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AIA: CA Workers Comp Measures to Increase Medical Costs and Interfere with Right to Contract

Source: AIA

Posted on 22 Apr 2010

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The American Insurance Association (AIA) testified on Wednesday in opposition to two pieces of legislation considered by the California Assembly Insurance Committee.

AB 1994, by Assemblywoman Nancy Skinner (D-Berkeley), would give certain hospital employees a rebuttable presumption for injuries including a blood-borne infectious disease, neck or back impairment, H1N1 influenza or MRSA that develops during the time the person is employed with the hospital. The bill also takes the unprecedented step of extending a rebuttable presumption for injuries to private sector employees. The current presumption is for public safety officers who face unique hazards in the line of duty.

“This bill will add to the already increasing medical costs in California’s workers’ compensation system,” said Steve Suchil, AIA assistant vice president for state affairs. “The Assembly Appropriations Committee analyzed a similar measure last year and found the price tag for hospitals would be an additional $400 to $800 million. Evidence has not been presented that shows the current system is ineffective for hospital employees.”

AB 2490, by Assemblyman Dave Jones (D-Sacramento), would require any agreement between an employer and a workers’ compensation insurer for dispute resolution or arbitration to specify that California law and venue will be used for all proceedings. Failure to comply with this new requirement would render the dispute resolution agreement void and unenforceable.

“AB 2490 needlessly interferes with an employer and carrier’s right to contract, and select a form of arbitration,” said Suchil. “These agreements are for large commercial accounts which are carefully negotiated with insurers, and involve risk managers, brokers and often legal counsel. There may be reasons beneficial to both parties to select another venue state or choice of law. Given California’s competitive market, employers have a variety of companies from which to choose.”