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CA Legislature Sends Much-Discussed Work Comp Bill to Governor

Today's workers' compensation defense post will take a closer look at A.B. 2490, an interesting piece of legislation passed by both the Assembly and the Senate by rather wide margins, and now submitted to Governor Schwarzenegger for final approval. 

A.B. 2490, sponsored by Assemblyman Dave Jones (D-Sacramento), would prevent work comp insurance companies from resolving their disputes with California employers in other states with more favorable arbitration provisions (unless both parties agree). In other words, Davis' legislation would mandate that work comp insurers resolve disputes with California employers in a California venue/forum in accordance with California law.

If passed, A.B. 2490 would apply only to those employers that utilize California as their principal place of business, and generally affect agreements between work comp insurers and rather complex employers (i.e., those with a business presence in several states).

It is worth noting that even though work comp insurance policies must be approved by the insurance commissioner, it is still no guarantee that these unfavorable arbitration provisions will not make their way into the final agreement. In fact, it is common practice for insurers to reach "side agreements" whereby an employer must travel to another jurisdiction (and rely on that jurisdiction's arbitration laws) in the event of a dispute.

According to Jones, this has been "a big problem."

While the state legislature has expressed widespread support for the measure, The American Insurance Association (AIA) has asked Governor Schwarzenegger to veto A.B. 2490. (The state Chamber of Commerce has changed its position from opposition to neutral.)

"AIA will request that the governor veto several bills that are unnecessary, impede an insurer and business owner's ability to contract ...," said AIA assistant vice president of state affairs, Steve Suchil.

Stay tuned for further developments in the area of workers' compensation defense ...

This post was provided for informational purposes only and not to be construed as legal advice.

Related Resources:
  
• California Lawmakers Advance Workers' Comp Bills, Including Arbitration Restriction (InsuranceNews.net)

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