BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1105|
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THIRD READING
Bill No: SB 1105
Author: Lieu (D)
Amended: 5/2/12
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-0, 4/25/12
AYES: Lieu, Wyland, DeSaulnier, Leno, Yee
NO VOTE RECORDED: Padilla, Runner
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Workers compensation: liens
SOURCE : California Correctional Peace Officers
Association
DIGEST : The bill requires the Workers' Compensation
Appeals Board to allow a lien for benefits paid by a
self-insured employee welfare benefit plan, as defined.
ANALYSIS : Existing law establishes a workers'
compensation system that provides benefits to an employee
who suffers from an injury or illness that arises out of
and in the course of employment, irrespective of fault.
This system requires all employers to secure payment of
benefits by either securing the consent of the Department
of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
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Existing law provides that no claim for workers
compensation or workers compensation award is subject to be
taken for the debts of the party, except as provided
through the workers' compensation liens process.
Existing law provides that no workers' compensation
benefit, whether awarded or voluntarily paid, shall be paid
to any attorney at law or in fact or other agent, but shall
be paid directly to the claimant entitled thereto unless
otherwise ordered by the appeals board. No payment made to
an attorney at law or in fact or other agent in violation
of this section shall be credited to the employer.
Existing law permits the Workers' Compensation Appeals
Board (WCAB) to determine and allow liens against any sum
to be paid as compensation for a variety of services or
expenses. Allowable liens include a reasonable fee for
legal services, the reasonable expense incurred in the
provision of medical services, and the reasonable value of
living expenses of an injured employee subsequent to the
injury.
Existing law provides that when a compromise of a workers'
compensation claim or an award is submitted to the appeals
board, arbitrator, or settlement conference referee for
approval, the parties shall file with the appeals board,
arbitrator, or settlement conference referee any liens
served on the parties.
Existing law provides that when the referee issues an award
finding that an injury or illness arises out of and in the
course of employment and makes an award for temporary
disability indemnity, the appeals board shall allow a lien
as living expense for benefits paid by a group disability
policy providing loss of time benefits.
Such lien can only be allowed:
1. To the extent that benefits have been paid for the same
day or days for which temporary disability indemnity is
awarded and shall not exceed the award for temporary
disability indemnity; and
2. If the group disability policy provides for reduction,
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exclusion, or coordination of loss of time benefits on
account of workers' compensation benefits.
This bill allows a self-insured employee welfare benefit
plan to file a living expense lien in the same manner and
with the same restrictions as a group disability policy
providing loss of time benefits, with the exception of the
requirement of the plan providing a reduction, exclusion,
or coordination of loss of time benefits on account of
workers' compensation benefits, as this does not apply to
an employee welfare benefit plan.
This bill, for the purposes of filing the lien, defines a
self-insured employee welfare benefit plan as:
1. Any plan or program of benefits provided by an employer
or an employee organization, or both, for the purpose of
providing hospital, medical, surgical, nursing, or
dental services, or indemnification for the costs
incurred for those services, to the employer's employees
or their dependents; and
2. A plan which provides benefits arising from a
disability, including but not limited to payment of
living expenses.
Comments
This bill seeks to address a narrow area of workers'
compensation liens: living expense liens filed by
self-insured employee welfare benefit plans. Unlike
medical-legal liens, which have been the focus of recent
legislation and studies and are a mechanism for contesting
employer determinations on appropriate medical care or
reimbursement, this area of the liens world is largely
stable and non-controversial. This is due to long-standing
statutes and case law on claims and debts in the workers'
compensation system.
Since 1917, the workers' compensation system has prohibited
anyone from taking any portion of a workers' compensation
award due to debt. The only mechanism available to settle
claims against a workers' compensation award is through the
workers' compensation liens process, which is somewhat
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narrow. As discussed in Ogden v. WCAB (1974) and favorably
quoted in Prudential v. WCAB, 22 Cal. 3d 776 (1978): �T]he
chapter on the payment of claims was intended to remove
workers' compensation awards from the operation of the
usual remedies available to creditors, to limit and
regulate the kinds of debts for which liens are allowed,
and to insure the award is available to the injured
employee for his recovery and rehabilitation.
In the Prudential decision, the California Supreme Court
further shielded injured workers for the possibility of
predatory collection against workers' compensation awards.
In that case, a worker had received payments in lieu of
salary through a group disability policy through Prudential
Insurance and the policy provided that such payments would
be reduced by a workers' compensation award. When the
injured worker sought benefits through the workers'
compensation system, Prudential Insurance sought to recover
funds paid in excess of the workers' compensation award
through the workers' compensation liens process.
In their decision, the Court refused to allow Prudential to
recover funds they had paid. Instead, the Court
interpreted the Legislature's statutory lien provisions as
limiting liens to medical costs and benefits or services
provided directly relating to those medical costs. In
1979, the Legislature largely codified the spirit of the
Prudential decision, creating a narrow addition to
allowable living expense liens for group disability plans,
but made clear that the lien could not be in excess of
awarded temporary disability benefits.
The bill's sponsor, the California Correctional Peace
Officers Association, reports that their union-run employee
welfare benefit plans, which is an employee-funded entity,
provides salary continuation and living expense benefits
from the welfare benefit plan, with the understanding that
the funds of their fellow workers will be repaid at a later
date from future funds, which could include workers'
compensation awards. However, if injured worker declines
to repay the employee welfare benefit plan from a workers'
compensation award, the fund is prevented from recovering
the funds, leaving the employee-funded plan with a
shortfall.
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Prior Legislation
SB 457 (Calderon), Chapter 564, Statutes of 2011, requires
the WCAB to allow a lien in excess of the Official Medical
Fee Schedule (OMFS) when it is found that a self-insured
employee welfare benefit plan provided benefits outside of
the workers' compensation system
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/21/12)
California Correctional Peace Officers Association (source)
ARGUMENTS IN SUPPORT : The bill's sponsor, the California
Correctional Peace Officers Association (CCPOA) argues that
this bill allows the CCPOA Benefit Trust Fund and other
self-insured employee welfare benefit plans, to recover,
through a lien, amounts advanced to its members for living
expenses while their workers' compensation case is being
delayed for investigation or pending resolution before the
WCAB. CCPOA argues that, currently, the Trust has to
initiate a civil case if the member does not comply with
her/his agreement and return the funds advanced by the
Trust upon resolution of the case by the Board. This bill
simply allows the Trust to place a lien with the WCAB to
directly recover the monies in a straight-forward manner
and efficient manner.
PQ:mw 5/22/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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