Limiting Investigations And Other Abuses

By: Mark Webb
Mark Webb
Mark Webb

As Assembly Bill 1465 (Reyes) apparently languishes in or around the Assembly Insurance Committee, another ominous legislative proposal has appeared on the horizon. Actually, Senate Bill 335 (Cortese) has crossed the horizon and is now awaiting a hearing in the Senate Appropriations Committee, where it is set for hearing on April 26. In other words, for the time being, SB 335 is alive and moving.

SB 335 shortens the timeframe for determining whether to accept or reject a claim in Labor Code Sec. 5402 from 90 days to 45. For employers, whose workers are afforded a presumption in Labor Code Secs. 3212 – 3213.2, that period is shortened to 30 days.

If these shortened timeframes look familiar, they should. These are the same timeframes established in Senate Bill 1159 (Hill) last year. SB 1159 added Labor Code Secs. 3212.86, 3212.87 and 3212.88. It codified Governor Newsom’s Executive Order N-62-20 and provided a set of requirements for a presumption of compensability to apply, as well as the shortened timeframes to decide whether to accept or deny a claim in all COVID-19 claims. For workers other than those in specified first responder or health care professions, the presumption attaches only once there is an outbreak as defined in the Code in the place of employment. These provisions sunset on January 1, 2023.

It should be considered a given that SB 1159 exists because of the unique needs of dealing with the COVID-19 pandemic. That conclusion should apply not only to the presumption, but also to the shortened investigation time. Apparently, such is not the case. While SB 335 in its current form preserves the sunset of the presumptions created in SB 1159, it makes the shortened timeframes for investigating a claim contained in that legislation applicable to all claims – not just COVID-19 claims – going forward.

SB 335 also amends the Labor Code to require up to $17,000 in immediate medical care while the claim is being investigated. The current amount is $10,000.

The last change made by SB 335 is that, for employers of workers entitled to a presumption in Labor Code Secs. 3212-3213.2, a new penalty provision, Labor Code Sec. 5814.3, is added. This penalty provision reinstates Labor Code Sec. 5814 as it existed prior to its repeal in Senate Bill 899 (Poochigian). Labor Code Sec. 5814 as it now exists was added in SB 899 seventeen years ago. It applies a 10 percent penalty to the entire specie of award that a workers’ compensation judge determines to be unreasonably delayed or denied.

It is this last provision that draws SB 335 into sharper focus. Reinstating the oft-abused Labor Code Sec. 5814 penalties, even in this somewhat limited fashion, blurs the line between consequences to the employer and windfall to the employee and, generally, the applicant’s attorney. As a whole, SB 335 will increase litigation and its associated costs. As it relates specifically to new Labor Code Sec. 5814.3, if chaptered, it will be time to dust off the many appellate cases decided almost two decades ago and refresh recollections of how Labor Code Sec. 5814 was abused.

Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.