bureau of
Fraudulent Claims, the Department of Insurance, and the Department of
Industrial Relations, as well as local law enforcement agencies,
including district attorneys, in identifying, investigating, and
prosecuting workers' compensation fraud and the willful failure to
secure payment of workers' compensation. The report shall
specifically identify areas of deficiencies. Included in this report
shall be recommendations on whether the current program provides the
appropriate levels of accountability for those responsible for the
allocation and expenditure of funds raised from the assessment
provided in this section. The Bureau of State Audits shall submit a
report to the Chairperson of the Senate Committee on Labor and
Industrial Relations and the Chairperson of the Assembly Committee on
Insurance on or before May 1, 2004.
SEC. 4. Section 11721 of the Insurance Code is amended to read:
11721. An insurer desiring to write workers' compensation
insurance shall maintain or provide occupational safety and health
loss control consultation services pursuant to Section 6354.5 of the
Labor Code.
SEC. 5. Section 11734 of the Insurance Code is amended to read:
11734. (a) Every workers' compensation insurer shall adhere to a
uniform experience rating plan filed with the commissioner by a
rating organization designated by the commissioner and subject to his
or her disapproval.
(b) The commissioner shall designate a rating organization to
assist him or her in gathering, compiling, and reporting relevant
statistical information, and to develop a classification system. An
insurer may develop its own classification system upon which a rate
may be made or adopt the classification system developed by the
designated rating organization; provided, however, that any
classification system developed by an insurer must be filed with the
commissioner 30 days prior to its use. The commissioner shall
disapprove a classification system filed by an insurer pursuant to
this section if the insurer fails to demonstrate that the data
thereby produced can be reported consistent with the uniform
statistical plan or the classification system developed by the rating
organization. Every workers' compensation insurer shall record and
report its workers' compensation experience to the designated rating
organization as set forth in the uniform statistical plan approved by
the commissioner.
(c) The designated rating organization shall develop and
file manual rules, subject to the approval of the commissioner,
reasonably related to the recording and reporting of data pursuant to
the uniform statistical plan, uniform experience rating plan, and
any classification systems that may be in effect. Every workers'
compensation insurer shall adhere to the approved manual rules and
experience rating plan in writing and reporting its business. No
insurer shall agree with any other insurer or with a rating
organization to adhere to manual rules that are not reasonably
related to the recording and reporting of data pursuant to the
uniform statistical plan or classification system developed by the
rating organization.
(d) The designated rating organization shall also develop and file
with the commissioner a weekly premium per employee for each
classification used or proposed for use by that organization. The
weekly premium shall be developed by applying the proposed rate for
each classification to the state average weekly wage. For the
purpose of this section, "state average weekly wage" means the
average weekly wage paid by employers to employees covered by
unemployment insurance as reported by the United States Department of
Labor for California for the 12 months ending March 31 of the
calendar year preceding the year in which the injury occurred.
SEC. 6. Section 11737 of the Insurance Code is amended to read:
11737. (a) The commissioner may disapprove a rate if the insurer
fails to comply with the filing requirements under Section 11735.
(b) If the commissioner believes that rates may violate any of the
requirements of this article, he or she shall call a hearing prior
to any disapproval. The commissioner shall disapprove a rate if he
or she finds that the rate would, if continued in use, tend to impair
or threaten the solvency of an insurer or tend to create a monopoly
in the market pursuant to Section 11732.
(c) Every insurer or rating organization shall provide within this
state reasonable means whereby any person aggrieved by the
application of its filings may be heard on written request to review
the manner in which the rating system has been applied in connection
with the insurance afforded or offered. If the insurer or rating
organization fails to grant or reject the request within 30 days, the
applicant may proceed in the same manner as if the application had
been rejected. Any party affected by the action of the insurer or
rating organization on the request may, within 30 days after written
notice of the action, appeal to the commissioner who, after a hearing
held within 60 days from the date on which the party requests the
appeal, or longer upon agreement of the parties and not less than 10
days' written notice to the appellant and to the insurer or rating
organization, may affirm, modify, or reverse that action. If the
commissioner has information on the subject from which the appeal is
taken and believes that a reasonable basis for the appeal does not
exist or that the appeal is not made in good faith, the commissioner
may deny the appeal without a hearing. The denial shall be in
writing and shall set forth the basis for the denial and shall be
served on all parties.
(d) If the commissioner disapproves a rate, the commissioner shall
issue an order specifying in what respects it fails to meet the
requirements of this article and stating when within a reasonable
period thereafter that rate shall be discontinued for any policy
issued or renewed after a date specified in the order. The order
shall be issued within 30 days after the close of the hearing or
within any reasonable time extension as the commissioner may fix.
The order may include a provision for premium adjustment for the
period after the effective date of the order for policies in effect
on that date.
(e) Whenever an insurer has no legally effective rates as a result
of the commissioner's disapproval of rates or other act, the
commissioner shall on request of the insurer specify interim rates
for the insurer that are adequate to protect the interests of all
parties and may order that a specified portion of the premiums be
placed in an escrow account approved by him or her. When new rates
become legally effective, the commissioner shall order the escrowed
funds or any overcharge in the interim rates to be distributed
appropriately, except that refunds of less than ten dollars ($10) per
policyholder shall not be required.
(f) Notwithstanding any other provision of law, an insurer may
increase rates on policies with inception dates prior to January 1,
2003, in an amount no greater than the pure premium rate increase
approved by the commissioner reflecting the cost of the change in
benefit levels authorized by the act adding this subdivision.
SEC. 6.5. Section 11741 is added to the Insurance Code, to read:
11741. (a) Notwithstanding any other provision of this code or
the Labor Code, the commissioner shall not have the authority to
disapprove a rate, discount, or credit established by any insurer for
any policy issued to an employer for coverage of employees
participating in a program established in accordance with Section
3201.5 of the Labor Code.
(b) The Department of Insurance shall report to the Legislature on
or before December 31, 2005, regarding the adequacy of rates charged
by insurers under subdivision (a) between January 1, 2003, to
December 31, 2004, inclusive. Insurers shall supply the Department
of Insurance with any and all necessary requested information in
order for the Department of Insurance to prepare and provide the
report set forth in this section.
(c) This section shall not apply to policies issued or renewed on
or after January 1, 2007.
(d) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.
SEC. 7. Section 11770 of the Insurance Code is amended to read:
11770. The State Compensation Insurance Fund is continued in
existence, to be administered by its board of directors for the
purpose of transacting workers' compensation insurance, and insurance
against the expense of defending any suit for serious and willful
misconduct, against an employer or his or her agent, and insurance to
employees and other persons of the compensation fixed by the workers'
compensation laws for employees and their dependents. Any
appropriation made therefrom or thereto before the effective date of
this code shall continue to be available for the purposes for which
it was made.
The board of directors of the State Compensation Insurance Fund is
composed of five members, one of whom shall be from organized labor,
appointed by the Governor. The Governor shall appoint the
chairperson who shall serve at the pleasure of the Governor. The
Director of Industrial Relations, the Speaker of the Assembly, and
the President pro Tempore of the Senate, or their designees, shall be
ex officio, nonvoting members of the board, and shall not be counted
as members of the board for quorum purposes or any other purpose.
The term of office of the members of the board, other than that of
the director, the Speaker of the Assembly, and the President pro
Tempore of the Senate, shall be five years and they shall hold office
until the appointment and qualification of their successors. The
term of office of the first additional member appointed pursuant to
amendment of this section effective January 1, 1990, shall expire on
January 15, 1995. Commencing January 15, 1991, the terms of office
of other members shall be extended to five years as each four-year
term expires, so that one member's term of office expires January 15
of each year. Each member shall receive his or her actual and
necessary traveling expenses incurred in the performance of his or
her duty as a member and, with the exception of the ex officio
members, one hundred dollars ($100) for each day of his or her actual
attendance at meetings of the board. In order to qualify for
membership on the board, each member other than the ex officio
members shall have been a policyholder or the employee or member of a
policyholder in the State Compensation Insurance Fund for one year
immediately preceding the appointment, and must continue in this
status during the period of his or her membership.
SEC. 8. Section 11771.5 is added to the Insurance Code, to read:
11771.5. Any advertising of the State Compensation Insurance Fund
shall include the following disclaimer: "The State Compensation
Insurance Fund is not a branch of the State of California."
SEC. 9. Section 11783 of the Insurance Code is amended to read:
11783. The State Compensation Insurance Fund may:
(a) Sue and be sued in all actions arising out of any act or
omission in connection with its business or affairs.
(b) Enter into any contracts or obligations relating to the State
Compensation Insurance Fund which are authorized or permitted by law.
(c) Invest and reinvest the moneys belonging to the fund as
provided by this chapter.
(d) Conduct all business and affairs and perform all acts relating
to the fund whether or not specifically designated in this chapter.
(e) Commission an independent study, with the assistance of an
investment banking firm, to determine the feasibility of the State
Compensation Insurance Fund issuing bonds or securities. The study
may include, among other things, the purpose for issuing bonds and
any potential adverse consequences that may arise from that issuance.
SEC. 10. Section 11784 of the Insurance Code is amended to read:
11784. In conducting the business and affairs of the fund, the
president of the fund may do any of the following:
(a) Enter into contracts of workers' compensation insurance.
(b) Sell annuities covering compensation benefits.
(c) Decline to insure any risk in which the minimum requirements
of the industrial accident prevention authorities with regard to
construction, equipment, and operation are not complied with, or
which is beyond the safe carrying of the fund. Otherwise, he or she
shall not refuse to insure any workers' compensation risk under state
law, tendered with the premium therefor.
(d) Reinsure any risk or any part thereof.
(e) Cause to be inspected and audited the payrolls of employers
applying to the fund for insurance.
(f) Make rules for the settlement of claims against the fund and
determine to whom and through whom the payments of compensation are
to be made.
(g) Contract with physicians and surgeons, and hospitals, for
medical and surgical treatment and the care and nursing of injured
persons entitled to benefits from the fund.
SEC. 11. Section 11785 of the Insurance Code is amended to read:
11785. The board of directors shall appoint a president of the
fund and fix his or her salary. The president shall manage and
conduct the business and affairs of the fund under the general
direction and subject to the approval of the board of directors, and
shall perform other duties as the board of directors prescribes.
SEC. 12. Section 11786 of the Insurance Code is amended to read:
11786. Before entering on the duties of his or her office, the
president shall qualify by giving an official bond approved by the
board of directors in the sum of fifty thousand dollars ($50,000) and
by taking and subscribing to an official oath. The approval of the
board shall be by written endorsement on the bond. The bond shall be
filed in the office of the Secretary of State.
SEC. 13. Section 11787 of the Insurance Code is amended to read:
11787. The board of directors may delegate to the president of
the fund, under those rules and regulations and subject to those
conditions as it from time to time prescribes, any power, function,
or duty conferred by law on the board of directors in connection with
the fund or in connection with the administration, management, and
conduct of the business and affairs of the fund. The president may
exercise those powers and functions and perform those duties with the
same force and effect as the board of directors, but subject to its
approval.
SEC. 14. Section 11820 of the Insurance Code is amended to read:
11820. Subject to the provisions of Article 2 (commencing with
Section 11730) of Chapter 3, the board of directors shall establish
the rates to be charged by the State Compensation Insurance Fund for
insurance issued by it. These rates shall be fixed with due regard to
the physical hazards of each industry, occupation, or employment.
SEC. 15. Section 11822 of the Insurance Code is amended to read:
11822. The rates fixed by the board of directors shall be that
percentage of the payroll of any employer which, in the long run and
on the average, will produce a sufficient sum, when invested in a way
as to realize the maximum return consistent with safe and prudent
management practices:
(a) To carry all claims to maturity. The rates shall be based
upon the "reserve" and not upon the "assessment" plan.
(b) To meet the reasonable expenses of conducting the business of
the fund.
(c) To produce a reasonable surplus to cover the catastrophe
hazard.
SEC. 16. Section 11823 of the Insurance Code is repealed.
SEC. 17. Section 11860 of the Insurance Code is amended to read:
11860. Each quarter the president of the State Compensation
Insurance Fund shall make a report to the Governor of the business
done by the State Compensation Insurance Fund during the previous
quarter and a statement of the fund's resources and liabilities at
the close of that previous quarter. The State Compensation Insurance
Fund shall, at its own expense, hire a recognized firm of certified
public accountants to audit annually the books and records of the
State Compensation Insurance Fund and cause an abstract summary
thereof to be published one or more times in at least two newspapers
of general circulation in the state. The president of the fund shall
additionally provide the commissioner with all reports required by
law to be made to him or her by other insurers.
SEC. 18. Section 62.6 of the Labor Code is amended to read:
62.6. (a) The director shall levy and collect assessments from
employers in accordance with subdivision (b), as necessary, to
collect the aggregate amount determined by the Fraud Assessment
Commission pursuant to Section 1872.83 of the Insurance Code.
Revenues derived from the assessments shall be deposited in the
Workers' Compensation Fraud Account in the Insurance Fund and shall
only be expended, upon appropriation by the Legislature, for the
investigation and prosecution of workers' compensation fraud and the
willful failure to secure payment of workers' compensation, as
prescribed by Section 1872.83 of the Insurance Code.
(b) 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 and regulations
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 to be 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.
SEC. 19. Section 75 of the Labor Code is amended to read:
75. (a) There is in the department the Commission on Health and
Safety and Workers' Compensation. The commission shall be composed
of eight voting members. Four voting members shall represent
organized labor, and four voting members shall represent employers.
Not more than one employer member shall represent public agencies.
Two of the employer and two of the labor members shall be appointed
by the Governor. The Senate Committee on Rules and the Speaker of
the Assembly shall each appoint one employer and one labor
representative. The public employer representative shall be
appointed by the Governor. No action of the commission shall be
valid unless agreed to by a majority of the membership and by not
less than two members representing organized labor and two members
representing employers.
(b) The commission shall select one of the members representing
organized labor to chair the commission during the 1994 calendar
year, and thereafter the commission shall alternatively select an
employer and organized labor representative to chair the commission
for one-year terms.
(c) The initial terms of the members of the commission shall be
four years, and they shall hold office until the appointment of a
successor. However, the initial terms of one employer and one labor
member appointed by the Governor shall expire on December 31, 1995;
the initial terms of the members appointed by the Senate Committee on
Rules shall expire December 31, 1996; the initial terms of the
members appointed by the Speaker of the Assembly shall expire on
December 31, 1997; and the initial term of one employer and one labor
member appointed by the Governor shall expire on December 31, 1998.
Any vacancy shall be filled by appointment to the unexpired term.
(d) The commission shall meet every other month and upon the call
of the chair. Meetings shall be open to the public. Members of the
commission shall receive one hundred dollars ($100) for each day of
their actual attendance at meetings of the commission and other
official business of the commission and shall also receive their
actual and necessary traveling expenses incurred in the performance
of their duty as a member. Payment of per diem and traveling
expenses shall be made from the Workers' Compensation Administration
Revolving Fund, when appropriated by the Legislature.
SEC. 20. Section 77 of the Labor Code is amended to read:
77. (a) The commission shall conduct a continuing examination of
the workers' compensation system, as defined in Section 4 of Article
XIV of the California Constitution, and of the state's activities to
prevent industrial injuries and occupational diseases. The
commission may conduct or contract for studies it deems necessary to
carry out its responsibilities. In carrying out its duties, the
commission shall examine other states' workers' compensation programs
and activities to prevent industrial injuries and occupational
diseases. All state departments and agencies, and any rating
organization licensed by the Insurance Commissioner pursuant to
Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of
Division 2 of the Insurance Code, shall cooperate with the commission
and upon reasonable request provide information and data in their
possession that the commission deems necessary for the purpose of
carrying out its responsibilities. The commission shall issue an
annual report on the state of the workers' compensation system,
including recommendations for administrative or legislative
modifications which would improve the operation of the system. The
report shall be made available to the Governor, the Legislature, and
the public on request.
(b) On or before July 1, 2003, and periodically thereafter as it
deems necessary, the commission shall issue a report and
recommendations on the improvement and simplification of the notices
required to be provided by insurers and self-insured employers.
(c) The commission succeeds to, and is vested with, all of the
powers, duties, purposes, responsibilities, and jurisdiction of the
Health and Safety Commission which is hereby abolished, including the
administration of grants to assist in establishing effective
occupational injury and illness prevention programs.
SEC. 21. Section 78 of the Labor Code is amended to read:
78. (a) The commission shall review and approve applications from
employers and employee organizations, as well as applications
submitted jointly by an employer organization and an employee
organization, for grants to assist in establishing effective
occupational injury and illness prevention programs. The commission
shall establish policies for the evaluation of these applications and
shall give priority to applications proposing to target high-risk
industries and occupations, including those with high injury or
illness rates, and those in which employees are exposed to one or
more hazardous substances or conditions or where there is a
demonstrated need for research to determine effective strategies for
the prevention of occupational illnesses or injuries.
(b) Civil and administrative penalties assessed and collected
pursuant to Sections 129.5 and 4628 shall be deposited in the Workers'
Compensation Administration Revolving Fund. Moneys in the fund,
when appropriated by the Legislature, shall be expended by the
department, upon approval by the commission, for funding the grants
under subdivision (a), and by the commission for payment of the
commission's expenses incurred under this chapter.
SEC. 22. Section 90.3 is added to the Labor Code, to read:
90.3. (a) It is the policy of this state to vigorously enforce
the laws requiring employers to secure the payment of compensation as
required by Section 3700 and to protect employers who comply with
the law from those who attempt to gain a competitive advantage at the
expense of their workers by failing to secure the payment of
compensation.
(b) In order to ensure that the laws requiring employers to secure
the payment of compensation are adequately enforced, the Labor
Commissioner shall establish and maintain a program for targeting
employers in industries with the highest incidence of unlawfully
uninsured employers. The industries and employers shall be
identified from data from the Uninsured Employers' Fund, the
Employment Development Department, the rating organizations licensed
by the Insurance Commissioner pursuant to Article 3 (commencing with
Section 11750) of Chapter 3 of Part 3 of Division 2 of the Insurance
Code, and any other sources deemed likely to lead to the
identification of unlawfully uninsured employers. All state
departments and agencies and any rating organization licensed by the
Insurance Commissioner pursuant to Article 3 (commencing with Section
11750) of Chapter 3 of Part 3 of Division 2 of the Insurance Code
shall cooperate with the Labor Commissioner and on reasonable request
provide information and data in their possession reasonably
necessary to carry out the program.
(c) As part of the program, the Labor Commissioner shall establish
procedures for ensuring that employers with payroll but with no
record of workers' compensation coverage are contacted and, if no
valid reason for the lack of record of coverage is shown, inspected
on a priority basis.
(d) The Labor Commissioner shall annually report to the
Legislature, not later than March 1, concerning the effectiveness of
the program. The report shall include, but not be limited to, all of
the following:
(1) The number of unlawfully uninsured employers identified
pursuant to the program.
(2) The number of employers matched to records of insurance
coverage.
(3) The number of employers notified that there was no record of
their insurance coverage.
(4) The number of employers inspected.
(5) The number and amount of penalties assessed pursuant to
Section 3722 as a result of the program.
SEC. 23. Section 90.5 of the Labor Code is amended to read:
90.5. (a) It is the policy of this state to vigorously enforce
minimum labor standards in order to ensure employees are not required
or permitted to work under substandard unlawful conditions or for
employers that have not secured the payment of compensation, and to
protect employers who comply with the law from those who attempt to
gain a competitive advantage at the expense of their workers by
failing to comply with minimum labor standards.
(b) In order to ensure that minimum labor standards are adequately
enforced, the Labor Commissioner shall establish and maintain a
field enforcement unit, which shall be administratively and
physically separate from offices of the division that accept and
determine individual employee complaints. The unit shall have
offices in Los Angeles, San Francisco, San Jose, San Diego,
Sacramento, and any other locations that the Labor Commissioner deems
appropriate. The unit shall have primary responsibility for
administering and enforcing those statutes and regulations most
effectively enforced through field investigations, including Sections
226, 1021, 1021.5, 1193.5, 1193.6, 1194.5, 1197, 1198, 1771, 1776,
1777.5, 2651, 2673, 2675, and 3700, in accordance with the plan
adopted by the Labor Commissioner pursuant to subdivision (c).
Nothing in this section shall be construed to limit the authority of
this unit in enforcing any statute or regulation in the course of its
investigations.
(c) The Labor Commissioner shall adopt an enforcement plan for the
field enforcement unit. The plan shall identify priorities for
investigations to be undertaken by the unit that ensure the available
resources will be concentrated in industries, occupations, and areas
in which employees are relatively low paid and unskilled, and those
in which there has been a history of violations of the statutes cited
in subdivision (b), and those with high rates of noncompliance with
Section 3700.
(d) The Labor Commissioner shall annually report to the
Legislature, not later than March 1, concerning the effectiveness of
the field enforcement unit. The report shall include, but not be
limited to, all of the following:
(1) The enforcement plan adopted by the Labor Commissioner
pursuant to subdivision (c), and the rationale for the priorities
identified in the plan.
(2) The number of establishments investigated by the unit, and the
number of types of violations found.
(3) The amount of wages found to be unlawfully withheld from
workers, and the amount of unpaid wages recovered for workers.
(4) The amount of penalties and unpaid wages transferred to the
General Fund as a result of the efforts of the unit.
SEC. 23.5. The heading of Chapter 5 (commencing with Section 110)
of Division 1 of the Labor Code is amended to read:
CHAPTER 5. DIVISION OF WORKERS' COMPENSATION
SEC. 24. 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.
(f) "Court administrator" means the administrator of the workers'
compensation adjudicatory process at the trial level.
SEC. 25. Section 123 of the Labor Code is amended to read:
123. The administrative director may employ necessary assistants,
officers, experts, statisticians, actuaries, accountants, workers'
compensation administrative law judges, stenographic shorthand
reporters, legal secretaries, disability evaluation raters, program
technicians, and other employees to implement new, efficient court
management systems. The salaries of the workers' compensation
administrative law judges shall be fixed by the Department of
Personnel Administration for a class of positions which perform
judicial functions.
SEC. 26. Section 123.3 of the Labor Code is amended to read:
123.3. Any official reporter employed by the administrative
director shall render stenographic or clerical assistance as directed
by the presiding workers' compensation administrative law judge of
the office to which the reporter is assigned, when the presiding
workers' compensation administrative law judge determines that the
reporter is not engaged in the performance of any other duty imposed
by law.
SEC. 27. Section 123.5 of the Labor Code is amended to read:
123.5. (a) Workers' compensation administrative law judges
employed by the administrative director and supervised by the court
administrator pursuant to this chapter shall be taken from an
eligible list of attorneys licensed to practice law in this state,
who have the qualifications prescribed by the State Personnel Board.
In establishing eligible lists for this purpose, state civil service
examinations shall be conducted in accordance with the State Civil
Service Act (Part 2 (commencing with Section 18500) of Division 5 of
Title 2 of the Government Code). Every workers' compensation judge
shall maintain membership in the State Bar of California during his
or her tenure.
A workers' compensation administrative law judge may not receive
his or her salary as a workers' compensation administrative law judge
while any cause before the workers' compensation administrative law
judge remains pending and undetermined for 90 days after it has been
submitted for decision.
(b) All workers' compensation administrative law judges appointed
on or after January 1, 2003, shall be attorneys licensed to practice
law in California for five or more years prior to their appointment
and shall have experience in workers' compensation law.
(c) All workers' compensation administrative law judges shall be
subject to the jurisdiction of the Commission on Judicial
Performance.
SEC. 28. Section 123.6 of the Labor Code is amended to read:
123.6. (a) All workers' compensation administrative law judges
employed by the administrative director and supervised by the court
administrator shall subscribe to the Code of Judicial Ethics adopted
by the Supreme Court pursuant to subdivision (m) of Section 18 of
Article VI of the California Constitution for the conduct of judges
and shall not otherwise, directly or indirectly, engage in conduct
contrary to that code or to the commentary to the Code of Judicial
Ethics made by the California Judges Association.
The administrative director shall adopt regulations to enforce
this section after consideration of recommendations from the court
administrator. Existing regulations shall remain in effect until new
regulations based on the recommendations of the court administrator
have become effective. To the extent possible, the rules shall be
consistent with the procedures established by the Commission on
Judicial Performance for regulating the activities of state judges,
and, to the extent possible, with the gift, honoraria, and travel
restrictions on legislators contained in the Political Reform Act of
1974 (Title 9 (commencing with Section 81000) of the Government
Code).
(b) Honoraria or travel allowed by the court administrator, and
not otherwise prohibited by this section in connection with any
public or private conference, convention, meeting, social event, or
like gathering, the cost of which is significantly paid for by
attorneys who practice before the board, may not be accepted unless
the court administrator has provided prior approval in writing to the
workers' compensation administrative law judge allowing him or her
to accept those payments.
SEC. 29. Section 124 of the Labor Code is amended to read:
124. (a) In administering and enforcing this division and
Division 4 (commencing with Section 3200), the division shall protect
the interests of injured workers who are entitled to the timely
provision of compensation.
(b) The administrative director, in consultation with the court
administrator, shall advise the Industrial Medical Council on a form
adopted by the council whether individual qualified medical
evaluators have prepared formal medical evaluations that can be
satisfactorily rated by the office.
(c) Forms and notices required to be given to employees by the
division shall be in English and Spanish.
SEC. 30. Section 127 of the Labor Code is amended to read:
127. The administrative director and court administrator may:
(a) Charge and collect fees for copies of papers and records, for
certified copies of official documents and orders or of the evidence
taken or proceedings had, for transcripts of testimony, and for
inspection of case files not stored in the place where the inspection
is requested. The administrative director shall fix those fees in
an amount sufficient to recover the actual costs of furnishing the
services. No fees for inspection of case files shall be charged to
an injured employee or his or her representative.
(b) Publish and distribute from time to time, in addition to the
reports to the Governor, further reports and pamphlets covering the
operations, proceedings, and matters relative to the work of the
division.
(c) Prepare, publish, and distribute an office manual, for which a
reasonable fee may be charged, and to which additions, deletions,
amendments, and other changes from time to time may be adopted,
published, and distributed, for which a reasonable fee may be charged
for the revision, or for which a reasonable fee may be fixed on an
annual subscription basis.
(d) Fix and collect reasonable charges for publications issued.
SEC. 31. Section 127.5 is added to the Labor Code, to read:
127.5. In the exercise of his or her functions, the court
administrator shall further the interests of uniformity and
expedition of proceedings before workers' compensation administrative
law judges, assure that all workers' compensation administrative law
judges are qualified and adhere to deadlines mandated by law or
regulations, and manage district office procedural matters at the
trial level.
SEC. 32. Section 127.6 is added to the Labor Code, to read:
127.6. (a) The administrative director shall, in consultation
with the Commission on Health and Safety and Workers' Compensation,
the Industrial Medical Council, other state agencies, and researchers
and research institutions with expertise in health care delivery and
occupational health care service, conduct a study of medical
treatment provided to workers who have sustained industrial injuries
and illnesses. The study shall focus on, but not be limited to, all
of the following:
(1) Factors contributing to the rising costs and utilization of
medical treatment and case management in the workers' compensation
system.
(2) An evaluation of case management procedures that contribute to
or achieve early and sustained return to work within the employee's
temporary and permanent work restrictions.
(3) Performance measures for medical services that reflect patient
outcomes.
(4) Physician utilization, quality of care, and outcome
measurement data.
(5) Patient satisfaction.
(b) The administrative director shall begin the study on or before
July 1, 2003, and shall report and make recommendations to the
Legislature based on the results of the study on or before July 1,
2004.
(c) In implementing this section, the administrative director
shall ensure the confidentiality and protection of patient-specific
data.
SEC. 33. Section 129 of the Labor Code is amended to read:
129. (a) To make certain that injured workers, and their
dependents in the event of their death, receive promptly and
accurately the full measure of compensation to which they are
entitled, the administrative director shall audit insurers,
self-insured employers, and third-party administrators to determine
if they have met their obligations under this code. Each audit
subject shall be audited at least once every five years. The audit
subjects shall be selected and the audits conducted pursuant to
subdivision (b). The results of audits of insurers shall be provided
to the Insurance Commissioner, and the results of audits of
self-insurers and third-party administrators shall be provided to the
Director of Industrial Relations. Nothing in this section shall
restrict the authority of the Director of Industrial Relations or the
Insurance Commissioner to audit their licensees.
(b) The administrative director shall schedule and conduct audits
as follows:
(1) A profile audit review of every audit subject shall be
conducted once every five years and on additional occasions indicated
by target audit criteria. The administrative director shall
annually establish a profile audit review performance standard that
will identify the poorest performing audit subjects.
(2) A full compliance audit shall be conducted of each profile
audited subject failing to meet or exceed the profile audit review
performance standard. The full compliance audit shall be a
comprehensive and detailed evaluation of the audit subject's
performance. The administrative director shall annually establish a
full compliance audit performance standard that will identify the
audit subjects that are performing satisfactorily. Any full
compliance audit subject that fails to meet or exceed the full
compliance audit performance standard shall be audited again within
two years.
(3) A targeted profile audit review or a full compliance audit may
be conducted at any time in accordance with target audit criteria
adopted by the administrative director. The target audit criteria
shall be based on information obtained from benefit notices, from
information and assistance officers, and from other reliable sources
providing factual information that indicates an insurer, self-insured
employer, or third-party administrator is failing to meet its
obligations under this division or Division 4 (commencing with
Section 3200) or the regulations of the administrative director.
(c) If, as a result of a profile audit review or a full compliance
audit, the administrative director determines that any compensation,
interest, or penalty is due and unpaid to an employee or dependent,
the administrative director shall issue and cause to be served upon
the insurer, self-insured employer, or third-party administrator a
notice of assessment detailing the amounts due and unpaid in each
case, and shall order the amounts paid to the person entitled
thereto. The notice of assessment shall be served personally or by
registered mail in accordance with subdivision (c) of Section 11505
of the Government Code. A copy of the notice of assessment shall
also be sent to the affected employee or dependent.
If the amounts are not paid within 30 days after service of the
notice of assessment, the employer shall also be liable for
reasonable attorney's fees necessarily incurred by the employee or
dependent to obtain amounts due. The administrative director shall
advise each employee or dependent still owed compensation after this
30-day period of his or her rights with respect to the commencement
of proceedings to collect the compensation owed. Amounts unpaid
because the person entitled thereto cannot be located shall be paid
to the Workers' Compensation Administration Revolving Fund. The
Director of Industrial Relations shall promulgate rules and
regulations establishing standards and procedures for the payment of
compensation from moneys deposited in the Workers' Compensation
Administration Revolving Fund whenever the person entitled thereto
applies for compensation.
(d) A determination by the administrative director that an amount
is or is not due to an employee or dependent shall not in any manner
limit the jurisdiction or authority of the appeals board to determine
the issue.
(e) Annually, commencing on April 1, 1991, the administrative
director shall publish a report detailing the results of audits
conducted pursuant to this section during the preceding calendar
year. The report shall include the name of each insurer,
self-insured employer, and third-party administrator audited during
that period. For each insurer, self-insured employer, and
third-party administrator audited, the report shall specify the total
number of files audited, the number of violations found by type and
amount of compensation, interest and penalties payable, and the
amount collected for each violation. The administrative director
shall also publish and make available to the public on request a list
ranking all insurers, self-insured employers, and third-party
administrators audited during the period according to their
performance measured by the profile audit review and full compliance
audit performance standards.
These reports shall not identify the particular claim file that
resulted in a particular violation or penalty. Except as required by
this subdivision or other provisions of law, the contents of
individual claim files and auditor's working papers shall be
confidential. Disclosure of claim information to the administrative
director pursuant to an audit shall not waive the provisions of the
Evidence Code relating to privilege.
(f) A profile audit review of the adjustment of claims against the
Uninsured Employers Fund by the claims and collections unit of the
Division of Workers' Compensation shall be conducted at least every
five years. The results of this profile audit review shall be
included in the report required by subdivision (e).
SEC. 34. Section 129.5 of the Labor Code is amended to read:
129.5. (a) The administrative director may assess an
administrative penalty against an insurer, self-insured employer, or
third-party administrator for any of the following:
(1) Failure to comply with the notice of assessment issued
pursuant to subdivision (c) of Section 129 within 15 days of receipt.
(2) Failure to pay when due the undisputed portion of an indemnity
payment, the reasonable cost of medical treatment of an injured
worker, or a charge or cost implementing an approved vocational
rehabilitation plan.
(3) Failure to comply with any rule or regulation of the
administrative director.
(b) The administrative director shall promulgate regulations
establishing a schedule of violations and the amount of the
administrative penalty to be imposed for each type of violation. The
schedule shall provide for imposition of a penalty of up to one
hundred dollars ($100) for each violation of the less serious type
and for imposition of penalties in progressively higher amounts for
the most serious types of violations to be set at up to five thousand
dollars ($5,000) per violation. The administrative director is
authorized to impose penalties pursuant to rules and regulations
which give due consideration to the appropriateness of the penalty
with respect to the following factors:
(1) The gravity of the violation.
(2) The good faith of the insurer, self-insured employer, or
third-party administrator.
(3) The history of previous violations, if any.
(4) The frequency of the violations.
(5) Whether the audit subject has met or exceeded the profile
audit review performance standard.
(6) Whether a full compliance audit subject has met or exceeded
the full compliance audit performance standard.
(7) The size of the audit subject location.
(c) The administrative director shall assess penalties as follows:
(1) If, after a profile audit review, the administrative director
determines that the profile audit subject met or exceeded the profile
audit review performance standard, no penalties shall be assessed
under this section, but the audit subject shall be required to pay
any compensation due and penalties due under subdivision (d) of
Section 4650 as provided in subdivision (c) of Section 129.
(2) If, after a full compliance audit, the administrative director
determines that the audit subject met or exceeded the full
compliance audit performance standards, penalties for unpaid or late
paid compensation, but no other penalties under this section, shall
be assessed. The audit subject shall be required to pay any
compensation due and penalties due under subdivision (d) of Section
4650 as provided in subdivision (c) of Section 129.
(3) If, after a full compliance audit, the administrative director
determines that the audit subject failed to meet the full compliance
audit performance standards, penalties shall be assessed as provided
in a full compliance audit failure penalty schedule to be adopted by
the administrative director. The full compliance audit failure
penalty schedule shall adjust penalty levels relative to the size of
the audit location to mitigate inequality between total penalties
assessed against small and large audit subjects. The penalty amounts
provided in the full compliance audit failure penalty schedule for
the most serious type of violations shall not be limited by
subdivision (b), but in no event shall the penalty for a single
violation exceed forty thousand dollars ($40,000).
(d) The notice of penalty assessment shall be served personally or
by registered mail in accordance with subdivision (c) of Section
11505 of the Government Code. The notice shall be in writing and
shall describe the nature of the violation, including reference to
the statutory provision or rule or regulation alleged to have been
violated. The notice shall become final and the assessment shall be
paid unless contested within 15 days of receipt by the insurer,
self-insured employer, or third-party administrator.
(e) In addition to the penalty assessments permitted by
subdivisions (a), (b), and (c), the administrative director may
assess a civil penalty, not to exceed one hundred thousand dollars
($100,000), upon finding, after hearing, that an employer, insurer,
or third-party administrator for an employer has knowingly committed
or performed with sufficient frequency so as to indicate a general
business practice any of the following:
(1) Induced employees to accept less than compensation due, or
made it necessary for employees to resort to proceedings against the
employer to secure compensation.
(2) Refused to comply with known and legally indisputable
compensation obligations.
(3) Discharged or administered compensation obligations in a
dishonest manner.
(4) Discharged or administered compensation obligations in a
manner as to cause injury to the public or those dealing with the
employer or insurer.
Any employer, insurer, or third-party administrator that fails to
meet the full compliance audit performance standards in two
consecutive full compliance audits shall be rebuttably presumed to
have engaged in a general business practice of discharging and
administering its compensation obligations in a manner causing injury
to those dealing with it.
Upon a second or subsequent finding, the administrative director
shall refer the matter to the Insurance Commissioner or the Director
of Industrial Relations and request that a hearing be conducted to
determine whether the certificate of authority, certificate of
consent to self-insure, or certificate of consent to administer
claims of self-insured employers, as the case may be, shall be
revoked.
(f) An insurer, self-insured employer, or third-party
administrator may file a written request for a conference with the
administrative director within seven days after receipt of a notice
of penalty assessment issued pursuant to subdivision (a) or (c).
Within 15 days of the conference, the administrative director shall
issue a notice of findings and serve it upon the contesting party by
registered or certified mail. Any amount found due by the
administrative director shall become due and payable 30 days after
receipt of the notice of findings. The 30-day period shall be tolled
during any appeal. A writ of mandate may be taken from the findings
to the appropriate superior court upon the execution by the
contesting party of a bond to the state in the principal sum that is
double the amount found due and ordered by the administrative
director, on the condition that the contesting party shall pay any
judgment and costs rendered against it for the amount.
(g) An insurer, self-insured employer, or third-party
administrator may file a written request for a hearing before the
Workers' Compensation Appeals Board within seven days after receipt
of a notice of penalty assessment issued pursuant to subdivision (e).
Within 30 days of the hearing, the appeals board shall issue
findings and orders and serve them upon the contesting party in the
manner provided in its rules. Any amount found due by the appeals
board shall become due and payable 45 days after receipt of the
notice of findings. Judicial review of the findings and order shall
be had in the manner provided by Article 2 (commencing with Section
5950) of Chapter 7 of Part 4 of Division 4. The 45-day period shall
be tolled during appellate proceedings upon execution by the
contesting party of a bond to the state in a principal sum that is
double the amount found due and ordered by the appeals board on the
condition that the contesting party shall pay the amount ultimately
determined to be due and any costs awarded by an appellate court.
(h) Nothing in this section shall create nor eliminate a civil
cause of action for the employee and his or her dependents.
(i) All moneys collected under this section shall be deposited in
the State Treasury and credited to the Workers' Compensation
Administration Revolving Fund.
SEC. 35. Section 133 of the Labor Code is amended to read:
133. The Division of Workers' Compensation, including the
administrative director, the court administrator, and the appeals
board, shall have power and jurisdiction to do all things necessary
or convenient in the exercise of any power or jurisdiction conferred
upon it under this code.
SEC. 36. Section 138 of the Labor Code is amended to read:
138. The administrative director and the court administrator may
each appoint a deputy to act during that time as he or she may be
absent from the state due to official business, vacation, or illness.
SEC. 37. Section 138.1 of the Labor Code is amended to read:
138.1. (a) The administrative director shall be appointed by the
Governor with the advice and consent of the Senate and shall hold
office at the pleasure of the Governor. He or she shall receive the
salary provided for by Chapter 6 (commencing with Section 11550) of
Part 1 of Division 3 of Title 2 of the Government Code.
(b) The court administrator shall be appointed by the Governor
with the advice and consent of the Senate. The court administrator
shall hold office at the pleasure of the administrative director.
The court administrator shall receive the salary provided for by
Chapter 6 (commencing with Section 11550) of Part 1 of Division 3 of
Title 2 of the Government Code.
SEC. 38. Section 138.2 of the Labor Code is amended to read:
138.2. (a) The headquarters of the Division of Workers'
Compensation shall be based at and operated from a centrally located
city.
The administrative director and the court administrator shall have
an office in that city with suitable rooms, necessary office
furniture, stationery, and supplies, and may rent quarters in other
places for the purpose of establishing branch or service offices, and
for that purpose may provide those offices with necessary furniture,
stationery and supplies.
(b) The administrative director shall provide suitable rooms, with
necessary office furniture, stationery and supplies, for the appeals
board at the centrally located city in which the board shall be
based and from which it shall operate, and may rent quarters in other
places for the purpose of establishing branch or service offices for
the appeals board, and for that purpose may provide those offices
with necessary furniture, stationery, and supplies.
(c) All meetings held by the administrative director shall be open
and public. Notice thereof shall be published in papers of general
circulation not more than 30 days and not less than 10 days prior to
each meeting in Sacramento, San Francisco, Fresno, Los Angeles and
San Diego. Written notice of all meetings shall be given to all
persons who request in writing directed to the administrative
director that they be given notice.
SEC. 39. Section 138.4 of the Labor Code is amended to read:
138.4. (a) For the purpose of this section, "claims administrator"
means a self-administered workers' compensation insurer; or a
self-administered self-insured employer; or a self-administered
legally uninsured employer; or a self-administered joint powers
authority; or a third-party claims administrator for an insurer, a
self-insured employer, a legally uninsured employer, or a joint
powers authority.
(b) With respect to injuries resulting in lost time beyond the
employee's work shift at the time of injury or medical treatment
beyond first aid:
(1) If the claims administrator obtains knowledge that the
employer has not provided a claim form or a notice of potential
eligibility for benefits to the employee, it shall provide the form
and notice to the employee within
three working days of its knowledge that the form or notice was
not provided.
(2) If the claims administrator cannot determine if the employer
has provided a claim form and notice of potential eligibility for
benefits to the employee, the claims administrator shall provide the
form and notice to the employee within 30 days of the administrator's
date of knowledge of the claim.
(c) The administrative director shall prescribe reasonable rules
and regulations for serving on the employee (or employee's
dependents, in the case of death), notices dealing with the payment,
nonpayment, or delay in payment of temporary disability, permanent
disability, and death benefits and the provision of vocational
rehabilitation services, notices of any change in the amount or type
of benefits being provided, the termination of benefits, the
rejection of any liability for compensation, and an accounting of
benefits paid.
SEC. 39.5. Section 139.05 of the Labor Code is repealed.
SEC. 40. Section 139.47 is added to the Labor Code, to read:
139.47. The Director of Industrial Relations shall establish and
maintain a program to encourage, facilitate, and educate employers to
provide early and sustained return to work after occupational injury
or illness. The program shall do both of the following:
(a) Develop educational materials and guides, in easily
understandable language in both print and electronic form, for
employers, health care providers, employees, and labor unions. These
materials shall address issues including, but not limited to, early
return to work, assessment of functional abilities and limitations,
development of appropriate work restrictions, job analysis, worksite
modifications, assistive equipment and devices, and available
resources.
(b) Conduct training for employee and employer organizations and
health care providers concerning the accommodation of injured
employees and the prevention of reinjury.
SEC. 41. Section 139.48 is added to the Labor Code, to read:
139.48. (a) The administrative director shall establish the
Return-to-Work Program in order to promote the early and sustained
return to work of the employee following a work-related injury or
illness.
(b) Upon submission by employers of documentation in accordance
with regulations adopted pursuant to subdivision (h), the
administrative director shall pay the wage reimbursement, workplace
modification expense reimbursement, and premium reimbursement allowed
under this section.
(c) Any employer, except the state or an employer eligible to
secure the payment of compensation pursuant to subdivision (c) of
Section 3700, may apply for a reimbursement for wages paid to an
employee who has returned to modified or alternative work, as defined
in paragraphs (5) and (6) of subdivision (a) of Section 4644, with
the employer during the period the employee is temporarily disabled
from his or her employment in accordance with all of the following:
(1) The reimbursement shall be allowed for up to 50 percent of
wages paid to the employee.
(2) The reimbursement shall be allowed for a period of no more
than 90 days, or until the employee is released to the full duties of
his or her usual occupation, or until the employee's condition
becomes permanent and stationary, whichever occurs first.
(3) The modified or alternative work is compatible with the
employee's documented work restrictions imposed by the treating
physician as a result of the work injury or illness.
(4) The reimbursement shall be paid from the Workers' Compensation
Return-to-Work Fund, created in subdivision (i), as a reimbursement
to the employer after submission of documentation of eligibility and
wages paid.
(d) The administrative director shall reimburse an employer for
expenses incurred to make workplace modifications to accommodate the
employee's return to modified or alternative work, as follows:
(1) The maximum reimbursement to an employer for expenses to
accommodate each temporarily disabled injured worker is one thousand
two hundred fifty dollars ($1,250).
(2) The maximum reimbursement to an employer for expenses to
accommodate each permanently disabled worker who is a qualified
injured worker is two thousand five hundred dollars ($2,500). If the
employer received reimbursement under paragraph (1), the amount of
the reimbursement under paragraph (1) and this paragraph shall not
exceed two thousand five hundred dollars ($2,500).
(3) The modification expenses shall be incurred in order to allow
a temporarily disabled worker to perform modified or alternative work
within physician-imposed temporary work restrictions, or to allow a
permanently disabled worker who is a qualified injured worker to
return to sustained modified or alternative employment with the
employer within physician-imposed permanent work restrictions.
(4) Allowable expenses may include physical modifications to the
worksite, equipment, devices, furniture, tools, or other necessary
costs for accommodation of the employee's restrictions.
(e) (1) An insured employer may apply to the administrative
director for reimbursement of workers' compensation insurance
premiums attributable to the sustained employment of a qualified
injured worker following the period for premium rebate provided in
subdivision (a) of Section 4638. The reimbursement shall be equal to
the standard premium computed on the wages paid by the employer to
the qualified injured worker during each 12-month period.
(2) An employer that employs 100 or fewer employees on the date of
injury may be reimbursed for 100 percent of the workers'
compensation insurance premium paid for the employee for up to two
years. An employer that employs more than 100 employees on the date
of injury may be reimbursed for 50 percent of the workers'
compensation insurance premium paid for the employee for up to two
years. The period subject to premium reimbursement shall begin on
the first day after the end of the 12-month period for premium rebate
provided in subdivision (a) of Section 4638 and shall continue for a
maximum of two years.
(3) The premium reimbursement shall be paid to the employer
annually after each consecutive period of 12 months, provided that
the qualified injured worker continues modified or alternative
employment with that employer in a regular position that pays at
least 85 percent of the employee's pre-injury wages and compensation.
(f) This section shall not create a preference in employment for
injured employees over noninjured employees. It shall be unlawful
for an employer to discriminatorily terminate, lay off, demote, or
otherwise displace an employee in order to return an industrially
injured employee to employment for the purpose of obtaining the
reimbursement set forth in subdivisions (c), (d), or (e).
(g) For purposes of this section, "employee" means a worker who
has suffered a work-related injury or illness on or after July 1,
2004.
(h) The administrative director shall adopt regulations to carry
out this section. Regulations allocating budget funds that are
insufficient to implement the maximum wage reimbursement, workplace
modification expense reimbursement, and premium reimbursement
provided for in this section shall include a prioritization schema
according to which employers with less than 100 employees shall be
given preference in the allocation of those funds.
(i) The Workers' Compensation Return-to-Work Fund is hereby
created as a special fund in the State Treasury. The fund shall be
administered by the administrative director. Moneys in the fund may
be expended by the administrative director, upon appropriation by the
Legislature, only for purposes of implementing this section. The
unencumbered balance remaining in the fund as of January 1, 2009,
shall revert to the General Fund.
(j) This section shall be operative on July 1, 2004.
(k) This section shall not be implemented unless and until funds
are appropriated by the Legislature for this purpose in the annual
Budget Act or other statute commencing with the 2004-05 fiscal year.
(l) This section shall remain in effect only until January 1,
2009, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2009, deletes or extends
that date.
SEC. 41.5. Section 139.49 is added to the Labor Code, to read:
139.49. (a) The administrative director shall contract with an
independent research organization to conduct a study and issue a
report on the Return-to-Work Program established in Section 139.48.
The study shall examine at least two years' operation of the program
and shall address all of the following:
(1) The effectiveness of the wage reimbursement, workplace
modification expense reimbursement, and premium reimbursement
components of the program.
(2) The rate of participation by insured and self-insured
employers, including information on the size and industry of
employers.
(3) Comparison of rates of utilization of modified and alternative
work before and after establishment of the program and evaluation of
whether there is an increase in sustained return to work.
(4) The impact of the program on injured employees.
(5) The cost-effectiveness of the program.
(6) Identification of potential future funding mechanisms for the
program.
(b) On or before January 1, 2008, the administrative director
shall make the report available to the public and the Legislature.
(c) This section shall remain in effect only until January 1,
2009, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2009, deletes or extends
that date.
SEC. 42. Section 3201.7 is added to the Labor Code, to read:
3201.7. (a) Except as provided in subdivisions (b) and (c), the
Department of Industrial Relations and the courts of this state shall
recognize as valid and binding any provision in a collective
bargaining agreement between a private employer or groups of
employers engaged in the aerospace or timber industries and a union
that is the recognized or certified exclusive bargaining
representative that establishes any of the following:
(1) An alternative dispute resolution system governing disputes
between employees and employers or their insurers that supplements or
replaces all or part of those dispute resolution processes contained
in this division, including, but not limited to, mediation and
arbitration. Any system of arbitration shall provide that the
decision of the arbiter or board of arbitration is subject to review
by the appeals board in the same manner as provided for
reconsideration of a final order, decision, or award made and filled
by a workers' compensation judge pursuant to the procedures set forth
in Article 1 (commencing with Section 5900) of Chapter 7 of Part 4
of Division 4, and the court of appeals pursuant to the procedures
set forth in Article 2 (commencing with Section 5950) of Chapter 7 of
Part 4 of Division 4, governing orders, decisions, or awards of the
appeals board. The findings of fact, award, order, or decision of
the arbitrator shall have the same force and effect as an award,
order, or decision of a workers' compensation administrative law
judge. Any provision for arbitration established pursuant to this
section shall not be subject to Sections 5270, 5270.5, 5271, 5272,
5273, 5275, and 5277.
(2) The use of an agreed list of providers of medical treatment
that may be the exclusive source of all medical treatment provided
under this division.
(3) The use of an agreed, limited list of qualified medical
evaluators and agreed medical evaluators that may be the exclusive
source of qualified medical evaluators and agreed medical evaluators
under this division.
(4) Joint labor management safety committees.
(5) A light-duty, modified job or return-to-work program.
(6) A vocational rehabilitation or retraining program utilizing an
agreed list of providers of rehabilitation services that may be the
exclusive source of providers of rehabilitation services under this
division.
(b) Nothing in this section shall allow a collective bargaining
agreement that diminishes the entitlement of an employee to
compensation payments for total or partial disability, temporary
disability, vocational rehabilitation, or medical treatment fully
paid by the employer as otherwise provided in this division; nor
shall any agreement authorized by this section deny to any employee
the right to representation by counsel at all stages of the
alternative dispute resolution process. The portion of any agreement
that violates this subdivision shall be declared null and void.
(c) Subdivision (a) shall apply only to the following:
(1) An employer developing or projecting an annual workers'
compensation insurance premium, in California, of two hundred fifty
thousand dollars ($250,000) or more, or any employer that paid an
annual workers' compensation insurance premium, in California, of two
hundred fifty thousand dollars ($250,000), in at least one of the
previous three years.
(2) Groups of employers engaged in a workers' compensation safety
group complying with Sections 11656.6 and 11656.7 of the Insurance
Code, and established pursuant to a joint labor management safety
committee or committees, which develops or projects annual workers'
compensation insurance premiums of two million dollars ($2,000,000)
or more.
(3) Employer or groups of employers that are self-insured in
compliance with Section 3700 that would have projected annual workers'
compensation costs that meet the requirements of paragraph (1) in
the case of employers, or paragraph (2) in the case of groups of
employers.
(d) Employers and labor representatives who meet the eligibility
requirements of this section shall be issued a letter by the
administrative director advising each employer and labor
representative that, based upon the review of all documents and
materials submitted as required by the administrative director, each
has met the eligibility requirements of this section.
(e) The premium rate for a policy of insurance issued pursuant to
this section shall not be subject to the requirements of Section
11732 or 11732.4 of the Insurance Code.
(f) No employer may establish or continue a program established
under this section until it has provided the administrative director
with all of the following:
(1) Upon its original application and whenever it is renegotiated
thereafter, a copy of the collective bargaining agreement and the
approximate number of employees who will be covered thereby.
(2) Upon its original application and annually thereafter, a valid
and active license where that license is required by law as a
condition of doing business in the state within the industries set
forth in subdivision (a).
(3) Upon its original application and annually thereafter, a
statement signed under penalty of perjury, that no action has been
taken by any administrative agency or court of the United States to
invalidate the collective bargaining agreement.
(4) The name, address, and telephone number of the contact person
of the employer.
(5) Upon its original application, a plan agreed to between an
employer and any affected union prior to the commencement of
collective bargaining, that establishes a framework for the
implementation of the system to be developed pursuant to subdivision
(a).
(6) Any other information that the administrative director deems
necessary to further the purposes of this section.
(g) No collective bargaining representative may establish or
continue to participate in a program established under this section
unless all of the following requirements are met:
(1) Upon its original application and annually thereafter, it has
provided to the administrative director a copy of its most recent
LM-2 or LM-3 filing with the United States Department of Labor, along
with a statement, signed under penalty of perjury, that the document
is a true and correct copy.
(2) It has provided to the administrative director the name,
address, and telephone number of the contact person or persons of the
collective bargaining representative or representatives.
(h) Commencing July 1, 2004, and annually thereafter, the Division
of Workers' Compensation shall report to the Director of Industrial
Relations the number of collective bargaining agreements received and
the number of employees covered by these agreements.
(i) By June 30, 2004, and annually thereafter, the Administrative
Director of the Division of Workers' Compensation shall prepare and
notify members of the Legislature that a report authorized by this
section is available upon request. The report based upon aggregate
data shall include the following:
(1) Person hours and payroll covered by agreements filed.
(2) The number of claims filed.
(3) The average cost per claim shall be reported by cost
components whenever practicable.
(4) The number of litigated claims, including the number of claims
submitted to mediation, the appeals board, or the court of appeals.
(5) The number of contested claims resolved prior to arbitration.
(6) The projected incurred costs and actual costs of claims.
(7) Safety history.
(8) The number of workers participating in vocational
rehabilitation.
(9) The number of workers participating in light-duty programs.
(10) Overall worker satisfaction.
The division shall have the authority to require those employers
and groups of employers listed in subdivision (c) to provide the data
listed above.
(j) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state. However, the Division of
Workers' Compensation shall create derivative works pursuant to
subdivisions (h) and (i) based on the collective bargaining
agreements and data. Those derivative works shall not be
confidential, but shall be public. On a monthly basis the
administrative director shall make available an updated list of
employers and unions entering into collective bargaining agreements
containing provisions authorized by this section.
SEC. 42.5. Section 3201.9 is added to the Labor Code, to read:
3201.9. (a) On or before June 30, 2004, and biannually
thereafter, the report required in subdivision (i) of Section 3201.5
and subdivision (i) of Section 3201.7 shall include updated loss
experience for all employers and groups of employers participating in
a program established under those sections. The report shall
include updated data on each item set forth in subdivision (i) of
Section 3201.5 and subdivision (i) of Section 3201.7 for the previous
year for injuries in 2003 and beyond. Updates for each program
shall be done for the original program year and for subsequent years.
The insurers, the Department of Insurance, and the rating
organization designated by the Insurance Commissioner pursuant to
Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of
Division 2 of the Insurance Code, shall provide the administrative
director with any information that the administrative director
determines is reasonably necessary to conduct the study.
(b) Commencing on and after June 30, 2004, the Insurance
Commissioner, or the commissioner's designee, shall prepare for
inclusion in the report required in subdivision (i) of Section 3201.5
and subdivision (i) of Section 3201.7 a review of both of the
following:
(1) The adequacy of rates charged for these programs, including
the impact of scheduled credits and debits.
(2) The comparative results for these programs with other programs
not subject to Section 3201.5 or Section 3201.7.
(c) Upon completion of the report, the administrative director
shall report the findings to the Legislature, the Department of
Insurance, the designated rating organization, and the programs and
insurers participating in the study.
(d) The data obtained by the administrative director pursuant to
this section shall be confidential and not subject to public
disclosure under any law of this state.
SEC. 43. Section 3501 of the Labor Code is amended to read:
3501. (a) A child under the age of 18 years, or a child of any
age found by any trier of fact, whether contractual, administrative,
regulatory, or judicial, to be physically or mentally incapacitated
from earning, shall be conclusively presumed to be wholly dependent
for support upon a deceased employee-parent with whom that child is
living at the time of injury resulting in death of the parent or for
whose maintenance the parent was legally liable at the time of injury
resulting in death of the parent, there being no surviving totally
dependent parent.
(b) A spouse to whom a deceased employee is married at the time of
death shall be conclusively presumed to be wholly dependent for
support upon the deceased employee if the surviving spouse earned
thirty thousand dollars ($30,000) or less in the twelve months
immediately preceding the death.
(c) In the event that no person qualifies as a total or partial
dependent of the deceased employee, then the surviving parent or
parents of the deceased employee shall be conclusively presumed to be
wholly dependent for support upon the deceased employee.
SEC. 44. Section 3550 of the Labor Code is amended to read:
3550. (a) Every employer subject to the compensation provisions
of this division shall post and keep posted in a conspicuous location
frequented by employees, and where the notice may be easily read by
employees during the hours of the workday, a notice that states the
name of the current compensation insurance carrier of the employer,
or when such is the fact, that the employer is self-insured, and who
is responsible for claims adjustment.
(b) Failure to keep any notice required by this section
conspicuously posted shall constitute a misdemeanor, and shall be
prima facie evidence of noninsurance.
(c) This section shall not apply with respect to the employment of
employees as defined in subdivision (d) of Section 3351.
(d) The form and content of the notice required by this section
shall be prescribed by the administrative director, after
consultation with the Commission on Health and Safety and Workers'
Compensation, and shall advise employees that all injuries should be
reported to their employer. The notice shall be easily
understandable. It shall be posted in both English and Spanish where
there are Spanish-speaking employees. The notice shall include the
following information:
(1) How to get emergency medical treatment, if needed.
(2) The kinds of events, injuries, and illnesses covered by
workers' compensation.
(3) The injured employee's right to receive medical care.
(4) The rights of the employee to select and change the treating
physician pursuant to the provisions of Section 4600.
(5) The rights of the employee to receive temporary disability
indemnity, permanent disability indemnity, vocational rehabilitation
services, and death benefits, as appropriate.
(6) To whom injuries should be reported.
(7) The existence of time limits for the employer to be notified
of an occupational injury.
(8) The protections against discrimination provided pursuant to
Section 132a.
(9) The location and telephone number of the nearest information
and assistance officer.
(e) Failure of an employer to provide the notice required by this
section shall automatically permit the employee to be treated by his
or her personal physician with respect to an injury occurring during
that failure.
(f) The form and content of the notice required to be posted by
this section shall be made available to self-insured employers and
insurers by the administrative director. Insurers shall provide this
notice to each of their policyholders, with advice concerning the
requirements of this section and the penalties for a failure to post
this notice.
SEC. 45. Section 3551 of the Labor Code is amended to read:
3551. (a) Every employer subject to the compensation provisions
of this code, except employers of employees defined in subdivision
(d) of Section 3351, shall give every new employee, either at the
time the employee is hired or by the end of the first pay period,
written notice of the information contained in Section 3550. The
content of the notice required by this section shall be prescribed by
the administrative director after consultation with the Commission
on Health and Safety and Workers' Compensation.
(b) The notice required by this section shall be easily
understandable and available in both English and Spanish. In addition
to the information contained in Section 3550, the content of the
notice required by this section shall include:
(1) Generally, how to obtain appropriate medical care for a job
injury.
(2) The role and function of the primary treating physician.
(3) A form that the employee may use as an optional method for
notifying the employer of the name of the employee's "personal
physician," as defined by Section 4600, or "personal chiropractor,"
as defined by Section 4601.
(c) The content of the notice required by this section shall be
made available to employers and insurers by the administrative
director. Insurers shall provide this notice to each of their
policyholders, with advice concerning the requirements of this
section and the penalties for a failure to provide this notice to all
employees.
SEC. 46. Section 3552 of the Labor Code is repealed.
SEC. 47. Section 3722 of the Labor Code is amended to read:
3722. (a) At the time the stop order is issued and served
pursuant to Section 3710.1, the director shall also issue and serve a
penalty assessment order requiring the uninsured employer to pay to
the director, for deposit in the State Treasury to the credit of the
Uninsured Employers Fund, the sum of one thousand dollars ($1,000)
per employee employed at the time the order is issued and served, as
an additional penalty for being uninsured at that time.
(b) At any time that the director determines that an employer has
been uninsured for a period in excess of one week during the calendar
year preceding the determination, the director may issue and serve a
penalty assessment order requiring the uninsured employer to pay to
the director, for deposit in the State Treasury to the credit of the
Uninsured Employers Fund, the greater of (1) twice the amount the
employer would have paid in workers' compensation premiums during the
period the employer was uninsured, determined according to
subdivision (c), or (2) the
sum of one thousand dollars ($1,000) per employee employed during
the period the employer was uninsured. A penalty assessment issued
and served by the director pursuant to this subdivision shall be in
lieu of, and not in addition to, any other penalty issued and served
by the director pursuant to subdivision (a).
(c) If the employer is currently insured, or becomes insured
during the period during which the penalty under subdivision (b) is
being determined, the amount an employer would have paid in workers'
compensation premiums shall be calculated by prorating the current
premium for the number of weeks the employer was uninsured. If the
employer is uninsured at the time the penalty under subdivision (b)
is being determined, the amount an employer would have paid in
workers' compensation premiums shall be calculated by applying the
weekly premium per employee calculated according to subdivision (d)
of Section 11734 of the Insurance Code to the number of weeks the
employer was uninsured. Each employee of the uninsured employer
shall be assumed to be assigned to the governing classification for
that employer as determined by the director after consultation with
the Insurance Commissioner. If the employer contends that the
assignment of the governing classification is incorrect, or that any
employee should be assigned to a different classification, the
employer has the burden to prove that the different classification
should be utilized.
(d) If upon the filing of a claim for compensation under this
division the Workers' Compensation Appeals Board finds that any
employer has not secured the payment of compensation as required by
this division and finds the claim either noncompensable or
compensable, the appeals board shall mail a copy of their findings to
the uninsured employer and the director, together with a direction
to the uninsured employer to file a verified statement pursuant to
subdivision (e).
After the time for any appeal has expired and the adjudication of
the claim has become final, the uninsured employer shall be assessed
and pay as a penalty either of the following:
(1) In noncompensable cases, two thousand dollars ($2,000) per
each employee employed at the time of the claimed injury.
(2) In compensable cases, ten thousand dollars ($10,000) per each
employee employed on the date of the injury.
(e) In order to establish the number of employees the uninsured
employer had on the date of the claimed injury in noncompensable
cases and on the date of injury in compensable cases, the employer
shall submit to the director within 10 days after service of
findings, awards, and orders of the Workers' Compensation Appeals
Board a verified statement of the number of employees in his or her
employ on the date of injury. If the employer fails to submit to the
director this verified statement or if the director disputes the
accuracy of the number of employees reported by the employer, the
director shall use any information regarding the number of employees
as the director may have or otherwise obtains.
(f) Except for penalties assessed under subdivision (b), the
maximum amount of penalties which may be assessed pursuant to this
section is one hundred thousand dollars ($100,000). Payment shall be
transmitted to the director for deposit in the State Treasury to the
credit of the Uninsured Employers Fund.
(g) (1) The Workers' Compensation Appeals Board may provide for a
summary hearing on the sole issue of compensation coverage to effect
the provisions of this section.
(2) In the event a claim is settled by the director pursuant to
subdivision (e) of Section 3715 by means of a compromise and release
or stipulations with request for award, the appeals board may also
provide for a summary hearing on the issue of compensability.
SEC. 48. Section 3762 of the Labor Code is amended to read:
3762. (a) Except as provided in subdivisions (b) and (c), the
insurer shall discuss all elements of the claim file that affect the
employer's premium with the employer, and shall supply copies of the
documents that affect the premium at the employer's expense during
reasonable business hours.
(b) 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.
(c) An insurer, third-party administrator retained by a
self-insured employer pursuant to Section 3702.1 to administer the
employer's workers' compensation claims, and those employees and
agents specified by a self-insured employer to administer the
employer's workers' compensation claims, are prohibited from
disclosing or causing to be disclosed to an employer, any medical
information, as defined in subdivision (b) of Section 56.05 of the
Civil Code, about an employee who has filed a workers' compensation
claim, except as follows:
(1) Medical information limited to the diagnosis of the mental or
physical condition for which workers' compensation is claimed and the
treatment provided for this condition.
(2) Medical information regarding the injury for which workers'
compensation is claimed that is necessary for the employer to have in
order for the employer to modify the employee's work duties.
SEC. 49. Section 3820 of the Labor Code is amended to read:
3820. (a) In enacting this section, the Legislature declares that
there exists a compelling interest in eliminating fraud in the
workers' compensation system. The Legislature recognizes that the
conduct prohibited by this section is, for the most part, already
subject to criminal penalties pursuant to other provisions of law.
However, the Legislature finds and declares that the addition of
civil money penalties will provide necessary enforcement flexibility.
The Legislature, in exercising its plenary authority related to
workers' compensation, declares that these sections are both
necessary and carefully tailored to combat the fraud and abuse that
is rampant in the workers' compensation system.
(b) It is unlawful to do any of the following:
(1) Willfully misrepresent any fact in order to obtain workers'
compensation insurance at less than the proper rate.
(2) Present or cause to be presented any knowingly false or
fraudulent written or oral material statement in support of, or in
opposition to, any claim for compensation for the purpose of
obtaining or denying any compensation, as defined in Section 3207.
(3) Knowingly solicit, receive, offer, pay, 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 soliciting or referring clients or
patients to obtain services or benefits pursuant to Division 4
(commencing with Section 3200) unless the payment or receipt of
consideration for services other than the referral of clients or
patients is lawful pursuant to Section 650 of the Business and
Professions Code or expressly permitted by the Rules of Professional
Conduct of the State Bar.
(4) Knowingly operate or participate in a service that, for
profit, refers or recommends clients or patients to obtain medical or
medical-legal services or benefits pursuant to Division 4
(commencing with Section 3200).
(5) Knowingly assist, abet, solicit, or conspire with any person
who engages in an unlawful act under this section.
(c) For the purposes of this section, "statement" includes, but is
not limited to, any notice, proof of injury, bill for services,
payment for services, hospital or doctor records, X-ray, test
results, medical-legal expenses as defined in Section 4620, or other
evidence of loss, expense, or payment.
(d) Any person who violates any provision of this section shall be
subject, in addition to any other penalties that may be prescribed
by law, to a civil penalty of not less than four thousand dollars
($4,000) nor more than ten thousand dollars ($10,000), plus an
assessment of not more than three times the amount of the medical
treatment expenses paid pursuant to Article 2 (commencing with
Section 4600) and medical-legal expenses paid pursuant to Article 2.5
(commencing with Section 4620) for each claim for compensation
submitted in violation of this section.
(e) Any person who violates subdivision (b) and who has a prior
felony conviction of an offense set forth in Section 1871.1 or 1871.4
of the Insurance Code, or in Section 549 of the Penal Code, shall be
subject, in addition to the penalties set forth in subdivision (d),
to a civil penalty of four thousand dollars ($4,000) for each item or
service with respect to which a violation of subdivision (b)
occurred.
(f) The penalties provided for in subdivisions (d) and (e) shall
be assessed and recovered in a civil action brought in the name of
the people of the State of California by any district attorney.
(g) In assessing the amount of the civil penalty the court shall
consider any one or more of the relevant circumstances presented by
any of the parties to the case, including, but not limited to, the
following: the nature and seriousness of the misconduct, the number
of violations, the persistence of the misconduct, the length of time
over which the misconduct occurred, the willfulness of the defendant'
s misconduct, and the defendant's assets, liabilities, and net worth.
(h) All penalties collected pursuant to this section shall be paid
to the Workers' Compensation Fraud Account in the Insurance Fund
pursuant to Section 1872.83 of the Insurance Code. All costs
incurred by district attorneys in carrying out this article shall be
funded from the Workers' Compensation Fraud Account. It is the
intent of the Legislature that the program instituted by this article
be supported entirely from funds produced by moneys deposited into
the Workers' Compensation Fraud Account from the imposition of civil
money penalties for workers' compensation fraud collected pursuant to
this section. All moneys claimed by district attorneys as costs of
carrying out this article shall be paid pursuant to a determination
by the Fraud Assessment Commission established by Section 1872.83 of
the Insurance Code and on appropriation by the Legislature.
SEC. 50. Section 3822 is added to the Labor Code, to read:
3822. The administrative director shall, on an annual basis,
provide to every employer, claims adjuster, third party
administrator, physician, and attorney who participates in the
workers' compensation system, a notice that warns the recipient
against committing workers' compensation fraud. The notice shall
specify the penalties that are applied for committing workers'
compensation fraud. The Fraud Assessment Commission, established by
Section 1872.83 of the Insurance Code, shall provide the
administrative director with all funds necessary to carry out this
section.
SEC. 51. 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. The notice shall be accompanied by the form prescribed by
the Industrial Medical Council for requesting assignment of a panel
of qualified medical evaluators, unless the employee is represented
by an attorney. 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 a medical
evaluation of the employee's permanent impairment and limitations
and any need for continuing medical care resulting from the injury.
For injuries occurring on or after January 1, 2003, except as
provided in subdivision (b) of Section 4064, 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.
(e) If an employee obtains a qualified medical evaluator from a
panel pursuant to subdivision (d) or pursuant to subdivision (b) of
Section 4062, and thereafter becomes represented by an attorney and
obtains an additional qualified medical evaluator, the employer shall
have a corresponding right to secure an additional qualified medical
evaluator.
(f) The represented employee shall be responsible for making an
appointment with an agreed medical evaluator.
(g) 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.
(h) 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.
(i) 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.
(j) 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
administrative director. 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 administrative director shall
calculate the permanent disability rating according to Section 4660
and serve the rating on the employee and employer.
(k) 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 administrative director 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.
(l) Within 30 days of receipt of the rating, if the employee is
unrepresented, the employee or employer may request that the
administrative director 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
administrative director 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.
(m) 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. 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 administrative
director 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.
(n) 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 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. 52. 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 of
receipt of the report if the employee is represented by an attorney
or within 30 days of receipt of the report if the employee is not
represented by an attorney. These time limits may be extended for
good cause or by mutual agreement. If the employee is represented by
an attorney, the 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. For
injuries occurring on or after January 1, 2003, except as provided in
subdivision (b) of Section 4064, 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.
(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. 53. Section 4062.9 of the Labor Code is amended to read:
4062.9. (a) For injuries occurring on or after January 1, 2003,
in cases where an additional comprehensive medical evaluation is
obtained under Section 4061 or 4062, if the employee has been treated
by his or her personal physician, or by his or her personal
chiropractor, as defined in Section 4601, who was predesignated prior
to the date of injury as provided under Section 4600, the findings
of the personal physician or personal chiropractor are presumed to be
correct. This presumption is rebuttable and may be controverted by
a preponderance of medical opinion indicating a different level of
disability. However, the presumption shall not apply where both
parties select qualified medical examiners.
(b) The administrative director, in consultation with the
Industrial Medical Council, shall develop, not later than January 1,
2004, and periodically revise as necessary thereafter, educational
materials to be used to provide treating physicians and chiropractors
with information and training in basic concepts of workers'
compensation, the role of the treating physician, the conduct of
permanent and stationary evaluations, and report writing.
SEC. 54. 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.
(b) For injuries occurring on or after January 1, 2003, if an
unrepresented employee obtains an attorney after the evaluation
pursuant to subdivision (d) of Section 4061 or subdivision (b) of
Section 4062 has been completed, the employee shall be entitled to
the same reports at employer expense as an employee who has been
represented from the time the dispute arose and those reports shall
be admissible in any proceeding before the appeals board.
(c) 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.
(d) 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, no party is prohibited from obtaining any medical evaluation
or consultation at 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.
SEC. 55. Section 4065 of the Labor Code is repealed.
SEC. 56. Section 4067 of the Labor Code is amended to read:
4067. If the jurisdiction of the appeals board is invoked
pursuant to Section 5803 upon the grounds that the effects of the
injury have recurred, increased, diminished, or terminated, a formal
medical evaluation shall be obtained pursuant to this article.
When an agreed medical evaluator or a qualified medical evaluator
selected by an unrepresented employee from a three-member panel has
previously made a formal medical evaluation of the same or similar
issues, the subsequent or additional formal medical evaluation shall
be conducted by the same agreed medical evaluator or qualified
medical evaluator, unless the workers' compensation judge has made a
finding that he or she did not rely on the prior evaluator's formal
medical evaluation, any party contested the original medical
evaluation by filing an application for adjudication, the
unrepresented employee hired an attorney and selected a qualified
medical evaluator to conduct another evaluation pursuant to
subdivision (b) of Section 4064, or the prior evaluator is no longer
qualified or readily available to prepare a formal medical
evaluation, in which case Sections 4061 or 4062, as the case may be,
shall apply as if there had been no prior formal medical evaluation.
SEC. 57. 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 or 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 or 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 or 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
or 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
or 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 or 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 or after July 1, 1996.
(8) Not less than one hundred eighty-nine dollars ($189), nor more
than nine hundred three dollars ($903) for injuries occurring on or
after January 1, 2003.
(9) Not less than one hundred eighty-nine dollars ($189), nor more
than one thousand ninety-two dollars ($1,092) for injuries occurring
on or after January 1, 2004.
(10) Not less than one hundred eighty-nine dollars ($189), nor
more than one thousand two hundred sixty dollars ($1,260) for
injuries occurring on or after January 1, 2005. Commencing on
January 1, 2006, and each January 1 thereafter, the limits specified
in this paragraph shall be increased by an amount equal to the
percentage increase in the state average weekly wage as compared to
the prior year. For purposes of this paragraph, "state average
weekly wage" means the average weekly wage paid by employers to
employees covered by unemployment insurance as reported by the United
States Department of Labor for California for the 12 months ending
March 31 of the calendar year preceding the year in which the injury
occurred.
(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 or
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 or 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
or 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 or 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 or 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 or 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 or 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 or 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 less than 70 percent: (A) not less than one
hundred fifty dollars ($150), nor more than two hundred seventy-seven
dollars and fifty cents ($277.50), for injuries occurring on or
after January 1, 2003; (B) not less than one hundred fifty-seven
dollars and fifty cents ($157.50), nor more than three hundred
dollars ($300), for injuries occurring on or after January 1, 2004;
(C) not less than one hundred fifty-seven dollars and fifty cents
($157.50), nor more than three hundred thirty dollars ($330) for
injuries occurring on or after January 1, 2005; and (D) not less than
one hundred ninety-five dollars ($195), nor more than three hundred
forty-five dollars ($345), for injuries occurring on or after January
1, 2006.
(7) When the final adjusted permanent disability rating of the
injured employee is 70 percent or greater, but less than 100 percent:
(A) not less than one hundred five dollars ($105), nor more than
two hundred fifty-two dollars ($252), for injuries occurring on or
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 or after July 1, 1995; (C) not less than one
hundred five dollars ($105), nor more than three hundred forty-five
dollars ($345), for injuries occurring on or after July 1, 1996; (D)
not less than one hundred fifty dollars ($150), nor more than three
hundred forty-five dollars ($345), for injuries occurring on or after
January 1, 2003; (E) not less than one hundred fifty-seven dollars
and fifty cents ($157.50), nor more than three hundred seventy-five
dollars ($375), for injuries occurring on or after January 1, 2004;
(F) not less than one hundred fifty-seven dollars and fifty cents
($157.50), nor more than four hundred five dollars ($405) for
injuries occurring on or after January 1, 2005; and (G) not less than
one hundred ninety-five dollars ($195), nor more than four hundred
five dollars ($405), for injuries occurring on or after January 1,
2006.
(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. 58. Section 4455 of the Labor Code is amended to read:
4455. If the injured employee is under 18 years of age, and his
or her incapacity is permanent, his or her average weekly earnings
shall be deemed, within the limits fixed in Section 4453, to be the
weekly sum that under ordinary circumstances he or she would probably
be able to earn at the age of 18 years, in the occupation in which
he or she was employed at the time of the injury or in any occupation
to which he or she would reasonably have been promoted if he or she
had not been injured. If the probable earnings at the age of 18
years cannot reasonably be determined, his or her average weekly
earnings shall be taken at the maximum limit established in Section
4453.
SEC. 59. Section 4600.1 is added to the Labor Code, to read:
4600.1. Any pharmacy providing medicines and medical supplies
required by Section 4600 shall provide the generic drug equivalent,
if a generic drug equivalent is available, unless the prescribing
physician specifically provides otherwise in writing.
SEC. 60. Section 4600.2 is added to the Labor Code, to read:
4600.2. (a) Notwithstanding Section 4600, when a self-insured
employer, group of self-insured employers, insurer of an employer, or
group of insurers contracts with a pharmacy, group of pharmacies, or
pharmacy benefit network to provide medicines and medical supplies
required by this article to be provided to injured employees, those
injured employees that are subject to the contract shall be provided
medicines and medical supplies in the manner prescribed in the
contract for as long as medicines or medical supplies are reasonably
required to cure or relieve the injured employee from the effects of
the injury.
(b) Nothing in this section shall affect the ability of
employee-selected physicians to continue to prescribe and have the
employer provide medicines and medical supplies that the physicians
deem reasonably required to cure or relieve the injured employee from
the effects of the injury.
(c) Each contract described in subdivision (a) shall comply with
standards adopted by the administrative director. In adopting those
standards, the administrative director shall seek to reduce
pharmaceutical costs and may consult any relevant studies or
practices in other states. The standards shall provide for access to
a pharmacy within a reasonable geographic distance from an injured
employee's residence.
SEC. 61. Section 4600.3 of the Labor Code is amended 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 a health care organization 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, personal chiropractor, or
personal acupuncturist that he or she has designated prior to the
injury, 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, personal chiropractor, or personal
acupuncturist. The choice shall be memorialized in writing and
maintained in the employee's personnel records. The employee who has
designated a personal physician, personal chiropractor, or personal
acupuncturist may change their designated caregiver at any time prior
to the injury. Any employee who fails to designate a personal
physician, personal chiropractor, or personal acupuncturist shall be
treated by the health care organization selected by the employer. If
the health care organization 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, this information shall be included in the
notice of contract with a health care organization.
(2) Each contract described in paragraph (1) shall comply with the
certification standards provided in Section 4600.5, and shall
provide all medical, surgical, chiropractic, acupuncture, 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 or health care
provider who is not a member of the health care organization.
(3) Insured employers, a group of self-insured employers, 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 any 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 with regard to
employees whom the bargaining agent is recognized or certified to
represent for collective bargaining purposes pursuant to state or
federal employer-employee relations law 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) When an employee is not receiving or is not eligible to
receive health care coverage for nonoccupational injuries or
illnesses provided by the employer, if 90 days from the date the
injury is reported the employee who has been receiving treatment from
a health care organization or his or her physician, chiropractor,
acupuncturist, or other agent 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, chiropractor, or acupuncturist or at a facility of his or
her own choosing within a reasonable geographic area.
(2) When an 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, chiropractor, or acupuncturist of his or
her own choice or at a facility of his or her own choice within a
reasonable geographic area if the employee or his or her physician,
chiropractor, acupuncturist, or other agent notifies his or her
employer in writing 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, but in no case
until 90 days from the date the injury was reported.
(3) 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 a participating physician on a matter
pertaining to diagnosis or treatment from a participating physician.
(f) Nothing in this section or Section 4600.5 shall be construed
to prohibit a self-insured employer, a group of self-insured
employers, or insurer from engaging in any activities permitted by
Section 4600.
(g) Notwithstanding subdivision (c), in the event that the
employer, group of employers, or the employer's workers' compensation
insurer no longer contracts with the health care organization that
has been treating an injured employee, the employee may continue
treatment provided or arranged by the health care organization. If
the employee does not choose to continue treatment by the health care
organization, the employer may control the employee's treatment for
30 days from the date the injury was reported. After that period,
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.
SEC. 61.5. Section 4600.35 is added to the Labor Code, to read:
4600.35. Any entity seeking to reimburse health care providers
for health care services rendered to injured workers on a capitated,
or per person per month basis, shall be 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. 61.7. Section 4600.5 of the Labor Code is amended 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 by the administrative director under
subdivision (e), 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, sufficient
to cover the actual cost of processing the application. A
certificate is valid for the period that 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,
that organization shall be
deemed to be a health care organization able to provide health care
pursuant to Section 4600.3 without further application. Those plans
shall maintain good standing with the Department of Managed Health
Care and meet 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) Demonstrates the capability to provide occupational medicine
and related disciplines.
(5) 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, and is in compliance with
subdivision (d) of Sections 10133 and 10133.5 of the Insurance Code,
the administrative director shall certify the organization 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
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 to 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
insurer, third-party administrator, or any other entity that the
administrative director determines meets the requirements of Section
4600.6, the administrative director shall certify the organization to
provide health care pursuant to Section 4600.3 if the director finds
that 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 relating to provider accessibility,
peer review, utilization review, quality assurance, advertising,
disclosure, medical and financial audits, and grievance systems, 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 to 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.
(7) Complies with the following requirements:
(A) An organization certified by the administrative director under
this subdivision may not 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 of that health care in return for a prepaid or
periodic charge paid by or on behalf of those employees.
(B) Every organization certified under this subdivision shall
operate on a fee-for-service basis. As used in this section, fee for
service refers to the situation where the amount of reimbursement
paid by the employer 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 organization certified under this subdivision is prohibited
from assuming risk.
(f) (1) A workers' compensation health care provider organization
authorized by the Department of Corporations on December 31, 1997,
shall be eligible for certification as a health care organization
under subdivision (e).
(2) An entity that had, on December 31, 1997, submitted an
application with the Commissioner of Corporations under Part 3.2
(commencing with Section 5150) shall be considered an applicant for
certification under subdivision (e) and shall be entitled to priority
in consideration of its application. The Commissioner of
Corporations shall provide complete files for all pending
applications to the administrative director on or before January 31,
1998.
(g) The provisions of this section shall not affect the
confidentiality or admission in evidence of a claimant's medical
treatment records.
(h) Charges for services arranged for or provided by health care
service plans certified by this section and that are paid on a
per-enrollee-periodic-charge basis shall not be subject to the
schedules adopted by the administrative director pursuant to Section
5307.1.
(i) 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.
(j) 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.
(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
Managed Health Care, 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.
(m) Individually identifiable medical information on patients
submitted to the division shall not be subject to the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code).
(n) (1) When an injured employee requests acupuncture treatment
for work-related injuries, the health care organization shall provide
the injured worker with access to the services of an acupuncturist
pursuant to guidelines for acupuncture care established by paragraph
(2). Within five working days of the employee's request to see an
acupuncturist, 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 acupuncturist for
work-related injuries that are within the guidelines for acupuncture
care established by paragraph (2). Acupuncture care rendered in
accordance with guidelines for acupuncture care established pursuant
to paragraph (2) shall be provided by duly licensed acupuncturists
affiliated with the plan.
(2) The health care organization shall establish guidelines for
acupuncture care in consultation with affiliated acupuncturists who
are participants in the health care organization's utilization review
process for acupuncture care, which may include qualified medical
evaluators. The guidelines for acupuncture care shall, at a minimum,
explicitly require the referral of any injured employee who so
requests to an affiliated acupuncturist for the evaluation or
treatment, or both, of neuromusculoskeletal conditions.
(3) Whenever a dispute concerning the appropriateness or necessity
of acupuncture care for work-related injuries arises, the dispute
shall be resolved by the health care organization's utilization
review process for acupuncture care in accordance with the health
care organization's guidelines for acupuncture care established by
paragraph (2).
Acupuncture 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
acupuncture care. Acupuncturists affiliated with the plan shall have
access to the health care organization's provider appeals process
and, in the case of acupuncture care for work-related injuries, the
review shall include review by an acupuncturist 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 acupuncture care, including the location and telephone
number where grievances may be submitted.
(5) All guidelines for acupuncture 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. 62. Section 4603.4 is added to the Labor Code, to read:
4603.4. (a) The administrative director shall adopt rules and
regulations to do all of the following:
(1) Ensure that all health care providers and facilities submit
medical bills for payment on standardized forms.
(2) Require acceptance by employers of electronic claims for
payment of medical services.
(3) Ensure confidentiality of medical information submitted on
electronic claims for payment of medical services.
(b) To the extent feasible, standards adopted pursuant to
subdivision (a) shall be consistent with existing standards under the
federal Health Insurance Portability and Accountability Act of 1996.
SEC. 62.5. Section 4628 of the Labor Code is amended to read:
4628. (a) Except as provided in subdivision (c), no person, other
than the physician who signs the medical-legal report, except a
nurse performing those functions routinely performed by a nurse, such
as taking blood pressure, shall examine the injured employee or
participate in the nonclerical preparation of the report, including
all of the following:
(1) Taking a complete history.
(2) Reviewing and summarizing prior medical records.
(3) Composing and drafting the conclusions of the report.
(b) The report shall disclose the date when and location where the
evaluation was performed; that the physician or physicians signing
the report actually performed the evaluation; whether the evaluation
performed and the time spent performing the evaluation was in
compliance with the guidelines established by the Industrial Medical
Council or the administrative director pursuant to paragraph (5) of
subdivision (j) of Section 139.2 or Section 5307.6 and shall disclose
the name and qualifications of each person who performed any
services in connection with the report, including diagnostic studies,
other than its clerical preparation. If the report discloses that
the evaluation performed or the time spent performing the evaluation
was not in compliance with the guidelines established by the
Industrial Medical Council or the administrative director, the report
shall explain, in detail, any variance and the reason or reasons
therefor.
(c) If the initial outline of a patient's history or excerpting of
prior medical records is not done by the physician, the physician
shall review the excerpts and the entire outline and shall make
additional inquiries and examinations as are necessary and
appropriate to identify and determine the relevant medical issues.
(d) No amount may be charged in excess of the direct charges for
the physician's professional services and the reasonable costs of
laboratory examinations, diagnostic studies, and other medical tests,
and reasonable costs of clerical expense necessary to producing the
report. Direct charges for the physician's professional services
shall include reasonable overhead expense.
(e) Failure to comply with the requirements of this section shall
make the report inadmissible as evidence and shall eliminate any
liability for payment of any medical-legal expense incurred in
connection with the report.
(f) Knowing failure to comply with the requirements of this
section shall subject the physician to a civil penalty of up to one
thousand dollars ($1,000) for each violation to be assessed by a
workers' compensation judge or the appeals board. All civil
penalties collected under this section shall be deposited in the
Workers' Compensation Administration Revolving Fund.
(g) A physician who is assessed a civil penalty under this section
may be terminated, suspended, or placed on probation as a qualified
medical evaluator pursuant to subdivisions (k) and (l) of Section
139.2.
(h) Knowing failure to comply with the requirements of this
section shall subject the physician to contempt pursuant to the
judicial powers vested in the appeals board.
(i) Any person billing for medical-legal evaluations, diagnostic
procedures, or diagnostic services performed by persons other than
those employed by the reporting physician or physicians, or a medical
corporation owned by the reporting physician or physicians shall
specify the amount paid or to be paid to those persons for the
evaluations, procedures, or services. This subdivision shall not
apply to any procedure or service defined or valued pursuant to
Section 5307.1.
(j) The report shall contain a declaration by the physician
signing the report, under penalty of perjury, stating:
"I declare under penalty of perjury that the information contained
in this report and its attachments, if any, is true and correct to
the best of my knowledge and belief, except as to information that I
have indicated I received from others. As to that information, I
declare under penalty of perjury that the information accurately
describes the information provided to me and, except as noted herein,
that I believe it to be true."
The foregoing declaration shall be dated and signed by the
reporting physician and shall indicate the county wherein it was
signed.
(k) The physician shall provide a curriculum vitae upon request by
a party and include a statement concerning the percent of the
physician's total practice time that is annually devoted to medical
treatment.
SEC. 63. 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.
(8) The employee and employer have agreed to self-directed
vocational rehabilitation that is approved as set forth in Section
4646.
(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) (1) 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. The plan
shall not include a period of job placement exceeding 60 days unless
the plan is exclusively utilizing transferable skills and experience
for direct placement activities. In these cases, the period of job
placement may be up to 90 days.
(2) 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:
(A) The employee's disability has deteriorated to the point where
the worker is unable to meet the physical demands of the first plan.
(B) The first plan is disrupted due to circumstances beyond the
control of the employee.
(C) 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. Those circumstances include the
deterioration of the employee's disability to the point where the
worker cannot meet the requirements of the first plan.
(3) The rehabilitation unit finds that a second plan is necessary
to provide the employee the opportunity for suitable gainful
employment. Approval for circumstances other than a change in the
employee's disability must be based on objective and verifiable facts
pursuant to rules promulgated by the administrative director.
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. 64. Section 4646 of the Labor Code is amended to read:
4646. (a) Settlement or commutation of prospective vocational
rehabilitation services shall not be permitted under Chapter 2
(commencing with Section 5000) or Chapter 3 (commencing with Section
5100) of Part 3 except as set forth in subdivision (b), or upon a
finding by a workers' compensation judge that there are good faith
issues that, if resolved against the employee, would defeat the
employee's right to all compensation under this division.
(b) The employer and a represented employee may agree to settle
the employee's right to prospective vocational rehabilitation
services with a one-time payment to the employee not to exceed ten
thousand dollars ($10,000) for the employee's use in self-directed
vocational rehabilitation. The settlement agreement shall be
submitted to, and approved by, the administrative director's
vocational rehabilitation unit upon a finding that the employee has
knowingly and voluntarily agreed to relinquish his or her
rehabilitation rights. The rehabilitation unit may only disapprove
the settlement agreement upon a finding that receipt of
rehabilitation services is necessary to return the employee to
suitable gainful employment.
(c) Prior to entering into any settlement agreement pursuant to
this section, the attorney for a represented employee shall fully
disclose and explain to the employee the nature and quality of the
rights and privileges being waived.
SEC. 65. Section 4651 of the Labor Code is amended to read:
4651. (a) No disability indemnity payment shall be made by any
written instrument unless it is immediately negotiable and payable in
cash, on demand, without discount at some established place of
business in the state.
Nothing in this section shall prohibit an employer from depositing
the disability indemnity payment in an account in any bank, savings
and loan association or credit union of the employee's choice in this
state, provided the employee has voluntarily authorized the deposit,
nor shall it prohibit an employer from electronically depositing the
disability indemnity payment in an account in any bank, savings and
loan association, or credit union, that the employee has previously
authorized to receive electronic deposits of payroll, unless the
employee has requested, in writing, that disability indemnity
benefits not be electronically deposited in the account.
(b) It is not a violation of this section if a delay in the
negotiation of a written instrument is caused solely by the
application of state or federal banking laws or regulations.
(c) On or before July 1, 2004, the administrative director shall
present to the Governor recommendations on how to provide better
access to funds paid to injured workers in light of the requirements
of federal and state laws and regulations governing the negotiability
of disability indemnity payments. The administrative director shall
make specific recommendations regarding payments to migratory and
seasonal farmworkers. The Commission on Health and Safety and
Workers' Compensation and the Employment Development Department shall
assist the administrative director in the completion of this report.
SEC. 66. Section 4658 of the Labor Code is amended to read:
4658. (a) For injuries occurring prior to January 1, 1992, if the
injury causes permanent disability, the percentage of disability to
total disability shall be determined, and the disability payment
computed and allowed, according to paragraph (1). However, in no
event shall the disability payment allowed be less than the
disability payment computed according to paragraph (2).
(1)
Column 2--Number of weeks
for which two-thirds of
Column 1--Range average weekly earnings
of percentage allowed for each 1 percent
of permanent of permanent disability
disability incurred: within percentage range:
Under 10 ....................... 3
10-19.75 ....................... 4
20-29.75 ....................... 5
30-49.75 ....................... 6
50-69.75 ....................... 7
70-99.75 ....................... 8
The number of weeks for which payments shall be allowed set forth
in column 2 above based upon the percentage of permanent disability
set forth in column 1 above shall be cumulative, and the number of
benefit weeks shall increase with the severity of the disability.
The following schedule is illustrative of the computation of the
number of benefit weeks:
Column 1--
Percentage Column 2--
of permanent Cumulative
disability number of
incurred: benefit weeks:
5 .......................... 15.00
10 .......................... 30.25
15 .......................... 50.25
20 .......................... 70.50
25 .......................... 95.50
30 .......................... 120.75
35 .......................... 150.75
40 .......................... 180.75
45 .......................... 210.75
50 .......................... 241.00
55 .......................... 276.00
60 .......................... 311.00
65 .......................... 346.00
70 .......................... 381.25
75 .......................... 421.25
80 .......................... 461.25
85 .......................... 501.25
90 .......................... 541.25
95 .......................... 581.25
100 .......................... for life
(2) Two-thirds of the average weekly earnings for four weeks for
each 1 percent of disability, where, for the purposes of this
subdivision, the average weekly earnings shall be taken at not more
than seventy-eight dollars and seventy-five cents ($78.75).
(b) This subdivision shall apply to injuries occurring on or after
January 1, 1992. If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed, according to paragraph
(1). However, in no event shall the disability payment allowed be
less than the disability payment computed according to paragraph (2).
(1)
Column 2--Number of weeks
for which two-thirds of
Column 1--Range average weekly earnings
of percentage allowed for each 1 percent
of permanent of permanent disability
disability incurred: within percentage range:
Under 10 ....................... 3
10-19.75 ....................... 4
20-24.75 ....................... 5
25-29.75 ....................... 6
30-49.75 ....................... 7
50-69.75 ....................... 8
70-99.75 ....................... 9
The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
(2) Two-thirds of the average weekly earnings for four weeks for
each 1 percent of disability, where, for the purposes of this
subdivision, the average weekly earnings shall be taken at not more
than seventy-eight dollars and seventy-five cents ($78.75).
(c) This subdivision shall apply to injuries occurring on or after
January 1, 2004. If the injury causes permanent disability, the
percentage of disability to total disability shall be determined, and
the disability payment computed and allowed as follows:
Column 2--Number of weeks
for which two-thirds of
Column 1--Range average weekly earnings
of percentage allowed for each 1 percent
of permanent of permanent disability
disability incurred: within percentage range:
Under 10 ....................... 4
10-19.75 ....................... 5
20-24.75 ....................... 5
25-29.75 ....................... 6
30-49.75 ....................... 7
50-69.75 ....................... 8
70-99.75 ....................... 9
The numbers set forth in column 2 above are based upon the
percentage of permanent disability set forth in column 1 above and
shall be cumulative, and shall increase with the severity of the
disability in the manner illustrated in subdivision (a).
SEC. 67. 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). For injuries occurring on or after
January 1, 2006, average weekly wages shall not be taken at more than
five hundred fifteen dollars and thirty-eight cents ($515.38).
(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.
(c) For injuries occurring on or after January 1, 2003, an
employee who becomes entitled to receive a life pension or total
permanent disability indemnity as set forth in subdivisions (a) and
(b) shall have that payment increased annually commencing on January
1, 2004, and each January 1 thereafter, by an amount equal to the
percentage increase in the "state average weekly wage" as compared to
the prior year. For purposes of this subdivision, "state average
weekly wage" means the average weekly wage paid by employers to
employees covered by unemployment insurance as reported by the United
States Department of Labor for California for the 12 months ending
March 31 of the calendar year preceding the year in which the injury
occurred.
SEC. 68. 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 total dependents and regardless of the
number of partial dependents, for injuries occurring before January
1, 1991, ninety-five thousand dollars ($95,000), for injuries
occurring on or 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), for injuries
occurring on or after July 1, 1996, one hundred forty-five thousand
dollars ($145,000), and for injuries occurring on or after January 1,
2006, two hundred ninety thousand dollars ($290,000).
(2) In the case of one total dependent and one or more partial
dependents, for injuries occurring before January 1, 1991, seventy
thousand dollars ($70,000), for injuries occurring on or 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), for injuries occurring on or after July 1, 1996,
one hundred twenty-five thousand dollars ($125,000), and for injuries
occurring on or after January 1, 2006, two hundred fifty thousand
dollars ($250,000), plus four times the amount annually devoted to
the support of the partial dependents, but not more than the
following: for injuries occurring before January 1, 1991, a total of
ninety-five thousand dollars ($95,000), for injuries occurring on or
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), for injuries
occurring on or after July 1, 1996, one hundred forty-five thousand
dollars ($145,000), and for injuries occurring on or after January 1,
2006, two hundred ninety thousand dollars ($290,000).
(3) In the case of one total dependent and no partial dependents,
for injuries occurring before January 1, 1991, seventy thousand
dollars ($70,000), for injuries occurring on or 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), for injuries occurring on or after July 1, 1996, one
hundred twenty-five thousand dollars ($125,000), and for injuries
occurring on or after January 1, 2006, two hundred fifty thousand
dollars ($250,000).
(4) (A) In the case of no total dependents and one or more partial
dependents, for injuries occurring before January 1, 1991, 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 or 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, but before
January 1, 2006, one hundred twenty-five thousand dollars ($125,000).
(B) In the case of no total dependents and one or more partial
dependents, eight times the amount annually devoted to the support of
the partial dependents, for injuries occurring on or after January
1, 2006, but not more than two hundred fifty thousand dollars
($250,000).
(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 or after July 1, 1994,
one hundred sixty thousand dollars ($160,000), for injuries occurring
on or after July 1, 1996, and three hundred twenty thousand dollars
($320,000), for injuries occurring on or after January 1, 2006.
(6) In the case of no total dependents and no partial dependents,
two hundred fifty thousand dollars ($250,000) to the estate of the
deceased employee.
(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. 69. Section 4703.5 of the Labor Code is amended to read:
4703.5. In the case of one or more totally dependent minor
children, as defined in Section 3501, after payment of the amount
specified in Section 4702, and notwithstanding the maximum
limitations specified in Sections 4702 and 4703, payment of death
benefits shall continue until the youngest child attains age 18, or
until the death of a child physically or mentally incapacitated from
earning, in the same manner and amount as temporary total disability
indemnity would have been paid to the employee, except that no
payment shall be made at a weekly rate of less than two hundred
twenty-four dollars ($224).
SEC. 70. Section 4903.5 is added to the Labor Code, to read:
4903.5. (a) No lien claim for expenses as provided in subdivision
(b) of Section 4903 may be filed after six months from the date on
which the appeals board or a workers' compensation administrative law
judge issues a final decision, findings, order, including an order
approving compromise and release, or award, on the merits of the
claim, after five years from the date of the injury for which the
services were provided, or after one year from the date the services
were provided, whichever is later.
(b) Notwithstanding subdivision (a), any health care provider,
health care service plan, group disability insurer, employee benefit
plan, or other entity providing medical benefits on a nonindustrial
basis, may file a lien claim for expenses as provided in subdivision
(b) of Section 4903 within six months after the person or entity
first has knowledge that an industrial injury is being claimed.
(c) The injured worker shall not be liable for any underlying
obligation if a lien claim has not been filed and served within the
allowable period. Except when the lien claimant is the applicant as
provided in Section 5501, a lien claimant shall not file a
declaration of readiness to proceed in any case until the
case-in-chief has been resolved.
(d) This section shall not apply to civil actions brought under
the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part
2 of Division 7 of the Business and Professions Code), the Unfair
Practices Act (Chapter 4 (commencing with Section 17000) of Part 2 of
Division 7 of the Business and Professions Code), or the federal
Racketeer Influenced and Corrupt Organization Act (Chapter 96
(commencing with Section 1961) of Title 18 of the United States Code)
based on concerted action with other insurers that are not parties
to the case in which the lien or claim is filed.
SEC. 70.5. 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.
(b) 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. 71. Section 5305 of the Labor Code is amended to read:
5305. The Division of Workers' Compensation, including the
administrative director, and the appeals board have jurisdiction over
all controversies arising out of injuries suffered outside the
territorial limits of this state in those cases where the injured
employee is a resident of this state at the time of the injury and
the contract of hire was made in this state. Any employee described
by this section, or his or her dependents, shall be entitled to the
compensation or death benefits provided by this division.
SEC. 72. Section 5307 of the Labor Code is amended to read:
5307. (a) Except for those rules and regulations within the
authority of the court administrator regarding trial level
proceedings as defined in subdivision (c), the appeals board may by
an order signed by four members:
(1) Adopt reasonable and proper rules of practice and procedure.
(2) Regulate and provide the manner in which, and by whom, minors
and incompetent persons are to appear and be represented before it.
(3) Regulate and prescribe the kind and character of notices,
where not specifically prescribed by this division, and the service
thereof.
(4) Regulate and prescribe the nature and extent of the proofs and
evidence.
(b) No rule or regulation of the appeals board pursuant to this
section shall be adopted, amended, or rescinded without public
hearings. Any written request filed with the appeals board seeking a
change in its rules or regulations shall be deemed to be denied if
not set by the appeals board for public hearing to be held within six
months of the date on which the request is received by the appeals
board.
(c) The court administrator shall adopt reasonable, proper, and
uniform rules for district office procedure regarding trial level
proceedings of the workers' compensation appeals board. These rules
shall include, but not be limited to, all of the following:
(1) Rules regarding conferences, hearings, continuances, and other
matters deemed reasonable and necessary to expeditiously resolve
disputes.
(2) The kind and character of forms to be used at all trial level
proceedings.
All rules and regulations adopted by the court administrator
pursuant to this subdivision shall be subject to the requirements of
the rulemaking provisions of the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3
of Title 2 of the Government Code).
SEC. 73. Section 5307.2 is added to the Labor Code, to read:
5307.2. The administrative director, after public hearings, shall
adopt, not later than July 1, 2003, and revise, no less frequently
than biennially, an official pharmaceutical fee schedule that shall
establish reasonable maximum fees paid for medicines and medical
supplies provided pursuant to this division. This schedule shall be
included within the official medical fee schedule adopted by the
administrative director pursuant to Section 5307.1. In adopting the
reasonable maximum fees included within the official pharmaceutical
fee schedule, the administrative director may consult any relevant
studies or practices in other states or in other payment systems in
California. The schedule shall include a single dispensing fee. The
schedule shall provide for access to a pharmacy within a reasonable
geographic distance from an injured employee's residence.
SEC. 74. Section 5307.21 is added to the Labor Code, to read:
5307.21. (a) The administrative director shall have the sole
authority to develop an outpatient surgery facility fee schedule for
services not performed under contract, provided that the schedule
meets all of the following requirements:
(1) The schedule shall include all facility charges for outpatient
surgeries performed in any facility authorized by law to perform the
surgeries. The schedule may not include the fee of any physician
and surgeon providing services in connection with the surgery.
(2) The schedule shall promote payment predictability, minimize
administrative costs, and ensure access to outpatient surgery
services by insured workers.
(3) The schedule shall be sufficient to cover the costs of each
surgical procedure, as well as access to quality care.
(4) The schedule shall include specific provisions for review and
revision of related fees no less frequently then biennially.
(5) The schedule shall be adopted after public hearings pursuant
to Section 5307.3 and shall be included within the official medical
fee schedule.
(b) The process used by the administrative director to develop an
outpatient surgery fee schedule shall contain the following elements:
(1) A formal analysis of one year of published data collected
pursuant to Section 128737 of the Health and Safety Code, with the
assistance of an independent consultant with demonstrated expertise
in outpatient surgery service.
(2) Any published data collected from providers of outpatient
surgery services.
(3) Payment data including, but not limited to, type of payer and
amount charged.
(4) Cost data including, but not limited to, actual expenses for
labor, supplies, equipment, implants, anesthesia, overhead, and
administration.
(5) Outcome data including, but not limited to, expected level of
rehabilitation, expected coverage timeframe, and incidence of
infection.
(6) Access data including, but not limited to, date of injury,
date of surgery recommendation, and data of procedure.
(7) Other data that is mutually agreed to by the Office of
Statewide Health Planning and Development and the administrative
director. The administrative director shall consult with the Office
of Statewide Health Planning and Development to ensure that the data
collected is comprehensive and relevant to the development of a fee
schedule.
(c) The outpatient surgery facility fee schedule shall reflect
input from workers' compensation insurance carriers, businesses,
organized labor, providers of outpatient surgical services, and
patients receiving outpatient surgical services.
SEC. 75. Section 5310 of the
Labor Code is amended to read:
5310. The appeals board may appoint one or more workers'
compensation administrative law judges in any proceeding, as it may
deem necessary or advisable, and may refer, remove to itself, or
transfer to a workers' compensation administrative law judge the
proceedings on any claim. The administrative director, after
consideration of the recommendation of the court administrator, may
appoint workers' compensation administrative law judges. Any workers'
compensation administrative law judge appointed by the
administrative director has the powers, jurisdiction, and authority
granted by law, by the order of appointment, and by the rules of the
appeals board.
SEC. 76. Section 5311.5 of the Labor Code is amended to read:
5311.5. The administrative director or the court administrator
shall require all workers' compensation administrative law judges to
participate in continuing education to further their abilities as
workers' compensation administrative law judges, including courses in
ethics and conflict of interest. The director may coordinate the
requirements with those imposed upon attorneys by the State Bar in
order that the requirements may be consistent.
SEC. 77. 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 employee's work shift at the time 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, and any followup visit for the purpose of observation of
minor scratches, cuts, burns, splinters, or other minor industrial
injury, which do not ordinarily require medical care. This one-time
treatment, and followup visit for the purpose of observation, is
considered first aid even though provided by a physician or
registered professional personnel. "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. Claim forms shall be available at
district offices of the Employment Development Department and the
division. Claim forms may be made available to the employee from any
other source.
(b) Insofar as practicable, the notice of potential eligibility
for benefits required by this section and the claim form shall be a
single document and shall instruct the injured employee to fully read
the notice of potential eligibility. The form and content of the
notice and claim form shall be prescribed by the administrative
director after consultation with the Commission on Health and Safety
and Workers' Compensation. The notice shall be easily understandable
and available in both English and Spanish. The content shall
include, but not be limited to, the following:
(1) The procedure to be used to commence proceedings for the
collection of compensation for the purposes of this chapter.
(2) A description of the different types of workers' compensation
benefits.
(3) What happens to the claim form after it is filed.
(4) From whom the employee can obtain medical care for the injury.
(5) The role and function of the primary treating physician.
(6) The rights of an employee to select and change the treating
physician pursuant to subdivision (e) of Section 3550 and Section
4600.
(7) How to get medical care while the claim is pending.
(8) The protections against discrimination provided pursuant to
Section 132a.
(9) The following written statements:
(A) You have a right to disagree with decisions affecting your
claim.
(B) You can obtain free information from an information and
assistance officer of the state Division of Workers' Compensation, or
you can hear recorded information and a list of local offices by
calling (applicable information and assistance telephone number(s)).
(C) You can consult an attorney. Most attorneys offer one free
consultation. If you decide to hire an attorney, his or her fee will
be taken out of some of your benefits. For names of workers'
compensation attorneys, call the State Bar of California at
(telephone number of the State Bar of California's legal
specialization program, or its equivalent).
(c) 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 (d), 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.
(d) 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 4060, 4061, or 4062.
Filing of the claim form with the employer shall toll, for injuries
occurring on or after January 1, 1994, 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. 78. Section 5405 of the Labor Code is amended to read:
5405. The period within which proceedings may be commenced for
the collection of the benefits provided by Article 2 (commencing
with Section 4600) or Article 3 (commencing with Section 4650), or
both, of Chapter 2 of Part 2 is one year from any of the following:
(a) The date of injury.
(b) The expiration of any period covered by payment under Article
3 (commencing with Section 4650) of Chapter 2 of Part 2.
(c) The last date on which any benefits provided for in Article 2
(commencing with Section 4600) of Chapter 2 of Part 2 were
furnished.
SEC. 79. Section 5500.3 of the Labor Code is amended to read:
5500.3. (a) The court administrator shall establish uniform
district office procedures, uniform forms, and uniform time of court
settings for all district offices of the appeals board. No district
office of the appeals board or workers' compensation administration
law judge shall require forms or procedures other than as established
by the court administrator. The court administrator shall take
reasonable steps to ensure enforcement of this section. A workers'
compensation administrative law judge who violates this section may
be subject to disciplinary proceedings.
(b) The appeals board shall establish uniform court procedures and
uniform forms for all other proceedings of the appeals board. No
district office of the appeals board or workers' compensation
administrative law judge shall require forms or procedures other than
as established by the appeals board.
SEC. 80. 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 of readiness to proceed, on a form
prescribed by the court administrator, is filed. If a claim form
has been filed for an injury occurring on or after January 1, 1990,
and before January 1, 1994, an application for adjudication shall
accompany the declaration of readiness to proceed.
(b) The court administrator 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 court administrator shall establish a priority conference
calendar for cases in which the employee is represented by an
attorney and the issues in dispute are employment or injury arising
out of employment or in the course of employment. The conference
shall be conducted by a workers' compensation administrative law
judge within 30 days after the declaration of readiness to proceed.
If the dispute cannot be resolved at the conference, a trial shall be
set as expeditiously as possible, unless good cause is shown why
discovery is not complete, in which case status conferences shall be
held at regular intervals. The case shall be set for trial when
discovery is complete, or when the workers' compensation
administrative law judge determines that the parties have had
sufficient time in which to complete reasonable discovery. A
determination as to the rights of the parties shall be made and filed
within 30 days after the conference.
(d) The court administrator 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.
(e) (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 administrative law judge or by a referee who is eligible
to be a workers' compensation administrative law judge or eligible
to be an arbitrator under Section 5270.5. At the mandatory
settlement conference, the referee or workers' compensation
administrative law 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 administrative law
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.
(f) 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.
(g) Except as provided in subdivision (a) and in Section 4065, the
provisions of this section shall apply irrespective of the date of
injury.
SEC. 81. Section 5814 of the Labor Code is amended to read:
5814. When payment of compensation has been unreasonably delayed
or refused, either prior to or subsequent to the issuance of an
award, the full amount of the order, decision, or award shall be
increased by 10 percent. Multiple increases shall not be awarded for
repeated delays in making a series of payments due for the same type
or specie of benefit unless there has been a legally significant
event between the delay and the subsequent delay in payments of the
same type or specie of benefits. The question of delay and the
reasonableness of the cause therefor shall be determined by the
appeals board in accordance with the facts. This delay or refusal
shall constitute good cause under Section 5803 to rescind, alter, or
amend the order, decision, or award for the purpose of making the
increase provided for herein.
SEC. 82. Section 5814.5 of the Labor Code is amended to read:
5814.5. When the payment of compensation has been unreasonably
delayed or refused subsequent to the issuance of an award by an
employer that has secured the payment of compensation pursuant to
Section 3700, the appeals board shall, in addition to increasing the
order, decision, or award pursuant to Section 5814, award reasonable
attorneys' fees incurred in enforcing the payment of compensation
awarded.
SEC. 83. Section 6354.5 of the Labor Code is amended to read:
6354.5. (a) Any insurer desiring to write workers' compensation
insurance shall maintain or provide occupational safety and health
loss control consultation services. The insurer may employ qualified
personnel to provide these services or provide the services through
another entity.
(b) The program of an insurer for furnishing loss control
consultation services shall be adequate to meet minimum standards
prescribed by this section. Required loss control consultation
services shall be adequate to identify the hazards exposing the
insured to, or causing the insured, significant workers' compensation
losses, and to advise the insured of steps needed to mitigate the
identified workers' compensation losses or exposures. The program of
an insurer for furnishing loss control consultation services shall
provide all of the following:
(1) A workplace survey, including discussions with management and,
where appropriate, nonmanagement personnel with permission of the
employer.
(2) A review of injury records with appropriate personnel.
(3) The development of a plan to improve the employer's health and
safety loss control experience, which shall include, where
appropriate, modifications to the employer's injury and illness
prevention program established pursuant to Section 6401.7. At the
time that an insurance policy is issued and annually thereafter, and
again when notified by Cal-OSHA that an insured employer has been
identified as a targeted employer pursuant to Section 6314.1, 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.
These notices to the employer shall appear in at least 10-point bold
type.
(c) The insurer shall not charge any fee in addition to the
insurance premium for safety and health loss control consultation
services.
(d) 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.
(e) The director shall establish an insurance loss control
services coordinator position in the Department of Industrial
Relations. The coordinator shall provide information to employers
about the availability of loss control consultation services and
respond to employers' questions and complaints about loss control
consultation services provided by their insurer. The coordinator
shall notify the insurer of every complaint concerning loss control
consultation services. If the employer and the insurer are unable to
agree on a mutually satisfactory solution to the complaint, the
coordinator shall investigate the complaint. Whenever the
coordinator determines that the loss control consultation services
provided by the insurer are inadequate or inappropriate, he or she
shall recommend to the employer and the insurer the actions required
to bring the loss control program into compliance. If the employer
and the insurer are unable to agree on a mutually satisfactory
solution to the complaint, the coordinator shall forward his or her
recommendations to the director. The cost of providing the
coordinator services shall be paid out of the Workers' Occupational
Safety and Health Education Fund created by subdivision (a) of
Section 6354.7. However, no more than 20 percent of that fund may be
expended for this purpose each year.
SEC. 84. Section 6354.7 is added to the Labor Code, to read:
6354.7. (a) The Workers' Occupational Safety and Health Education
Fund is hereby created as a special account in the State Treasury.
Proceeds of the fund may be expended, upon appropriation by the
Legislature, by the Commission on Health and Safety and Workers'
Compensation for the purpose of establishing and maintaining a worker
occupational safety and health training and education program and
insurance loss control services coordinator. The director shall levy
and collect fees to fund these purposes from insurers subject to
Section 6354.5. However, the fee assessed against any insurer shall
not exceed the greater of one hundred dollars ($100) or 0.0286
percent of paid workers' compensation indemnity claims as reported
for the previous calendar year to the designated rating organization
for the analysis required under subdivision (b) of Section 11759.1 of
the Insurance Code. All fees shall be deposited in the fund.
(b) The commission shall establish and maintain a worker safety
and health training and education program. The purpose of the worker
occupational safety and health training and education program shall
be to promote awareness of the need for prevention education
programs, to develop and provide injury and illness prevention
education programs for employees and their representatives, and to
deliver those awareness and training programs through a network of
providers throughout the state. The commission may conduct the
program directly or by means of contracts or interagency agreements.
(c) The commission shall establish an employer and worker advisory
board for the program. The advisory board shall guide the
development of curricula, teaching methods, and specific course
material about occupational safety and health, and shall assist in
providing links to the target audience and broadening the
partnerships with worker-based organizations, labor studies programs,
and others that are able to reach the target audience.
(d) The program shall include the development and provision of a
needed core curriculum addressing competencies for effective
participation in workplace injury and illness prevention programs and
on joint labor-management health and safety committees. The core
curriculum shall include an overview of the requirements related to
injury and illness prevention programs and hazard communication.
(e) The program shall include the development and provision of
additional training programs for any or all of the following
categories:
(1) Industries on the high hazard list.
(2) Hazards that result in significant worker injuries, illnesses,
or compensation costs.
(3) Industries or trades where workers are experiencing numerous
or significant injuries or illnesses.
(4) Occupational groups with special needs, such as those who do
not speak English as their first language, workers with limited
literacy, young workers, and other traditionally underserved
industries or groups of workers. Priority shall be given to training
workers who are able to train other workers and workers who have
significant health and safety responsibilities, such as those workers
serving on a health and safety committee or serving as designated
safety representatives.
(f) The program shall operate one or more libraries and
distribution systems of occupational safety and health training
material, which shall include, but not be limited to, all material
developed by the program pursuant to this section.
(g) The advisory board shall annually prepare a written report
evaluating the use and impact of programs developed.
(h) The payment of administrative costs incurred by the commission
in conducting the program shall be made from the Workers'
Occupational Safety and Health Education Fund.
SEC. 85. The Director of Industrial Relations shall establish the
following new positions for staffing of the workers' compensation
courts:
(a) Eight workers' compensation administrative law judges.
(b) Eight hearing reporters.
(c) Eight senior typists (legal).
SEC. 86. It is the intent of the Legislature that all
reimbursement expended by the Administrative Director of the Division
of Workers' Compensation for the administration of the workers'
compensation Return-to-Work Program established in Section 139.48 of
the Labor Code shall be funded from the funds collected in the annual
premium tax, collected under Section 12201 of the Revenue and
Taxation Code, which is directly attributable to the compensation
benefit rates and amounts set forth in the Revenue and Taxation Code.
SEC. 87. It is the intent of the Legislature that nothing in this
act shall be interpreted to require any change in the administration,
alternative dispute resolution component, or medical treatment
component, of any program approved pursuant to Section 3201.5 of the
Labor Code prior to January 1, 2003.
SEC. 88. The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SEC. 89. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.