BILL ANALYSIS �
AB 1309
Page 1
ASSEMBLY THIRD READING
AB 1309 (Perea)
As Amended April 25, 2013
Majority vote
INSURANCE 11-0
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|Ayes:|Perea, Hagman, Bonilla, | | |
| |Ian Calderon, Cooley, | | |
| |Frazier, | | |
| |Beth Gaines, Mitchell, | | |
| |Nestande, Olsen, Torres | | |
| | | | |
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SUMMARY : Limits access to the California workers' compensation
system for professional athletes employed by out-of-state teams,
and establishes a separate statute of limitations for cumulative
injury cases for professional athletes. Specifically, this
bill :
1)Provides that a professional athlete employed by an out of
state team who is temporarily within California performing for
that out of state team is not covered by California's workers'
compensation system if:
a) The employer furnished workers' compensation coverage
under the laws of another state;
b) That workers' compensation coverage covers the
professional athlete's work performed in California.
2)Specifies that, if the above conditions are met, the laws of
the other state shall be the exclusive workers' compensation
remedy for injuries to the professional athlete while in this
state.
3)Defines "professional athlete" as an athlete employed at
either the minor league or major league level in the sports of
football, basketball, baseball, hockey, and soccer.
4)Defines "temporarily within this state" as an athlete who,
within the 365 days immediately prior to the last day he or
she performed in this state, had less than 90 days of service
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for that out of state employer in California.
5)Provides that where a professional athlete employed by a
California team commences employment with an out of state
team, he or she has one year from the date the player ended
employment with the California team to file a claim for
occupational disease or cumulative injury against the
California team.
6)Establishes an exception to this rule for players with
substantial California careers with a California team, by
treating a player with 8 years and 80% of his or her playing
career with a California team as a California player, even
though the player completes his or her career for an out of
state team.
7)Provides that, with respect to professional athletes who are
within the jurisdiction of the California workers'
compensation system, a claim for compensation for occupational
disease or cumulative injury, the date of injury is the later
of:
a) The date of last injurious exposure while employed
anywhere as a professional athlete; or
b) The date of diagnosis by a licensed physician.
8)The date of diagnosis by a licensed physician is the date the
physician informed the professional athlete of the medical
diagnosis.
9)Provides that the one-year statute of limitations from the
date of injury may be tolled only for the employee's mental
incompetence during the period during the one-year limitations
period.
EXISTING LAW :
1)Provides that an employee who has been hired or regularly
employed in California is protected by California's workers'
compensation laws.
2)Provides that an employee who is hired outside of California
is exempted from California's workers' compensation laws when
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temporarily within California if the employer has furnished
workers' compensation coverage under the laws of the other
state that protects the out of state employee while
temporarily in California, provided the other state has a
jurisdictional law similar to California's ("reciprocity").
3)Provides that, where there is reciprocity, the workers'
compensation laws of the other state shall be the exclusive
remedy for injuries incurred by the out of state employee
while temporarily employed in California.
4)Provides in most workers' compensation cases where there are
multiple employers who might be responsible for the effects of
an injury, the costs of benefits are apportioned among those
employers.
5)Provides, with respect to occupational disease or cumulative
injury, that the last employer is responsible for the entire
amount of benefits.
6)Establishes, based on case law, that the "last employer" rule
means "the last employer over which California has
jurisdiction."
7)Provides that a proceeding for workers' compensation benefits
must be commenced within one year of the date of injury.
8)Provides, with respect to an occupational disease or
cumulative injury, that the date of injury is the date the
employee first suffered disability from the injury, and knew
or should have known that the disability was caused by his or
her present or prior employment.
9)Provides, based on case law, that the statute of limitations
is tolled after an injury until the injured employee is
provided notice of his or her workers' compensation rights.
10)Establishes the California Insurance Guarantee Association
(CIGA) to, among other things, pay workers' compensation
benefits to injured employees whose employer was covered by a
now-insolvent insurer.
11)Finances CIGA through direct employer assessments and the
issuance of bonds that are supported by direct employer
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assessments.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS :
1)Purpose . According to the author, out of state professional
athletes are taking advantage of loopholes in California's
workers' compensation system to the detriment of substantial
California interests, and to the detriment of California
sports teams. Specifically, as a result of the "last employer
over which California has jurisdiction" rule, and the absence
of an enforceable one-year limitations period, California
teams are facing cumulative injury claims from players with
extremely minimal California contacts, but substantial playing
histories for teams in other states. In addition, out of
state sports teams are having claims filed against them in
California that are resulting in a number of serious
consequences for California, including: 1) clogging the
workers' compensation courts with cases that should be filed
in another state, thereby delaying cases of California
employees, 2) causing all insured California employers to
absorb rapidly escalating costs being incurred by CIGA, and 3)
placing increasing pressure on insurers to raise workers'
compensation rates generally in California to cover these
rapidly rising unanticipated expenses. In many of these cases
the players have already received workers' compensation
benefits from other states, as well as employment benefits
covering the same losses they are seeking compensation for in
California.
2)What does the bill do ? The bill makes three basic changes to
current law. First, the bill provides that professional
athletes in the five specified sports who play for out of
state teams must look to their own state's workers'
compensation system for benefits. The bill also provides a
specific statutory definition to "temporary" with respect to
out of state athletes. Current law provides no statutory
definition for any employee, and the lack of definition is why
courts have struggled to determine when a player has
sufficient contact with California. Second, the bill provides
protection for California teams where they believe they are
unfairly carrying the burden of obligations that should
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devolve to out of state teams. Third, the bill changes the
trigger for when the statute of limitations on a cumulative
trauma claim starts running from the date the professional
athlete "should have known" of the injury to the date the
professional athlete last played for any team, and was
diagnosed with injuries by a licensed physician, a much more
objective standard.
3)CIGA . California experienced several major workers'
compensation insurer insolvencies - in the mid-1980s as well
as in the late 1990s and early 2000s. As a result of these
insolvencies, many of the claims being addressed by the bill
are not being paid by the insurer that provided workers'
compensation coverage during the time the player played for
the particular team. Rather, these claims are being paid by
CIGA, which is financed by a broad-based assessment on all
insured California employers.
According to CIGA, it has paid over 800 of these claims in
recent years, and has over 1,000 claims pending. Of even
greater concern to CIGA, the pace of new filings has been
rapidly increasing, and it is receiving an average of 34 new
claims per month. CIGA also notes that the claims are
increasingly from non-Californians, and that while former
National Football League (NFL) players used to be the bulk of
the claims, players from other sports are now increasingly
filing. CIGA interprets this trend as suggesting total claims
will continue to increase as non-football players recognize
the opportunity to file. As confirmation of CIGA's concern,
Major League Baseball reports that it is experiencing similar
escalating frequency of claims - over 30 per month in the past
year.
4)Milliman study . The proponents of the bill commissioned a
study by the respected actuarial firm of Milliman, Inc. The
study was intended to identify the scope of expected future
financial impacts of professional athlete claims in the
California workers' compensation system, including the extent
to which these claims might impact the financial condition,
and thus pricing, of insurers writing workers' compensation
insurance in California. According to Milliman, they predict
workers' compensation rates for all insured employers to be
1.3% higher as a result of the continued filing of
professional athlete claims starting next year. This 1.3% is
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the "expected" impact, and Milliman suggests a "best case"
increase of 0.8% and a worst case impact of a 2.1% increase.
5)California teams' concerns . California sports teams believe
that current law unfairly shifts obligations to them that
should be borne by out of state teams. This result is due to
the case law that has modified the "last employer" rule for
cumulative injury cases and made it a "last employer over
which California has jurisdiction" issue. As a result,
players with only minimal, early career contact with a
California team have been successfully holding these teams
responsible for a career-long cumulative trauma. The
following example exemplifies the dilemma of California law:
The Oakland Raiders draft two players, but release both at the
end of their first training camp. One of these players is
picked up by the San Diego Chargers, and has a 10-year career
in San Diego. The other player is picked up by the Dallas
Cowboys and has a 10-year career in Dallas. After playing for
the Chargers for one year, the career-long cumulative injury
responsibility rests with the San Diego Chargers. Under
current law, however, the career-long cumulative injury
responsibility with respect to the Dallas Cowboys player still
rests with the Oakland Raiders.
6)Tolling . While many of the claims being filed are from
relatively recently retired players (players who have retired
since 2000), a large number are from players who retired in
the last century. One of the reasons that so many old claims
are still viable is because of the "tolling" decisions that
courts have made. In general, an employer must inform an
injured employee of their workers' compensation rights once a
claim is filed. However, cumulative injury cases may not be
known to either employee or employer at the time that the
employment relationship ends. Nonetheless, case law has held
that the failure of an out of state team to have provided a
California workers' compensation notice tolls the statute of
limitations. As a result of this "failure" to provide notice,
numerous claims that might otherwise be invalid due to the
statute of limitations for commencing proceedings remain
viable.
Representatives of players point to the failure to provide
notice, and argue that the bill is attempting to relieve teams
of the consequences of their misconduct in failing to provide
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notice of workers' compensation rights. Out of state teams
respond by arguing it is unreasonable to have expected the New
York Giants, for example, to provide (accurate) notices about
California workers' compensation rights as they would exist in
2013 to players in the 1970s and 1980s who, at the time of
separation, did not have known injuries. The bill addresses
this by tying the statute of limitations to the diagnosis of
disease or injury.
7)Forum of last resort . Players have argued that California is
the forum of last resort for their claims, and that the bill
is unfairly eliminating this opportunity for compensation.
While it is true that other states where professional sports
teams are located experience a small number of claims, no
other state experiences the out of state professional athlete
claims frequency like California. The combination of more
favorable cumulative injury rules, and virtually non-existent
statute of limitations rules makes California unique among all
of the states in which there are professional sports teams.
As a result, there is no question that California is the
"forum of last resort" for many players. The question is
whether California should be a forum unique among all of the
states that have professional sports teams - none of which
offer California players anywhere near the same opportunities
to pursue claims in their workers' compensation systems.
8)Medical treatment and player benefits . One of the primary
arguments made by players is that their injuries sustained
during their careers require ongoing medical treatment. And
in many cases this is without doubt true. However, it is not
true that California workers' compensation claims are the only
routes to obtain that medical care. And, in fact, well in
excess of 90% of the out of state professional athlete claims
that have been settled do not include future medical awards
because the players have settled out medical care for lump sum
payments. While it is not universally the case, the leading
reason that players settle future medical rights for a lump
sum is that they have secured medical care through other
sources - often their league or the team they played for. For
example, NFL players have post-career disability income
benefits, medical insurance benefits, and league-paid medical
savings accounts, depending on length of career, among other
collectively bargained benefits.
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It should also be noted that, starting January 1, 2014, under
the federal Affordable Care Act, retired players otherwise
without access to comprehensive health insurance will be
eligible for coverage without limitation for pre-existing
conditions.
9)Collective bargaining . All of the major sports have
well-established and well-funded player associations, and to
varying degrees have entered into collective bargaining
agreements that contain a range of benefits that provide
protection for the same issues that workers' compensation
benefits cover, often with better coverage than workers'
compensation. Player representatives argue that this process
has worked well, and that player benefits should be resolved
at the bargaining table, and not in the Legislature. They
contend that the bill's proponents are attempting to obtain by
legislation that which they should be discussing at the
bargaining table.
10)Reciprocity . Current California law contains what is
referred to as a "reciprocity" provision that operates to
preclude out of state players from filing a claim in
California if their home state has enacted the proper statute.
Where there is an adequate other state law, such as Ohio's,
the claims at issue in this bill are barred in California.
Thus, Cincinnati Bengals', Cincinnati Reds', Cleveland
Indians', and Cleveland Cavaliers' former players, otherwise
in similar circumstances with players from a number of other
states, are barred from coming to California with their
workers compensation claims. It should be noted that
"reciprocity" does not require comparable substantive workers'
compensation rights. It merely requires technical legal
compliance.
Proponents of the bill argue that this long-standing provision
evidences a policy that requires out of state employees to
turn to their own state's workers' compensation system. The
problem, they argue, with this approach is that it places the
policy decisions raised by this bill in the hands of other
states that may or may not adopt a conforming law. Proponents
point to this rule to argue that this bill is merely an
improved way to implement existing statutory policy.
Opponents argue that, rather than an approach like that
described in this bill, proponents should be pursuing
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conforming reciprocity provisions in each state where there is
a professional team.
11)Brain injuries . Opponents have claimed that the bill would
eliminate coverage for latent brain injuries that medical
science is just beginning to understand. They assert that a
diagnosed concussion during a player's playing career would
operate to bar a later diagnosis of a latent brain disease
such as one of the many forms of dementia. Proponents, on the
other hand, point to language in the bill that establishes the
"date of injury" for statute of limitations purposes as the
date of diagnosis by a licensed physician, and argue that a
diagnosis of dementia is clearly a new diagnosis of a
completely separate condition than the mere concussion that
occurred during the player's career. The author has clearly
expressed the intent that latent injuries or diseases such as
dementia would be a new diagnosis, and the author's position
is borne out by reference to Steadman's Medical Dictionary,
which defines "diagnosis" as the "determination of the nature
of a disease, condition, or congenital defect." It is clear
that a diagnosis of dementia (a disease) is a completely
different diagnosis than a diagnosis of a concussion (an
injury). Thus, the diagnosis of a latent brain disease would
be a newly diagnosed condition which would trigger a new
one-year limitation period.
12)Salary cap . The NFL Players' Association makes the argument
that "the players are paying for their own workers'
compensation benefits through lower salaries." They point to
the formula that is used to calculate the salary cap that is
in place in the NFL, and note that workers' compensation
expenses are a part of that formula, and therefore these
expenses operate to reduce salary if the expenses go up. The
bill's proponents respond that, first, this argument applies
to the NFL only, and the bill applies to a much broader scope
of professional athletes. But they also point out that the
formula in the NFL collective bargaining agreement is one
small piece of a much larger agreement, and isolating this one
piece to say "the players pay their own workers' comp claims"
is like saying the players pay any or all of the various
expenses that a professional sports team incurs. It should be
noted that it is illegal in California to require an injured
worker to pay for any part of his or her workers' compensation
benefits.
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13)Licensed physician language . The bill triggers the
commencement of the limitations period for a cumulative injury
case upon a new diagnosis by a "licensed physician." The
intent of this provision is to refer to physicians and
surgeons holding either an M.D. or D.O. degree. It is not
intended to refer to the term "physician" as used in the Labor
Code. The author may wish to consider a clarifying amendment
so that there is no confusion on this issue.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086 FN:
0000296