BILL ANALYSIS �
SB 1105
Page 1
Date of Hearing: June 20, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 1105 (Lieu) - As Amended: June 13, 2012
SENATE VOTE : 39-0
SUBJECT : Workers' compensation: liens
SUMMARY : Adds self-insured employee welfare benefit plans to
the list of entities entitled to file a lien for the cost of
living expense services provided to an injured worker.
Specifically, this bill :
1)Provides that a self-insured employee welfare benefit plan may
file a living expense lien against an award of temporary
disability benefits in cases where the plan has paid the cost
of living expenses for the same days that the temporary
disability benefits are being awarded.
2)Defines a self-insured employee welfare benefit plan as a
plan, fund, or program established or maintained by an
employer, employee organization, or both, where it provides
benefits other than through insurance for hospital, medical or
surgical expenses, or other benefits in the event of sickness,
accident, disability, death, or unemployment.
EXISTING LAW :
1)Establishes a comprehensive system for providing benefits to
workers for injuries or conditions arising out of or in the
course of employment, including temporary disability indemnity
benefits.
2)Allows for liens against these temporary disability indemnity
benefits where certain entities, including where benefits are
paid by a group disability policy, have paid loss-of-income
benefits to the injured worker.
FISCAL EFFECT : Unknown, however, this bill was referred to the
Senate floor by the Senate Appropriations Committee pursuant to
Senate Rule 28.8.
COMMENTS :
SB 1105
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1)Purpose . According to the author, SB 1105 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. The type of benefits provided by an
employee welfare benefit plan are the same as those provided
by other types of coverage, so these plans should have the
same standing to file a lien as others similarly situated.
2)Background . 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 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
SB 1105
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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.
3)Support . The California Correctional Peace Officers
Association (CCPOA) argues that the bill would allow 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 Workers' Compensation Appeals
Board. 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. SB 1105 would
simply allow the Trust to place a lien with the Board to
directly recover the monies in a straight-forward and
efficient manner.
REGISTERED SUPPORT / OPPOSITION :
Support
California Correctional Peace Officers Association
Opposition
None received.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086