California in Holding Pattern on Insurance Bills

September 9, 2008

With Democratic and Republican legislators unable to agree on a budget since California’s fiscal year began on July 1, 2008, many state services — as well as insurance bills — are at a standstill. Gov. Arnold Schwarzenegger has threatened not to act on bills until the Legislature can come to an agreement over how to close a $15.2 billion gap in California’s $100 billion-plus general fund.

Following is a list of noteworthy bills that passed in the last weeks of this year’s legislative session and a list of significant bills that failed passage this year, as compiled by the Association of California Insurance Companies. Gov. Arnold Schwarzenegger has until Sept. 30 to act on the bills that passed.

Approved Bills being held for Governor
Auto
Senate Bill 28 Motor Vehicles: Mobile Service Device would amend current law to add “mobile service devices” to the Vehicle Code provision that prohibits use of a wireless telephone unless that telephone is specifically designed to allow hands-free listening and talking. “Mobile service devices” include, but are not limited to, broadband personal communication devices, laptop computers and two-way messaging devices.

SB 1371 Insurance: Automobile Repair Estimates would prohibit insurers from capping paint and materials charges, as defined.

Litigation
SB 1113 Attorney’s Fees and Costs would authorize a court to award costs and expert witness fees in private attorney general lawsuits.

SB 1608 Disabled Persons: Equal Access: Civil Actions would require a licensed architect, as a condition of license renewal, to complete courses regarding disability access requirements. SB 1608 also would allow a defendant in a disability access lawsuit to obtain a temporary stay in the action in order to resolve the complaint. THe bill would require that building sites be inspected by certified access specialists.

Metal Theft
AB 844 Junk Dealers and Recyclers: Nonferrous Material would require junk dealers and recyclers to maintain certain records when purchasing copper, copper alloys, stainless steel and aluminum.

SB 691 Junk Dealers and Recyclers: Nonferrous Materials would require junk dealers and recyclers to provide payment by check for nonferrous materials after a three-day waiting period subject to limited exceptions.

Privacy
SB 364 Personal Information: Privacy would amend current requirements for notification of security breaches.

Regulatory
SB 1279 Insurance: Electronic Records would provide that the Department of Insurance may maintain records in electronic form and handle transactions electronically to the extent not prohibited by law.

Unclaimed Property
SB 1319 Unclaimed Property: Escheat would require holders of unclaimed property, which includes insurance companies, to give additional notices to property owners. The bill would condition a property holder’s relief from liability on the holder’s compliance with the requirements of the Unclaimed Property Law. The bill also would increase the penalties for a property holder’s willful or non-willful failure to comply with the requirements of the Unclaimed Property Law.

Workers’ Compensation
AB 2969 Workers’ Compensation: Medical Treatment Reviews would require that a physician who conducts a utilization review of workers compensation medical treatment services be licensed in California.

SB 1115 Workers’ Compensation: Permanent Disability Report would specify that in making workers’ compensation apportionment determinations physicians may not consider race, religious creed, color, national origin, age, gender, marital status, sex or genetic predisposition as a cause or other factor of disability.

Bills That Failed Passage
Auto
AB 2800 Automobile Insurance: Rates would have allowed an auto insurer to apply different rating factors for insurer-verified annual mileage and applicant-estimated annual mileage. Assemblyman Jared Huffman, who sponsored the bill, decided not to pursue the legislation now that the DOI has proposed regulations addressing the same issue.

AB 3004 Vehicle: Liens would have extinguished a garage’s lien that arose from storing a vehicle if the garage failed to provide the vehicle owner or the owner’s insurance representative with information required to be provided by the Vehicle Code.

SB 1059 Vehicle Insurance: Aftermarket Parts would have prohibited an insurer from requiring the use of certain aftermarket parts in the repair of a vehicle that was under the original manufacturer’s warranty, unless the insurer’s contract with the claimant required the use of the aftermarket parts. The provisions of the bill would have applied for three years from the date on which the vehicle was sold as new.

Litigation
AB 1873 Small Claims Court would have authorized a Small Claims Court to allow a party or a witness to appear by telephone.

SB 1630 Civil Actions: Place of Trial would have required the Judicial Council, in consultation with specified entities, to establish a process for promptly transferring venue of a civil case for trial when (1) the court in which the case was filed had a significant backlog of civil trials and (2) the backlog was due to documented need for judicial officers in that court, or to other special circumstances that impact the ability of the court to conduct trials in civil actions.

Privacy
SB 328 Personal Information: Prohibited Practices would have prohibited obtaining personal information from a business about a customer or employee by making false, fictitious or fraudulent statements or representations and would have imposed civil penalties for violations.

Taxes
AB 1848 Income Tax Returns: Withholding would have required a business to impose backup withholding at a rate of 7 percent on any California business when payments to that business are subject to federal backup withholding. ACIC opposed the bill.

Workers’ Compensation
AB 2692 Insurance: Workers’ Compensation would have created a presumption that workers’ compensation rates that do not meet the “minimum reasonable pure loss ratio” established by the insurance commissioner are excessive.

AB 2987 Workers’ Compensation: Job Displacement Benefits would have set the time for an injured employee’s eligibility for the supplemental job replacement benefit at 60 days after the date of the receipt of the first report of initial evaluation of permanent impairment.

Sources: ACIC, California Legislature

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