SAN FRANCISCO --The Attorney General's Office has ruled on a question presented to them by the Department of Industrial Relations (DIR) regarding the rights of private and public self-insured employers to purchase special excess workers' compensation insurance in view of Propositions 30 and 31 on the March 7, 2000 ballot. DIR's request for an opinion not only resolved the uncertainty for all parties, it pulled a piece of uncontroversial, public interest legislation out of the referendum cross-fire between insurers and the tort lawyers over the two Propositions.
The decision from the Attorney General's Office concludes that notwithstanding Propositions 30 and 31 having qualified for the ballot, private and public sector self-insured employers may purchase special excess workers' compensation insurance policies effective January 1, 2000.
In 1999 the state Legislature enacted statutes 720 and 721, the Fair Insurance Responsibility Act of 2000, authorizing third party claimants to sue insurance companies for unfair claims settlement practices. The two statutes would have become effective January 1, 2000; however, referendum petitions successfully circulated require that the statutes be placed on the ballot for approval by the voters. These referenda are on the ballot as Propositions 30 and 31. The legislation included technical cross references between the two statutes that left in doubt the legal ability of carriers to sell these policies, which effectively transfers workers' compensation claim liability from the self-insured employer to a carrier.
Proposition 30 encompasses all of Chapter 720, allowing third party claimants to sue insurance companies for unfair claims settlement practices. Proposition 31 includes all of Chapter 721 except Sections 5 and 7, which authorize public sector self-insured employers to purchase special excess workers' compensation insurance polices. Sections 5 and 7 of Chapter 721, which amend the insurance and labor codes, are not parts of either Proposition 30 or 31.
You can view the final decision issued by the Office of Attorney General Bill Lockyer on the DIR web site at http://www.dir.ca.gov.