Bill Text: CA SB536 | 2025-2026 | Regular Session | Amended

California Senate Bill 536

Bill Title: Workers’ compensation insurance fraud reporting.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Engrossed) 2026-06-24 - From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 17. Noes 0.) (June 24). Re-referred to Com. on APPR. [SB536 Detail]

Download: California-2025-SB536-Amended.html

Amended IN Assembly June 15, 2026

Amended IN Assembly May 18, 2026

Amended IN Senate May 23, 2025

Amended IN Senate April 30, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 536

Introduced by Senator Archuleta

February 20, 2025

An act to amend Section 1877.3 of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL'S DIGEST

SB 536, as amended, Archuleta. Workers’ compensation insurance fraud reporting.

Existing law makes it a misdemeanor or a felony to engage in specified acts of fraud or material misrepresentation for the purpose of obtaining or denying workers’ compensation, as specified. Existing law, the Workers’ Compensation Insurance Fraud Reporting Act (the act), requires insurers and licensed rating organizations to release upon request to an authorized governmental agency, as defined, relevant information deemed important to the authorized governmental agency that the insurer or licensed rating organization may possess relating to any specific workers’ compensation insurance fraud investigation. The act requires, under specified circumstances, an insurer or licensed rating organization to notify the local district attorney’s office and the Fraud Division of the Department of Insurance, and requires that entity, unless specified circumstances exist, to notify any other authorized governmental agency of suspected fraud, as specified. The act also requires the Employment Development Department (EDD) to release, upon written request, to an authorized governmental agency relevant information that the EDD may possess relating to any specific workers’ compensation insurance fraud investigation. The act requires, unless specified circumstances exist, an authorized governmental agency that is provided with information pursuant to those provisions to release or provide that information in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution, or prevention of insurance fraud or workers’ compensation fraud.

This bill would require an insurer or licensed rating organization to notify the EDD, in addition to the local district attorney’s office and Fraud Division on the Department of Insurance, of suspected fraud when the fraudulent act relates to premium fraud. The bill would authorize an ~~insurer, an agent authorized by an insurer, or a licensed rating organization~~ insurer to submit wage records and employee counts for an employer to the EDD and would require the EDD to identify discrepancies in the submitted information, as specified, and report any discrepancies back to the submitting ~~party.~~ insurer. Upon request by an insurer, ~~an agent of an insurer, or a licensed rating organization,~~ the bill would require the EDD to release or provide detailed payroll information, including payroll summary totals, allowing the requester to compare the records with the information they are otherwise entitled to receive from employers in workers’ compensation claims or pursuant to workers’ compensation policies, unless doing so would violate federal law or compromise an ongoing investigation. The bill would require the EDD to only provide the information if specified requirements are met, and the requesting ~~insurer, agent, or licensed rating organization~~ insurer to reimburse the department’s actual, direct costs of releasing or providing this information. The bill would prohibit the provided documents from being used for specified purposes.

Existing federal regulations generally prohibit the disclosure of confidential unemployment compensation information unless disclosure is on the basis of, among other things, informed consent to an agent of an employer.

This bill would provide that by entering into a policy of workers’ compensation insurance with an insurer, an employer in California consents and designates that insurer as the employer’s agent to act for or in the place of the employer only with respect to a request for the above-described payroll information.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 1877.3 of the Insurance Code is amended to read:

1877.3.

(a) Upon written request to an insurer or a licensed rating organization by an authorized governmental agency, an insurer, an agent authorized by that insurer, or a licensed rating organization to act on behalf of the insurer, shall release to the requesting authorized governmental agency any or all relevant information deemed important to the authorized governmental agency that the insurer or licensed rating organization may possess relating to any specific workers’ compensation insurance fraud investigation.

(b) (1) When an insurer or licensed rating organization knows or reasonably believes it knows the identity of a person or entity whom it has reason to believe committed a fraudulent act relating to a workers’ compensation insurance claim or a workers’ compensation insurance policy, including any policy application, or has knowledge of such a fraudulent act, then, for the purpose of notification and investigation, the insurer, or agent authorized by an insurer to act on its behalf, or licensed rating organization shall notify the local district attorney’s office, the Fraud Division of the Department of Insurance, and, when the fraudulent act relates to premium fraud, the Employment Development Department, and may notify any other authorized governmental agency of that suspected fraud and provide any additional information in accordance with subdivision (a). The insurer or licensed rating organization shall state in its notice the basis of the suspected fraud.

(2) Insurers shall use a form prescribed by the department for the purposes of reporting suspected fraudulent workers’ compensation acts pursuant to this subdivision.

(3) This section does not abrogate or impair the rights or powers created under subdivision (a).

(c) The authorized governmental agency provided with information pursuant to subdivision (a), (b), or (e) shall, upon request, unless it would violate federal law or otherwise compromise an investigation, release or provide that information in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution, or prevention of insurance fraud or workers’ compensation fraud.

(d) An insurer or licensed rating organization providing information to an authorized governmental agency pursuant to this section shall provide the information within a reasonable time, but not exceeding 60 days from the day on which the duty arose.

(e) Upon written request by an authorized governmental agency, as specified in subdivision (o) of Section 1095 of the Unemployment Insurance Code, the Employment Development Department shall release to the requesting agency any or all relevant information that the Employment Development Department may possess relating to any specific workers’ compensation insurance fraud investigation. If an authorized governmental agency seeks to disclose this information to any other governmental agency that is not authorized to receive that information pursuant to subdivision (o) of Section 1095 of the Unemployment Insurance Code or subdivision (c) of Section 603.9 of Title 20 of the Code of Federal Regulations, that agency shall submit a request to the Employment Development Department for approval prior to disclosure. Relevant information may include, but is not limited to, all of the following:

(1) Copies of unemployment and disability insurance application and claim forms and copies of any supporting medical records, documentation, and records pertaining thereto.

(2) Copies of returns filed by an employer pursuant to Section 1088 of the Unemployment Insurance Code and copies of supporting documentation.

(3) Copies of benefit payment checks issued to claimants.

(4) Copies of any documentation that specifically identifies the claimant by social security number, residence address, or telephone number.

(f) (1) An ~~insurer, an agent authorized by an insurer, or a licensed rating organization~~ insurer may submit wage records and employee counts for an employer to the Employment Development Department. The department shall identify discrepancies in the submitted information as compared to the information maintained by the department. The department shall report any discrepancies back to the submitting ~~party.~~ insurer.

(2) Based on the discrepancies and a relevant potential workers’ compensation insurance fraud investigation, the ~~insurer, agent authorized by an insurer, or licensed rating organization~~ insurer may submit a request to the Employment Development Department, and the department shall release or provide to the requester, detailed payroll information, including payroll summary totals, that would allow the requester to compare the records with the information they are otherwise entitled to receive from employers in workers’ compensation claims or pursuant to workers’ compensation policies, unless it would violate federal law or otherwise compromise an ongoing investigation. The information described in this paragraph shall only be released or provided if both of the following requirements are met:

(A) The ~~insurer, agent, or licensed rating organization~~ insurer specifies in the written request what information is necessary.

(B) The Employment Development Department determines the information requested is consistent with a workers’ compensation investigation by an ~~insurer, agent, or licensed rating organization~~ insurer and could be used in the investigation of potential workers’ compensation insurance fraud.

(3) The information released or provided under this subdivision shall be provided in a confidential manner and shall be used only in furtherance of the investigation of potential workers’ compensation insurance fraud and any required reporting, underwriting actions, and audit and collection of premiums. The information shall not, in any circumstance, be used for the purposes described in subdivision (k) of Section 791.13 of the Insurance Information and Privacy Protection Act (Article 6.6 (commencing with Section 791) of Chapter 1).

(4) The information released or provided cannot be shared with law enforcement unless released or provided as part of a fraud referral pursuant to special investigative unit compliance requirements as authorized by Section 1872.4 or as part of the information provided or released pursuant to subdivision (a) or (b) of this section.

(5) (A) The information requested pursuant to this subdivision shall only be released or provided in compliance with the requirements of Part 603 of Title 20 of the Code of Federal Regulations.

(B) By entering into a policy of workers’ compensation insurance with an insurer, an employer in California consents and designates that insurer as the employer’s agent to act for or in the place of the employer only with respect to a request for the information described in paragraph (2). The declaration page of a workers’ compensation insurance policy shall constitute written release that confirms the insurer as the agent of the employer sufficient for the requirements of Part 603 of Title 20 of the Code of Federal Regulations.

(6) An ~~insurer, agent, or licensed rating organization~~ insurer requesting information pursuant to this subdivision shall quarterly reimburse the Employment Development Department for the department’s actual, direct costs of releasing or providing information from its records to the requesting ~~insurer, agent, or licensed rating organization.~~ insurer.

(7) The Employment Development Department may require an ~~insurer, agent authorized by an insurer, or licensed rating organization~~ insurer submitting information or a request pursuant to this subdivision to enter into a written, enforceable agreement that shall be terminable if the department determines the ~~insurer, agent authorized by an insurer, or licensed rating organization~~ insurer did not adhere to the safeguards in that agreement.

SEC. 2.

The Legislature finds and declares that Section 1 of this act, which amends Section 1877.3 of the Insurance Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

In order to protect the privacy of California workers, while also gathering useful information related to a workers’ compensation investigation, it is necessary that personal identifying information remain confidential.