Item #03
Date: October 4, 2022
To: Mayor and City Council
From: Nicole Moe, City Clerk
Jim Schaad, City Manager
Subject: Veto Senate Bill (SB) 1127 (Atkins)
Recommendation:
Pass a Motion to authorize the City Clerk to circulate a letter for all Councilmembers to sign, in support of vetoing the proposed SB 1127 (Atkins) that stipulates less time to investigate, and institutes fines on Agencies for Workers’ Compensation Claims.
Rationale for Recommendation:
SB 1127 (Atkins) is currently moving to Governor Newsom’s desk for a pass or veto decision. SB 1127 reduces the time to investigate workers’ compensation claims from 90 days to 75 days and institutes a fine up to $50,000 for each “unreasonable” rejection claim per case.
Background:
California Association of Joint Powers Authorities (CAJPA) is urging Agencies to take action to help prevent the signing of SB 1127 and refrain from undue burden being placed upon employer’ ability to rightfully handle workers’ compensation claims.
SB 1127 reduces the timeline for employers to make an informed decision about covering workers’ compensation claims covered by a presumption statute from 90 to 75 days, and it retroactively imposes penalties as high as $50,000 per claim if an employer “unreasonably” rejects liability for one of these workers’ compensation claims. Since there is no definition of an “unreasonable denial” each denial of a “rebuttable” presumption will be litigated as unreasonable- at a minimum drastically increasing costs and litigation for all employers.
The City supports making better and faster decisions about workers’ compensation claims. However, measures should be made in order to encourage stakeholders to work together on reforms that actually achieve more timely claims resolution.
The laws of the State of California already provide for a fair and equitable system for all workers. Our workers’ compensation system is “no fault”, meaning that employers pay for benefits even if there was no specific negligence. Additionally, state law requires the workers’ compensation appeals board judges to “liberally construe” the laws of the state toward the provision of benefits. These two statutory requirements make our workers’ compensation system extremely accessible for injured workers.
Item #03
Discussion & Analysis:
SB 1127 proposes harsh new penalties for employers who “unreasonably” reject liability for clams covered by presumption statutes, yet it does not define that term making each rebuttable presumption claim, fodder for litigation. SB 1127 mandates a penalty of five times the value of benefits delayed or denied, with a maximum penalty of $50,000. This bill impacts public and private employers because these penalty provisions apply not only to the severe injuries and illnesses found in the public safety presumption statutes, but also to the COVID-19 presumption. Similarly, all these claims will be held to the 30-day investigation period, which all but guarantees that a legally sufficient investigation cannot be conducted within the allotted timeframe.
Finally, the new penalties in SB 1127 apply RETROACTIVELY to all injuries without regard to the date of injury. This means that the penalty portion of the bill would apply retroactively to decisions that were made prior to the date of enactment. This is fundamentally unfair to employers and will add significantly to the litigation and friction associated with the bill.
Alignment with City Council Goal(s):
This Agenda item does not align with current Council Goals.
Attachment:
1) Letter of recommendation – to Veto SB 1127 (Atkins)