A bill that would prevent employers of first responders from subrogating their full workers’ compensation costs from third-party lawsuits is making its way through the California state Senate.
During the last month, lawmakers have been mulling Senate Bill 487, by Sen. Tim Grayson (D-Concord). The bill would ensure that police officers and firefighters receive no less than two-thirds of a third-party defendant’s liability insurance policy limit when specific criteria are met.
Those criteria require the injured worker to prove that:
- Their damages in the third-party suit exceed the net amount recoverable after satisfying the employer’s lien for workers’ compensation payments;
- And the third-party defendant’s total liability insurance limits are too low to fully compensate all damages.
If they prove those criteria, then the injured worker would get to keep at least two-thirds of the recovery from the third-party defendant’s liability limits. The employer of the injured worker would not get to assert a credit against that sum either, according to the latest version of the bill.
It’s worth noting that the bill refers to third-party settlements, which suggests that the injured worker’s third-party suit could settle and still have this rule apply. In other words, there would be no requirement for the first responder to take their third-party claim to trial in order for this set of rules to apply.
The bill is currently headed to the Senate Appropriations Committee, which was set to review the bill during it’s May 12 hearing. However, an update on the bill’s website stated that the May 12 hearing was being postponed for unknown reasons.
The committee is likely to refer the bill to the “suspense file,” which is where they send bills that could cost the state more than $50,000, depending on which fund the money is coming from. Because first responders are primarily employed by governmental entities, the bill would most certainly lead to increased government costs.
In order for the bill to become law, it would have to be
- approved by the Senate,
- make its way through Assembly Committees,
- be approved by the Assembly,
- signed into law by Gov. Gavin Newsom
In other words, this bill has quite a ways to go. That being said, nobody has testified in opposition to the bill to date, and it remains to be seen if that will change in the future.
CONTEXT: THE BILL ARRIVES DURING A TIME OF UNPRECEDENTED TURMOIL
One consideration that could impact the bill’s likelihood of passage during this legislative session is the current budgetary turmoil facing L.A. County at the moment. In recent months, the county has faced:
- The worst wildfire crisis in the county’s history;
- A massive budgetary shortfall caused by a $4 billion settlement to resolve more than 6,800 sexual assault claims dating back to 1959;
- A strike by more than 50,000 county workers demanding raises.
Needless to say, the county is going through some hard times, and your humble blogger does not envy the job of anyone trying to make sound budgetary decisions. The confluence of these events could arguably create an unprecedented budgetary shortfall, which is aggravated by decreased tax revenues.
The LA Times took note of it in this April 19 piece which described the situation in greater detail, and analyzed the county’s proposal to make 3% cuts to multiple county departments.
With all that in mind, it’s easy to foresee a situation where Gov. Newsom vetoes the bill solely to avoid increasing costs to the state’s largest county budget, regardless of whether one agrees or disagrees with the merits of the bill itself.
Editor’s Note: Bradford & Barthel will have more comprehensive legislative summaries later on in the year as bills are approved and/or rejected by lawmakers.
Got a question about workers’ compensation defense issues or pending legislation? Feel free to contact John P. Kamin. Mr. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location, where he monitors the recent legislative affairs as the firm’s Director of the Editorial Board. Mr. Kamin previously worked as a journalist for WorkCompCentral, where he reported on work-related injuries in all 50 states. Please feel free to contact John at jkamin@bradfordbarthel.com or at (818) 654-0411.
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