BILL ANALYSIS
AB 1117
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1117 (Fuentes)
As Amended June 28, 2009
2/3 vote. Urgency
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|ASSEMBLY: |73-0 |(May 14, 2009) |SENATE: |34-0 |(July 9, 2009) |
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Original Committee Reference: INS.
SUMMARY : Clarifies that a board member of the State
Compensation Insurance Fund (SCIF) is not disqualified by virtue
of a conflict of interest from considering issues before the
board due to the fact that the board member is a policyholder or
employee of a policyholder of SCIF.
The Senate amendments recast the clarifying language contained
in the Assembly-passed version to more precisely limit
application of the bill to SCIF Board consideration of
ratemaking matters.
EXISTING LAW :
1)Establishes SCIF as a public enterprise fund for the purpose
of transacting workers' compensation insurance. SCIF is
required to be fairly competitive with other insurers and is
directed to be self-supporting. SCIF is administered by an
11-member board of directors, 9 of whom are appointed by the
Governor.
2)Requires that one of the board members be a SCIF policyholder,
or officer or employee of a SCIF policyholder, and does not
prohibit other board members from being policyholders.
3)Provides that no person who has an interest in any transaction
with SCIF is eligible to be a board member, and makes
specified conflict of interest laws applicable to board
members.
4)Provides that SCIF board members must have experience in
positions involving workers' compensation, legal, investment,
financial, corporate governance and management, accounting or
auditing responsibilities with entities of sufficient size as
to make their qualifications relevant to an enterprise of the
AB 1117
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financial and operational size of SCIF.
FISCAL EFFECT : None
COMMENTS : The author introduced this bill at the suggestion of
SCIF to clarify a confusion in the law that could hamper the
ability of the newly expanded board of directors to effectively
run the company. Specifically, counsel for SCIF opined that
policyholder board members had "an interest" in a "transaction"
with SCIF - the insurance policy itself - that triggered the
disqualifying conflict provisions. Since this is clearly not
what the Legislature intended last year when it expanded the
board and required at least one policyholder member, legislation
is required to clarify the issue.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0001672