BILL NUMBER: AB 2490 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 6, 2010
INTRODUCED BY Assembly Member Jones
FEBRUARY 19, 2010
An act to amend Section 11751.5 of add
Section 11658.5 to the Insurance Code, relating to workers'
compensation insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2490, as amended, Jones. Workers' compensation insurance:
rating organizations: statistical agent.
dispute resolution: arbitration clauses.
Existing law requires that a workers' compensation insurance
policy or endorsement not be issued by an insurer unless the insurer
files a copy of the form or endorsement with the rating organization
and 30 days have expired from the date the form or endorsement is
received by the commissioner from the rating organization without
notice from the commissioner, unless the commissioner gives written
approval of the form or the endorsement prior to that time.
This bill would require any agreement between an employer and a
workers' compensation insurer concerning resolution of disputes,
including, but not limited to, an arbitration clause arising out of a
workers' compensation policy, endorsement, or plan be part of the
form or endorsement filed with the rating organization and approved
by the commissioner and contain provisions to resolve disputes in the
California courts and under California law. Failure to observe those
requirements would render the dispute resolution agreement void and
unenforceable.
Existing law authorizes the Insurance Commissioner, after notice
and hearing, to promulgate reasonable rules and statistical plans, to
be used in recording and reporting by workers' compensation insurers
their loss and expense experience in order that the information may
be made available to aid the commissioner in his or her duties
regarding the approval of workers' compensation insurance rates.
Existing law requires the commissioner to designate a licensed
rating organization, as defined, as his or her statistical agent to
gather and compile workers' compensation insurers loss and expense
experience statistics, and all licensed rating organizations are
required to report loss and expense experiences of their member
workers' compensation insurers to the statistical agent. Subject to
reasonable rules approved by the commissioner, the statistical agent
is required to make available those compiled experience statistics to
all licensed rating organizations. The statistical agent is
authorized to make a reasonable charge to other rating organizations
for the expense incurred by it in combining, tabulating, and
compiling the experience of all workers' compensation insurers.
This bill would require that the statistical agent make available
those compiled experience statistics to all other organizations that
the commissioner, by regulation, identifies as appropriate, and would
authorize the statistical agent to make a reasonable charge for the
information.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) All California employers subject to the Workers' Compensation
Law are required by law to obtain insurance for their employees.
(b) Workers' compensation plans are highly regulated and designed
primarily to protect the worker and ensure prompt payment of claims.
(c) The Legislature has authorized the Insurance Commissioner
(commissioner) and the Workers' Compensation Insurance Rating Bureau
(WCIRB) to oversee the form and substance of all workers'
compensation insurance plans, including everything from the scope of
required coverage provided to employees, to the amount employers pay
insurers for premiums.
(d) Insurance companies providing workers' compensation policies
are required by law to disclose and seek preapproval from the
commissioner and WCIRB of the insurance plan being purchased.
(e) Disputes between employers and insurance companies regarding
workers' compensation plans can arise, and resolution of these
disputes through litigation can be expensive, uncertain, and time
consuming.
(f) In an effort to save time, costs, and the uncertainty of
litigation, national workers' compensation carriers often place
mandatory arbitration clauses into policies and, over time, these
arbitration clauses have become complex and expensive, and have
diminished the rights of the parties in the arbitration proceedings.
(g) Despite the requirement that the commissioner approve the form
and substance of all workers' compensation plans, some workers'
compensation carriers issue separate or side agreements, sometimes
called Insurance Program Agreements or IPAs, that are not provided to
the employer until after the policy or plan is accepted, that
require arbitration of any disputes between the employer and the
carrier concerning the approved workers' compensation plan, and lack
the approval of the commissioner.
(h) These unapproved separate or side agreements (or IPAs) often
choose a foreign jurisdiction's law to interpret the plan and resolve
disputes, and choose a state other than California as the location
or venue to conduct arbitrations. This subjects Californians to
another state's laws and forces them to travel outside this state to
conduct dispute resolution proceedings, resulting in significant cost
burdens.
(i) California employers have successfully challenged some of
these side agreements containing arbitration clauses; however, it
should not be necessary to burden the California courts with these
cases.
(j) California has a compelling state interest in ensuring that
workers' compensation policies and plans are enforced under
California law and not subject to interpretation by other
jurisdictions, and that any dispute resolution proceedings are
conducted within its borders.
SEC. 2. Section 11658.5 is added to the
Insurance Code , to read:
11658.5. (a) Any agreement between an employer and a workers'
compensation insurer concerning resolution of disputes, including,
but not limited to, an arbitration clause arising out of a workers'
compensation policy, endorsement, or plan shall conform to all of the
following:
(1) It shall be part of the form or endorsement filed with the
rating organization and approved by the commissioner pursuant to
Section 11658.
(2) It shall contain a choice of law provision that identifies
California law as the law to be used to resolve any dispute.
(3) It shall contain a forum selection provision that identifies
California as the proper venue for any proceeding regarding a
dispute.
(b) Failure to observe the requirements of this section shall
render the dispute resolution agreement void and unenforceable.
SECTION 1. Section 11751.5 of the Insurance
Code is amended to read:
11751.5. The commissioner, after notice and hearing, may
promulgate reasonable rules and statistical plans, which may be
modified from time to time and which shall be used thereafter in the
recording and reporting by insurers of their loss and expense
experience in order that the experiences of all insurers may be made
available in such form and detail as may be necessary to aid the
commissioner in administering the provisions of Article 2 (commencing
with Section 11730). The commissioner shall designate a rating
organization licensed under this article as his or her statistical
agent to gather and compile such experience statistics and all
licensed rating organizations shall report the experience of their
members to such designated rating organization. Subject to reasonable
rules approved by the commissioner, such designated rating
organization shall make such experience statistics, when compiled,
available to all licensed rating organizations, and other
organizations that the commissioner, by regulation, identifies as
appropriate to obtain the statistics, and may make a reasonable
charge to other rating organizations and other organizations for the
expense incurred by it in combining, tabulating, and compiling the
experience of all workers' compensation insurers.