BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 457
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 457 (Calderon) - As Amended:  June 28, 2011 

          Policy Committee:                              InsuranceVote:10 
          - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill requires that the Workers' Compensation Appeals Board 
          reimburse for all benefits and services paid by a health 
          insurance plan, group disability policy, hospital service 
          contract, or a self-insured employee welfare benefit plan that 
          should have been covered by workers compensation insurance, even 
          if those costs are in excess of the official medical fee 
          schedule (OMFS). 

           FISCAL EFFECT  

          The state's share of medical spending for workers compensation 
          is in excess of $200 million per year. If this legislation 
          results in a one or two percent increase in those costs, it 
          would cost the state somewhere between $2 million and $5 million 
          per year (GF and SF).  

           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.  









                                                                 SB 457
                                                                  Page  2

          2)Workers' Compensation Coverage  . The State of California, as an 
            employer, and many cities and counties are self-insured for 
            workers' compensation claims. Payments are treated in a pay as 
            you go manner. Therefore, any increase in costs has a direct 
            impact on state and local funds. For non-self-insured 
            employers, premiums are paid through a private insurer or the 
            State Compensation Insurance Fund (SCIF). Increased costs for 
            these employers would be evidenced through potentially higher 
            premiums.  
           
           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916) 
          319-2081