BILL ANALYSIS �
June 22,
2011
Page 1
Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 457 (Calderon) - As Amended: May 4, 2011
SENATE VOTE : 25-14
SUBJECT : Workers' compensation liens
SUMMARY : Provides that a health plan may recover from an
employer or workers' compensation insurer more than the amount
for medical expenses provided by the Official Medical Fee
Schedule (OMFS), under certain circumstances.
Specifically, this bill provides that, for purposes of awarding
a lien claimant compensation for medical expenses, if the lien
claimant is a health care service plan, an insurance company
that is claiming pursuant to benefits paid under a group health
insurance policy, a claimant pursuant to a hospital service
contract, or a self-insured employee welfare benefit plan, where
the lien claimant has paid benefits or provided services under
its plan, the OMFS does not limit the amount of the lien.
EXISTING LAW :
1)Establishes a comprehensive system of workers' compensation
benefits for workers injured on the job, including medical
benefits.
2)Establishes, based on a statutory delegation to the
Administrative Director (AD) of the Division of Workers'
Compensation (DWC) to develop and adopt, an OMFS that sets the
maximum reasonable reimbursement for medical services provided
to injured workers.
3)Authorizes service providers to file a lien with the Workers'
Compensation Appeals Board (WCAB) if a dispute arises about
the right to payment or the amount paid by the employer or
insurer.
4)Requires the WCAB to determine whether to allow the lien, and
how much should be paid on the lien, generally using the OMFS
when the lien is for medical services.
June 22,
2011
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FISCAL EFFECT : According to the Senate Appropriations
Committee, unknown, potentially significant costs in the event
health plans seek liens above the OMFS for benefits paid or
services provided to state employees who are determined to have
work-related injuries.
COMMENTS :
1)Purpose . According to the sponsor, the California
Professional Firefighters, if an employer or its insurer
denies a workers' compensation claim, case law requires a
non-industrial health program that is otherwise available to
the employee to provide coverage. The law allows that health
plan to file a lien to recover its costs "to the extent of
benefits paid" in the event the injury is later determined to
be work-related. However, the amount the health plan may have
paid in treatment may be greater than the OMFS, and thus the
health plan faces a loss of the difference between what it
paid, and what the OMFS covers. The bill is intended to close
this "loophole."
2)When does the bill apply? Proponents point to the scenario
where there has been a denial of the workers' comp claim, and
the denial is overturned after being litigated, which may be
resolved in fairly short order, or may takes years to resolve,
(as in a case that resulted in over $1 million in treatment
costs for a firefighter who died of cancer.) At least some
employers have expressed concerns that scenarios other than
those involving a denial of the claim by the employer/insurer
can lead to opportunities to "game" the system. However, it
is clear that the Labor Code section being amended by the bill
applies only where there has been an adjudication of a denied
claim, and the adjudication results in a finding that the
claim was valid.
3)May the WCAB reduce the amount claimed in the lien? Concern
has been expressed that the bill itself does not state that a
lien may be reduced if it is unreasonable. However, it is
clear that Labor Code Section 4903.1, which is being amended
by the bill, is subject to Section 4903, which confers upon
the WCAB the authority to determine the amount of a lien.
In order to ensure there is clarity on this issue, the author
June 22,
2011
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has agreed to adopt an amendment that provides that the bill's
provisions do not affect the rights of an insurer or employer
to utilization review of the treatment provided to the injured
worker.
4)Double-jointing . This bill and SB 863 (Lieu) both amend Labor
Code Section 4903.1. The amendments are not incompatible, but
in order to avoid chaptering out issues, the authors should
have double-jointing language prepared as final forms of the
bills develop by the time they reach the Assembly Floor.
REGISTERED SUPPORT / OPPOSITION :
Support
California Professional Firefighters
California Federation of Labor, AFL-CIO
Opposition
California Association of Joint powers Authorities
California Chamber of Commerce
Allied Management Care
Acclamation Insurance Management Services
County of Los Angeles
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086