California – Insurance Commissioner Dave Jones today announced that Governor Jerry Brown signed SB 684, which protects California employers from being dragged out of state by workers’ compensation insurers to resolve disputes. SB 684, which received bipartisan support, was sponsored by Insurance Commissioner Dave Jones and authored by Senate Majority Leader Ellen Corbett (D-San Leandro). The bill provides that workers’ compensation insurers must provide a written disclosure to California employers that the insurer is seeking to include in the workers’ compensation insurance contract a requirement that disputes be arbitrated or resolved in a state other than California under that other state’s laws. The bill also provides that unless the California employer agrees explicitly otherwise, any disputes with the insurer will be resolved in California under California law.
“SB 684 protects California’s businesses by preventing workers’ compensation insurers from dragging California businesses to other states like New York or Delaware to resolve disputes, without the California business’s consent,” said Commissioner Jones. “SB 684 reduces costs for California businesses associated with having to fly managers and lawyers to places like New York or Delaware to resolve disputes that could just as easily be resolved here in California.”
When quoting a price for workers’ compensation insurance, the workers’ compensation insurers increasingly assume that the California employer will be required to resolve any disputes with the insurer out of state – in a state chosen by the insurer. Or the workers’ compensation insurer will impose this requirement after the main contract is negotiated. Employers complained to Insurance Commissioner Dave Jones that they were being dragged too far off states, at their own expense, to resolve disputes – even though they had not agreed up front to this requirement.
SB 684 protects California businesses by requiring that there be disclosure up front at the time a quote is provided as to where the insurer would like to resolve disputes and by making explicit that California businesses can decline to agree to being forced to arbitrate or otherwise resolve disputes in other states than California.
SB 684 will apply to workers’ compensation policies issued or renewed on or after July 1, 2012.
Source: CA Insurance Commissioner