SB 1105
Page 1
SENATE THIRD READING
SB 1105 (Lieu)
As Amended August 29, 2012
Majority vote
SENATE VOTE: 39-0
INSURANCE
Ayes:
13-0
Solorio, Hagman, Bradford, Fong,
Carter, Feuer, Beth Gaines, Hayashi,
Miller, Olsen, Skinner, Torres,
Wieckowski
APPROPRIATIONS
Ayes:
17-0
Fuentes, Harkey, Blumenfield,
Bradford, Charles Calderon, Campos,
Davis, Donnelly, Gatto, Hall, Hill,
Lara, Mitchell, Nielsen, Norby,
Solorio, Wagner
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.
3) Contains chaptering language to avoid conflicts with the new version of SB 863.
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: 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
SB 1105
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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, 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: 0005774