Ever since Governor Newsom’s May 7th Executive Order N-63-20 established a new paradigm for claims handling in the era of COVID-19, the workers’ compensation world has waited with bated breath for the inevitable legislation which the order promised would be soon to follow. As different versions of the bill that would ultimately become SB-1159 worked its way through the chambers of the California Legislature, there has been much speculation—and trepidation—about what the final text of the bill would contain.
It would appear, however, that SB-1159 has headed to the desk of Governor Newsom for what we anticipate will be a swift passage, and we can finally provide with definitive authority our interpretation of the text of that bill, and the impact we anticipate it will have on claims handling in the coming years.
When Governor Newsom passed his initial order regarding the “rebuttable presumption” on industrial COVID-19 claims, while creating perhaps more questions than answers, it seemed clear that the order would last only 60 days, giving a timeline for the legislature to act on a permanent solution. The text of SB-1159 also makes clear that parts of the Governor’s order will remain untouched, and establishes two timeframes for application of the new sections.
New Labor Code 3212.86 shall apply to all cases occurring within 14 days after the last date of work of “any employee with a COVID-19 related illness,” provided that day falls within the period of March 19, 2020 to July 5, 2020. Much of the same elements that applied to the original order apply similarly to claims during this period. This new section also makes a distinction between employees diagnosed on or after May 6, 2020 and those testing positive before May 6, 2020 for application of temporary disability benefits.
In a running theme throughout the new sections, SB-1159 seems to make a legal distinction between a presumption that is “rebuttable” and one that is “disputable.” Updating the text of the order, the bill indicates that the COVID19 presumption is “disputable” with evidence obtained during the investigatory period. It also seems to suggest even if not disputed during the initial 30 days—and therefore presumed industrial—it may still be rebutted with evidence discovered after the initial investigatory period. The legislation makes clear however, that unless controverted, the “appeals board is bound to find in accordance with the presumption.”
The second timeframe involved in the framework of the bill applies to employees who are diagnosed or obtain a positive test from July 6, 2020 onward. This is codified in new sections 3212.87 and 3212.88.
New section 3212.87 establishes a specific set of guidelines for handling of claims related to health workers, peace officers, and firefighters among other frontline workers. For these employees, much of the same handling guidelines from the previous order remain intact and continue on. A new element for application of the presumption in health workers provides that the presumption will not apply, if the employer can establish that the employee did not have contact with a patient who tested positive for COVID19 in the last 14 days from the positive test or diagnosis. This element of the bill was likely expected, as the state has made clear the intent behind the Order and the new legislation was to protect frontline health and safety workers not affected by the statewide shutdown. The investigatory timeframe for these employees remains 30 days from the date the claim form is filed.
Section 3212.88, however, applies to all other employees not specifically enumerated in the preceding section and establishes a very specific new set of claims handling guidelines unlike any we have encountered before.
We encourage everyone to read and familiarize themselves with the text of the bill, but we have compiled the highlights and things to be aware of below.
- First and foremost, the section applies to employers which have five or more employees only.
- Second, the timeframe for investigation of employees under this section has been extended to 45 days.
- Third, and most importantly, the bill lays out a specific step by step process for claims handling and passage of information between the employer and the claims administrator regarding COVID-19 claims.
- Once an employer knows or reasonably should have known that an employee has tested positive for COVID-19, within three days, the employer must alert the claims administrator, but may not provide specifically identifying information about the employee in question, unless that employee asserts the infection is work related.
- The employer must then give the claims administrator the highest number of employees who reported to work during the 45 days preceding the last day the infected employee worked. This, which is the critical element of the bill, is all in service of determining if an “outbreak” has occurred at the place of employment.
The bill, to its credit, does a good job explaining what constitutes an “outbreak” for purposes of application of this section. And because the presumption only applies when it is determined that the positive test occurred during an outbreak at the specific place of employment, it places a large burden in the early part of the reporting on the employers to report, and the claims administrator to interpret, that information. Only after an “outbreak” has been identified does the “disputable presumption” apply.
Unlike in the other sections, Section 3212.88 provides examples of the types of evidence which
may be used to dispute and/or rebut the presumption, including;
- evidence of preventative measures taken by the employer to reduce transmission, as well as
Workers’ Compensation professionals had long suspected these types of evidence could be used, but this section provides a definitive, though not exhaustive list.
The text of SB-1159 may not come as much of a surprise to the workers’ compensation professional following Governor Newsom’s order, as many of the requirements and guidelines have merely been continued in the new bill. However, we stress that the new elements—including new time frames and guidelines for reporting—require intense attention to detail and we encourage all claims professionals to study the text of the bill thoroughly.
The bill lays out strong penalties for employers—or anyone acting on behalf of an employer in any capacity—who submit false or misleading information intentionally or fail to submit information, so it is incumbent upon us all to have strategies and plans in place to ensure timely and accurate transmission of information in the event of knowledge of a positive test.
As always, LFLM will continue to monitor and report on the changing legal landscape as we see the bill implemented in our day to day practice.