BILL NUMBER: AB 2490	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 20, 2010
	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  that  any agreement, other than
a settlement agreement resolving a particular dispute, between an
employer  , whose principal place of business is in California,
 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  be part of the form or endorsement filed with the rating
organization  and  subject to approval by
the commissioner and   , shall be provided to the
employer contemporaneously with any written quote that offers to
provide ins   urance coverage, and shall  contain
provisions to resolve disputes that arise in this state in the
California courts and under California law. The bill would
provide, however, that prior to the inception of the  
policy, employers and workers' compensation insurance companies may,
after freely negotiating, expressly agree to a choice of law or a
choice of forum other than California.  Failure to observe those
requirements would render  the   any 
dispute resolution  agreement   provision 
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.  
endorsements. 
   (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.  
   (f) In an effort to save time and costs, and because of the
uncertainty of litigation, workers' compensation carriers and
employers use arbitration to resolve disputes.  
   (j) 
    (g)  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. 
   (h) Employers and workers' compensation carriers should be freely
able to negotiate and agree to the terms of arbitration without
undermining the protections afforded to California employers under
California law. 
  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  , whose
principal place of business is in California,  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 subject to approval by the
commissioner pursuant to Section 11658.   rating
organization pursuant to Section 11658, and shall be provided to the
employer contemporaneously with any written quote that offers to
provide insurance coverage. 
   (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. 
   (4) Notwithstanding paragraphs (2) and (3), prior to the inception
of the policy, employers and workers' compensation insurance
companies may, after freely negotiating, expressly agree to a choice
of law or a choice of forum other than California. 
   (b) Failure to observe the requirements of this section shall
render  the   any  dispute resolution
 agreement   provision  void and
unenforceable.