BILL NUMBER: AB 2490	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 20, 2010
	AMENDED IN ASSEMBLY  APRIL 27, 2010
	AMENDED IN ASSEMBLY  APRIL 6, 2010

INTRODUCED BY   Assembly Member Jones

                        FEBRUARY 19, 2010

   An act to 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:
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, other than a settlement
agreement resolving a particular dispute, 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 or endorsement be part of the form or
endorsement filed with the rating organization and  approved
  subject to approval  by the commissioner and
contain provisions to resolve disputes that arise in this state in
the California courts and under California law. Failure to observe
those requirements would render the dispute resolution agreement void
and unenforceable.
   Vote: majority. Appropriation: no. Fiscal committee: 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 policies and endorsements 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) to oversee the form and substance of all workers'
compensation insurance policies and endorsements, 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
and endorsements are required by law to file the policies and
endorsements with the rating organization for transfer to the
commissioner.
   (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 workers' compensation carrier
file policies and endorsements with the rating organization and wait
a prescribed period, 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 endorsement is accepted, that require arbitration of
any disputes between the employer and the carrier concerning the
workers' compensation policy or endorsement, and that have not been
filed with the rating organization or commissioner.
   (h) These unfiled separate or side agreements 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 endorsements 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, other than a settlement agreement
resolving a particular dispute, 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 or endorsement shall conform to all of the
following:
   (1) It shall be part of the form or endorsement filed with the
rating organization and  approved   subject to
approval  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 that
arises in California.
   (3) It shall contain a forum selection provision that identifies
California as the proper venue for any proceeding regarding a dispute
that arises in California.
   (b) Failure to observe the requirements of this section shall
render the dispute resolution agreement void and unenforceable.