Bill Text: CA SB684 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Workers' compensation insurance: dispute resolution:

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2011-10-07 - Chaptered by Secretary of State. Chapter 566, Statutes of 2011. [SB684 Detail]

Download: California-2011-SB684-Amended.html

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BILL NUMBER: SB 684	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 25, 2011

INTRODUCED BY   Senator Corbett

                        FEBRUARY 18, 2011

   An act to add Section 11658.5 to the Insurance Code, relating to
workers' compensation insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 684, as amended, Corbett. Workers' compensation insurance:
dispute resolution: arbitration clauses.
   Existing law requires that a workers' compensation insurance
policy or endorsement not be issued by an insurer unless the insurer
files a copy of the form or endorsement with a rating organization
and 30 days have expired from the date the form or endorsement is
received by the commissioner from the rating organization without
notice from the commissioner, unless the commissioner gives written
approval of the form or the endorsement prior to that time.
   This bill would require that any agreement, other than a
settlement agreement resolving a particular dispute, between an
employer, whose principal place of business is in California, and a
workers' compensation insurer concerning resolution of disputes,
including, but not limited to, an arbitration clause arising out of a
workers' compensation policy or endorsement, be part of  the
  a  form or endorsement filed with the rating
organization, be provided to the employer  in writing 
contemporaneously with any written quote that offers to provide
insurance coverage, and contain provisions to resolve disputes that
arise in this state in the California courts and under California
law. The bill would provide, however, that prior to the inception of
the policy, employers and workers' compensation insurance companies
may, after freely negotiating, expressly agree to  a choice
of law or  a choice of forum other than California.  The
bill would require that where a California state agency has been
granted the authority to resolve the dispute, it would not be subject
to an alternative dispute resolution between an employer and workers'
compensation carrier.  Failure to observe those requirements
would render any dispute resolution provision void and unenforceable.

   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) All California employers subject to the Workers' Compensation
Law are required by law to obtain insurance for their employees.
   (b) Workers' compensation policies and endorsements are highly
regulated and designed primarily to protect the worker and ensure
prompt payment of claims.
   (c) The Legislature has authorized the Insurance Commissioner
(commissioner) to oversee the form and substance of all workers'
compensation insurance policies and endorsements.
   (d) Insurance companies providing workers' compensation policies
and endorsements are required by law to file the policies and
endorsements with the rating organization for transfer to the
commissioner.
   (e) Disputes between employers and insurance companies regarding
workers' compensation plans can arise, and resolution of these
disputes through litigation can be expensive, uncertain, and time
consuming.
   (f) In an effort to save time and costs, and because of the
uncertainty of litigation, workers' compensation carriers and
employers use arbitration to resolve disputes.
   (g) California has a compelling state interest in ensuring that
workers' compensation policies and endorsements are enforced under
California law and not subject to interpretation by other
jurisdictions, and that any dispute resolution proceedings are
conducted within its borders.
   (h) Employers and workers' compensation carriers should be freely
able to negotiate and agree to the terms of arbitration without
undermining the protections afforded to California employers under
California law.
  SEC. 2.  Section 11658.5 is added to the Insurance Code, to read:
   11658.5.  (a) Any agreement, other than a settlement agreement
resolving a particular dispute, between an employer, whose principal
place of business is in California, and a workers' compensation
insurer concerning resolution of disputes, including, but not limited
to, an arbitration clause arising out of a workers' compensation
policy or endorsement shall conform to all of the following:
   (1) It shall be part of  the   a  form
or endorsement filed with the rating organization pursuant to Section
11658, and  disclosure of the agreement  shall be provided
to the employer  in writing  contemporaneously with any
written quote that offers to provide insurance coverage.
   (2) It shall contain a choice of law provision that identifies
California law as the law to be used to resolve any dispute that
arises in California.
   (3) It shall contain a forum selection provision that identifies
California as the proper venue for any proceeding regarding a dispute
that arises in California.
   (4) Notwithstanding  paragraphs (2) and  
paragraph  (3), prior to the inception of the policy, employers
and workers' compensation insurance companies may, after freely
negotiating, expressly agree to  a choice of law or 
a choice of forum other than California. 
   (b) Notwithstanding this section, any dispute for which authority
to resolve the dispute has been granted to a California state agency
shall not be subject to alternative dispute resolution between an
employer and a workers' compensation insurer.  
   (b) 
    (c)  Failure to observe the requirements of this section
shall render any dispute resolution provision void and
unenforceable.