NOTICE OF PROPOSED ACTION
AND NOTICE OF PUBLIC HEARING
CONCERNING PROPOSED CHANGES
TO TITLE 8 OF THE
CALIFORNIA CODE OF REGULATIONS

SUBJECT OF HEARING

Notice is hereby given that the Department of Industrial Relations is proposing amendment to the regulations regarding the annual license fee assessment for private self insured employers, the private self insurer's annual report, and submittal of interim self insurers annual reports.

The Department of Industrial Relations proposed the amendment of these regulations, Title 8, Chapter 8, Group 2, Article 4, Section 15230, Article 5, Section 15251 and Article 9, Section 15402.1, pursuant to the authority vested in him by California Labor Code section 55 and 3702.10. The purpose of these regulations is to implement and make specific the provisions of Labor Code Section 3700, 3702.2, 3702.5 and 3702.8.

PUBLIC HEARING

No public hearing has been scheduled on these proposed actions. However, the Department will hold a hearing if it receives a written request for a public hearing from any interested person, or his or her authorized representative, no later than 15 days before the close of the written comment period.

WRITTEN COMMENT PERIOD

Any interested person, or his or her authorized representative, may submit written comments relevant to the proposed regulatory action to this office. The written comment period closes at 5:00 p.m. on March 5, 2001. The Department will consider only comments received at the Office of Self Insurance Plans by that time.

Written comments may be submitted by US Mail, FAX or E-Mail as follows:

Mail written comments to:

FAX Comments to:

E-Mail Comments to:

Terri_Toohey@dir.ca.gov

A description of the proposed changes are as follows:

1. Title 8, Chapter 8, Group 2, Article 4, Section 15230

Informative Digest

Existing Section 15230(a) requires the private self insurer to pay an annual license fee and provides the assessment table that is the basis for the fee charged to each private self insurer. This assessment is determined by the number of employees and the number of adjusting locations for each self insurer.

This proposal would increase the revenue generated by the base fee portion of the assessment table by requiring each private self insurer to pay a higher annual license fee. The fees will continue to be based on the number of employees and adjusting locations, and the majority of self insurers will pay an increase of $2,600.00 per year.

Existing subsection (e) requires that a private self insurer, that has their certificate revoked, continue to pay the annual license fee for an additional 3 years to cover the cost of continued administration.

The proposal would require a former self insurer whose certificate was revoked after July 1, 2001 to pay the annual license fee for an additional two years after revocation (requires the revoked self insurer to pay the assessment a total of five years after revocation date.) The fee would be assessed using the table in subsection (a) and require the revoked self insurer to pay between $4,100 and $8,100 per year for two years (based on number of employees).

Policy Statement Overview

Self Insurance Plans proposes to adopt this regulatory change to the assessment fees to generate sufficient funds to cover the costs of the private self insurance program.

COST ESTIMATES OF PROPOSED ACTION

Costs or Savings To State Agencies

No costs or savings to state agencies will result as a consequence of the proposed action.

Determination of Mandate: The proposed regulatory action will not impose a mandate on local agencies or school districts, or a mandate which requires reimbursement pursuant to part 7 (commencing with Section 17500) of Division 4 of the Government Code because the proposed amendment will not require local agencies or school districts to incur additional costs in complying with the proposal.

Costs or Savings to Local Agencies or School Districts Required to be Reimbursed

No costs to local agencies or school are required to be reimbursed in accordance with Government Code Sections 17500 through 17630.

Other Nondiscretionary Cost Or Savings Imposed On Local Agencies

This proposal does not impose nondiscretionary cost or savings imposed on local agencies.

Cost or Savings in Federal Funding to the State

This proposal will not result in costs or savings in federal funding to the state.

Impact on Housing Costs

The Department of Industrial Relations has made an initial determination the amendment of this regulation will not have a significant effect on housing costs.

Cost Impact on Representative Private Persons or Businesses:

The department is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action.

Impact on Business

The Department of Industrial Relations has made an initial determination the amendment of this regulation will not have a significant, statewide adverse economic impact directly affecting business, including the ability of California business to compete with businesses in other states.

SMALL BUSINESS IMPACT

The proposed regulations will not affect small business because the regulations only apply to businesses in the Self Insurance Program. The businesses that qualify for the Self Insurance Program are not small businesses as defined by Government Code Section 11342.610.

PLAIN ENGLISH STATEMENT

The express terms of the proposal written in plain English have been prepared pursuant to Government Code Section 11346.2(a)(1).

ALTERNATIVE CONSIDERED

Our Department must determine that no reasonable alternative considered by us or that has otherwise been identified and brought to the attention of our department would be more effective in carrying out the purpose for which the action is proposed or would be as effective and less burdensome to affected private persons than the proposed action.

ASSESSMENT

The adoption of the proposed amendments to these regulations will neither create nor eliminate jobs in the State of California nor result in the elimination of existing businesses or create or expand businesses in the State of California.

2. Title 8, Chapter 8, Group 2, Article 5, Section 15251

Informative Digest:

Labor Code Section 3702.2 requires all self insured employers to file an annual report in a form prescribed by the Director of Industrial Relations. Existing Section 15251 provides the current annual report form and specifies the information required on that annual report form. Subsection 15251(b)(2) requires that a private self insurer that has claims administered from more than one claims adjusting office submit a liability report page for each office location and one liability report page (Consolidated Report) that totals all liability reported on the individual location reports.

This proposal would delete the consolidated liabilities report requirement. It would require that the private self insurer only submit the individual reports from each office location.

Existing subsection 15251(c)(2)(A)3. requires public sector joint power authorities (JPAs) to submit an individual liability report for each of the members of the JPA. This proposal would delete the requirement that the JPA submit a liability report for each member. It would require that the JPA only submit one liability report combining the liabilities of all its members.

Existing subsection 15251 (b)(6) requires the private self insurer to submit itemized information on their security deposited with Self Insurance Plans. The proposal would delete the requirement that a self insurer itemize their security deposit on the annual report form.

Existing subsection (b)(1)(B) requires the private self insurer to provide the Standard Industrial Classification Code (SIC Code) on the annual report form. The proposal would change the requirement that the self insurer provide their Standard Industrial Classification Code (SIC Code) and instead report their industry code classification from the North American Industry Classification (NAICS).

Policy Statement Overview

The proposed amendments will simplify the completion of the annual report for the self insurers and make it consistent with industry practice.

COST ESTIMATES OF PROPOSED ACTION

Costs or Savings To State Agencies

No costs or savings to state agencies will result as a consequence of the proposed action.

Determination of Mandate: The proposed regulatory action will not impose a mandate on local agencies or school districts, or a mandate which requires reimbursement pursuant to part 7 (commencing with Section 17500) of Division 4 of the Government Code because the proposed amendment will not require local agencies or school districts to incur additional costs in complying with the proposal.

Costs or Savings to Local Agencies or School Districts Required to be Reimbursed

No costs to local agencies or school are required to be reimbursed in accordance with Government Code Sections 17500 through 17630.

Other Nondiscretionary Cost Or Savings Imposed On Local Agencies

This proposal does not impose nondiscretionary cost or savings imposed on local agencies.

Cost or Savings in Federal Funding to the State

This proposal will not result in costs or savings in federal funding to the state.

Impact on Housing Costs

The Department of Industrial Relations has made an initial determination the amendment of this regulation will not have a significant effect on housing costs.

Cost Impact on Representative Private Persons or Businesses:

The department is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action.

Impact on Business

The Department of Industrial Relations has made an initial determination the amendment of this regulation will not have a significant, statewide adverse economic impact directly affecting business, including the ability of California business to compete with businesses in other states.

SMALL BUSINESS IMPACT

The proposed regulations will not affect small business because the regulations only apply to businesses in the Self Insurance Program. The businesses that qualify for the Self Insurance Program are not small businesses as defined by Government Code Section 11342.610.

PLAIN ENGLISH STATEMENT

The express terms of the proposal written in plain English have been prepared pursuant to Government Code Section 11346.2(a)(1).

ALTERNATIVE CONSIDERED

Our Department must determine that no reasonable alternative considered by us or that has otherwise been identified and brought to the attention of our department would be more effective in carrying out the purpose for which the action is proposed or would be as effective and less burdensome to affected private persons than the proposed action.

ASSESSMENT

The adoption of the proposed amendments to these regulations will neither create nor eliminate jobs in the State of California nor result in the elimination of existing businesses or create or expand businesses in the State of California.

3. Title 8, Chapter 8, Group 2, Article 9, Section 15402.1

Informative Digest

Existing Section 15402.1 requires a self insurer's administrator to submit an interim annual report if they cease self insuring and return to a fully insured policy program. Subsection 15402.1(d) specifies that an interim report be completed when a self insurer leaves self insurance and insures their worker's compensation liabilities with an authorized insurance carrier. The proposal would delete the requirement that a self insurer submit an interim annual report when leaving self insurance and purchasing workers compensation coverage through a carrier.

Policy Statement Overview

This proposal will prevent self insurers and their administrators from preparing and filing a document that is unnecessary in the administration of their self insurance program.

COST ESTIMATES OF PROPOSED ACTION

Costs or Savings To State Agencies

No costs or savings to state agencies will result as a consequence of the proposed action.

Determination of Mandate: The proposed regulatory action will not impose a mandate on local agencies or school districts, or a mandate which requires reimbursement pursuant to part 7 (commencing with Section 17500) of Division 4 of the Government Code because the proposed amendment will not require local agencies or school districts to incur additional costs in complying with the proposal.

Costs or Savings to Local Agencies or School Districts Required to be Reimbursed

No costs to local agencies or school are required to be reimbursed in accordance with Government Code Sections 17500 through 17630.

Other Nondiscretionary Cost Or Savings Imposed On Local Agencies

This proposal does not impose nondiscretionary cost or savings imposed on local agencies.

Cost or Savings in Federal Funding to the State

This proposal will not result in costs or savings in federal funding to the state.

Impact on Housing Costs

The Department of Industrial Relations has made an initial determination the amendment of this regulation will not have a significant effect on housing costs.

Cost Impact on Representative Private Persons or Businesses:

The department is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action.

Impact on Business

The Department of Industrial Relations has made an initial determination the amendment of this regulation will not have a significant, statewide adverse economic impact directly affecting business, including the ability of California business to compete with businesses in other states.

SMALL BUSINESS IMPACT

The proposed regulations will not affect small business because the regulations only apply to businesses in the Self Insurance Program. The businesses that qualify for the Self Insurance Program are not small businesses as defined by Government Code Section 11342.610.

PLAIN ENGLISH STATEMENT

The express terms of the proposal written in plain English have been prepared pursuant to Government Code Section 11346.2(a)(1).

ALTERNATIVE CONSIDERED

Our Department must determine that no reasonable alternative considered by us or that has otherwise been identified and brought to the attention of our department would be more effective in carrying out the purpose for which the action is proposed or would be as effective and less burdensome to affected private persons than the proposed action.

ASSESSMENT

The adoption of the proposed amendments to these regulations will neither create nor eliminate jobs in the State of California nor result in the elimination of existing businesses or create or expand businesses in the State of California.

CONTACT PERSON

Comments or inquiries concerning the substance of the proposed regulation changes may be directed to Mark Ashcraft, Manager, Self Insurance Plans, 2265 Watt Avenue, Suite 1, Sacramento, CA 95823, 916-483-3392. In his absence, contact Terri Toohey, Associate Governmental Program Analyst, Self Insurance Plans, 2265 Watt Avenue, Suite 1, Sacramento, CA 95825, 916-483-3392, ext. 3017.

To obtain copies of any documents related to these proposed regulations contact Terri Toohey, Associate Governmental Program Analyst, Self Insurance Plans, 2265 Watt Avenue, Suite 1, Sacramento, CA 95825, 916-483-3392, ext. 3017, or Terri_Toohey@dir.ca.gov. In her absence contact Becky Swafford, Office Supervisor, 2265 Watt Avenue, Suite 1, Sacramento, CA 95825, 916-483-3392, ext 3007.

AVAILABILITY OF STATEMENT OF REASONS AND TEXT OF PROPOSED REGULATIONS

A copy of the express terms of the proposed changes in strikeout-underline format and an initial statement of reasons describing the specific purpose and necessity for the proposed regulations is available upon request to the agency representative listed above and may be requested in hardcopy by US Mail or by e-mail at the address above. These documents are also available on the SIP Website at http://sip.dir.ca.gov, the SIP Rulemaking Section.

The copy of the final statement of reasons will be prepared after the close of the public comment period. To obtain a copy of the final statement of reasons, contact Terri Toohey at the address above. All persons that submit comments, will receive a copy of the final statement of reasons by US Mail, unless otherwise notified. In addition, a copy of the final statement of reasons will be available on the SIP Website at http://sip.dir.ca.gov, under the SIP Rulemaking Section.

AVAILABILITY OF CHANGES FOLLOWING
PUBLIC HEARING

If modifications are made to the proposed regulations as a result of the public hearing and public comments received, the modified text with changes clearly indicated shall be made available to the public for at least 15 days prior to the date on which the Director adopts the regulations.

A copy of this notice will automatically be sent to those persons on the Self Insurance Plans' Public and Private self insurer's mailing list, to all third party administrators and to the Self Insurer's Security Fund and to any persons that have filed a request to be notified of regulatory actions concerning this particular program.

The rulemaking file for the proposed action is open to the public Monday through Friday, from 8:00 a.m. to 5:00 p.m. at the Office of Self Insurance Plans, 2265 Watt Avenue, Suite 1, Sacramento, California.