BILL ANALYSIS �
SB 1105
Page 1
SENATE THIRD READING
SB 1105 (Lieu)
As Amended June 13, 2012
Majority vote
SENATE VOTE :39-0
INSURANCE 13-0 APPROPRIATIONS 17-0
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|Ayes:|Solorio, Hagman, |Ayes:|Fuentes, Harkey, |
| |Bradford, Fong, Carter, | |Blumenfield, Bradford, |
| |Feuer, Beth Gaines, | |Charles Calderon, Campos, |
| |Hayashi, Miller, Olsen, | |Davis, Donnelly, Gatto, |
| |Skinner, Torres, | |Hall, Hill, Lara, |
| |Wieckowski | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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.
SB 1105
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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 : According to the Assembly Appropriations
Committee, minor and absorbable costs to the Department of
Industrial Relations.
COMMENTS :
According to the author, 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. 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.
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,
SB 1105
Page 3
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 California Correctional Peace Officers Association (CCPOA)
argues that the bill would allow the CCPOA Benefit Trust Fund
(Trust), 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.
This bill would simply allow the Trust to place a lien with the
Board to directly recover the monies in a straight-forward and
efficient manner.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0004880