SECTIONS 11770-11805 - California Statutes

INSURANCE CODE

SECTION 11770-11805

11770. (a) The State Compensation Insurance Fund is continued in
existence, to be administered by its board of directors for the
purpose of transacting workers' compensation insurance, and insurance
against the expense of defending any suit for serious and willful
misconduct, against an employer or his or her agent, and insurance to
employees and other persons of the compensation fixed by the workers'
compensation laws for employees and their dependents. Any
appropriation made therefrom or thereto before the effective date of
this code shall continue to be available for the purposes for which
it was made.
(b) (1) The Board of Directors of the State Compensation Insurance
Fund is composed of 11 members, nine of whom shall be appointed by
the Governor. The Governor shall appoint the chairperson. One of the
members appointed by the Governor shall be from organized labor. The
members appointed by the Governor, other than the labor member, shall
have substantial experience in positions involving workers'
compensation, legal, investment, financial, corporate governance and
management, accounting, or auditing responsibilities with entities of
sufficient size as to make their qualifications relevant to an
enterprise of the financial and operational size of the State
Compensation Insurance Fund. At all times the board shall have a
member with auditing background for the purposes of fulfilling the
responsibility of the chair of the audit committee. A quorum is a
majority of those appointed, provided that at no time shall a quorum
be established with less than five members.
(2) The Speaker of the Assembly shall appoint one member who shall
represent organized labor, and the Senate Committee on Rules shall
appoint one member who shall have been a policyholder of the State
Compensation Insurance Fund, or an officer or employee of a
policyholder, for one year immediately preceding the appointment, and
must continue in this status during the period of his or her
membership.
(3) The Director of Industrial Relations shall be an ex officio,
nonvoting member of the board, and shall not be counted as members of
the board for quorum purposes or any other purpose.
(4) Notwithstanding subdivision (c), the initial term of the
members of the board added in the 2008 portion of the 2007-08 Regular
Session shall be as follows:
(A) One of the members appointed by the Governor shall serve an
initial term of two years, one shall serve an initial term of four
years, and two shall serve an initial term of five years.
(B) The member appointed by the Senate Committee on Rules shall
serve an initial term of four years.
(C) The member appointed by the Speaker of the Assembly shall
serve an initial term of three years.
(c) The term of office of the members of the board, other than
that of the director, shall be five years and they shall hold office
until the appointment and qualification of their successors.
(d) (1) Each member of the board shall receive his or her actual
and necessary traveling expenses incurred in the performance of his
or her duties as a member and, with the exception of the ex officio
members, one hundred dollars ($100) for each day of his or her actual
attendance at meetings of the board.
(2) (A) Each member of the board appointed pursuant to paragraphs
(1) and (2) of subdivision (b) shall receive the compensation fixed
pursuant to subparagraph (B).
(B) Each board member described in subparagraph (A) shall be paid
an annual compensation of fifty thousand dollars ($50,000), to be
automatically adjusted beginning January 1, 2010, by multiplying the
compensation in effect the prior June 30 by the percentage of
inflation that occurred during the previous year, adding this amount
to the annual compensation from the previous year, and rounding off
the result to the nearest dollar. "Percentage of inflation" means the
percentage of inflation specified in the Consumer Price Index for
All Urban Consumers, as published by the Department of Industrial
Relations, Division of Labor Statistics and Research, or its
successor index.
(e) Each member of the board of directors shall attend training
approved by the board of directors that covers topics, including, but
not limited to, the duties and obligations of members of a board of
directors, corporate governance, ethics, board of director legal
issues, insurance, finance and investment, and information
technology. The training shall be conducted by persons or entities
not affiliated with the State Compensation Insurance Fund.
(f) No person who has had a direct or indirect interest in any
transaction with the State Compensation Insurance Fund since the
beginning of the last fiscal year of the fund, or who has a direct or
indirect material interest in any proposed transaction with the
fund, where the amount involved in the transaction exceeds one
hundred twenty thousand dollars ($120,000) shall be eligible for
appointment as a member of the board of directors of the fund. Once
appointed, no member of the board of directors shall have a financial
conflict of interest, as defined in Chapter 7 of Title 9 (commencing
with Section 87100) of the Government Code, and every member shall
be subject to Article 4 (commencing with Section 1090) of Chapter 1
of Division 4 of Title 1 of the Government Code, provided that the
existence of a contract of insurance between the State Compensation
Insurance Fund and the policyholder member appointed by the Senate
Committee on Rules shall not constitute a conflict of interest
pursuant to this subdivision. For purposes of board actions affecting
generally applicable rates, a member of the board of directors shall
not be deemed to have a financial interest, as defined in Article 4
(commencing with Section 1090) of Chapter 1 of Division 4 of Title 1
of, or pursuant to Chapter 7 (commencing with Section 87100) of Title
9 of, the Government Code, in a contract of insurance between the
State Compensation Insurance Fund and an organization of which any
member of the board of directors is an owner, officer, or employee.
(g) The appointing authority of a member of the board may remove
the member and make an appointment replacing the member for the
duration of the term if the member ceases to discharge the duties of
his or her office for the period of three consecutive board meetings.
(h) The board of the State Compensation Insurance Fund shall
create, at a minimum, an audit committee, an investment committee, a
corporate governance committee, and other committees as the board
determines are necessary.

11771. The State shall not be liable beyond the assets of the State
Compensation Insurance Fund for any obligations in connection
therewith.

11771.5. Any advertising of the State Compensation Insurance Fund
shall include the following disclaimer: "The State Compensation
Insurance Fund is not a branch of the State of California."

11772. There shall not be any liability in a private capacity on
the part of the board of directors or any member thereof, or any
officer or employee of the fund for or on account of any act
performed or obligation entered into in an official capacity, when
done in good faith, without intent to defraud and in connection with
the administration, management or conduct of the fund or affairs
relating thereto.

11773. The fund shall be organized as a public enterprise fund.

11774. The assets of the fund shall be applicable to the payment of
losses sustained on account of insurance and to the payment of the
salaries and other expenses charged against it in accordance with the
provisions of this chapter.

11775. The fund shall, after a reasonable time during which it may
establish a business, be fairly competitive with other insurers, and
it is the intent of the Legislature that the fund shall ultimately
become neither more nor less than self-supporting. For that purpose
loss experience and expense shall be ascertained and dividends or
credits may be made as provided in this article.

11776. The actual loss experience and expense of the fund shall be
ascertained on or about the first of January in each year for the
year preceding. If it is then shown that there exists an excess of
assets over liabilities, necessary reserves, and a reasonable surplus
for the catastrophe hazard, then a cash dividend may be declared to,
or a credit allowed on the renewal premium of, each employer who has
been insured with the fund.

11777. Such cash dividend or credit is to be in an amount which the
board of directors in its discretion considers to be the employer's
proportion of divisible surplus.

11778. The fund may transact workers' compensation insurance
required or authorized by law of this state to the same extent as any
other insurer. The fund shall be subject to the powers and authority
of the commissioner to the same extent as any other insurer
transacting workers' compensation insurance, except where
specifically exempted by reference. For purposes of Section 700, the
fund shall be deemed admitted to transact this class of insurance.

11779. The fund may insure California employers against their
liability for compensation or damages for injury or death under the
United States Longshoremen's and Harbor Workers' Compensation Act, or
other federal or maritime laws, as fully as any private insurer.

11780. The fund may also insure an employer against his or her
liability for damages under the laws of the State of California
arising out of bodily injury to or death of the employer's employees
occurring within the State of California if the fund also issues
workers' compensation insurance to the employer as to his or her
employees.

11780.5. The fund may also insure a California employer against his
liability for workers' compensation benefits, under the law of any
other state, for California employees temporarily working outside of
California on a specific assignment if the fund insures the employer'
s other employees who work within California.

11781. The board of directors is hereby vested with full power,
authority and jurisdiction over the State Compensation Insurance
Fund. The board of directors may perform all acts necessary or
convenient in the exercise of any power, authority or jurisdiction
over the fund, either in the administration thereof or in connection
with the insurance business to be carried on by it under the
provisions of this chapter, as fully and completely as the governing
body of a private insurance carrier. The principal office for the
transaction of the business of the State Compensation Insurance Fund
is located in the City and County of San Francisco.

11781.5. The State Compensation Insurance Fund may acquire and own
real property for a branch office in the City of Los Angeles when so
determined by the board of directors, and may, if necessary,
construct suitable buildings thereon in accordance with law.

11782. All business and affairs of the fund shall be conducted in
the name of the State Compensation Insurance Fund, and in that name,
without any other name or title, the board of directors may perform
the acts authorized by this chapter.

11783. The State Compensation Insurance Fund may:
(a) Sue and be sued in all actions arising out of any act or
omission in connection with its business or affairs.
(b) Enter into any contracts or obligations relating to the State
Compensation Insurance Fund which are authorized or permitted by law.
(c) Invest and reinvest the moneys belonging to the fund as
provided by this chapter.
(d) Conduct all business and affairs and perform all acts relating
to the fund whether or not specifically designated in this chapter.
(e) Commission an independent study, with the assistance of an
investment banking firm, to determine the feasibility of the State
Compensation Insurance Fund issuing bonds or securities. The study
may include, among other things, the purpose for issuing bonds and
any potential adverse consequences that may arise from that issuance.

11784. In conducting the business and affairs of the fund, the
president of the fund may do any of the following:
(a) Enter into contracts of workers' compensation insurance.
(b) Sell annuities covering compensation benefits.
(c) Decline to insure any risk in which the minimum requirements
of the industrial accident prevention authorities with regard to
construction, equipment, and operation are not complied with, or
which is beyond the safe carrying of the fund. Otherwise, he or she
shall not refuse to insure any workers' compensation risk under state
law, tendered with the premium therefor.
(d) Reinsure any risk or any part thereof.
(e) Cause to be inspected and audited the payrolls of employers
applying to the fund for insurance.
(f) Make rules for the settlement of claims against the fund and
determine to whom and through whom the payments of compensation are
to be made.
(g) Contract with physicians and surgeons, and hospitals, for
medical and surgical treatment and the care and nursing of injured
persons entitled to benefits from the fund.

11785. (a) The board of directors shall appoint a president, a
chief financial officer, a chief operating officer, a chief
information technology officer, a chief investment officer, a chief
risk officer, and a general counsel. The board of directors shall set
the salary for each position. These positions shall not be subject
to otherwise applicable provisions of the Government Code and the
Public Contract Code, and for those purposes the fund shall not be
considered a state agency or other public entity. The president shall
manage and conduct the business and affairs of the fund under the
general direction and subject to the approval of the board of
directors, and shall perform other duties as the board of directors
prescribes.
(b) Section 87406 of the Government Code, the Milton Marks
Postgovernment Employment Restrictions Act of 1990, shall apply to
the fund. Members of the board, the president, the chief financial
officer, the chief operating officer, the general counsel, and any
other person designated by the fund shall be deemed to be designated
employees for the purpose of that act.
(c) Both the Bagley-Keene Open Meeting Act (Article 9 (commencing
with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2
of the Government Code) and the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code) shall apply to the fund.

11786. Before entering on the duties of his or her office, the
president shall qualify by giving an official bond approved by the
board of directors in the sum of fifty thousand dollars ($50,000) and
by taking and subscribing to an official oath. The approval of the
board shall be by written endorsement on the bond. The bond shall be
filed in the office of the Secretary of State.

11787. The board of directors may delegate to the president of the
fund, under those rules and regulations and subject to those
conditions as it from time to time prescribes, any power, function,
or duty conferred by law on the board of directors in connection with
the fund or in connection with the administration, management, and
conduct of the business and affairs of the fund. The president may
exercise those powers and functions and perform those duties with the
same force and effect as the board of directors, but subject to its
approval.

11788. The State Treasurer shall be custodian of all securities
belonging to the State Compensation Insurance Fund, except as
otherwise provided in this chapter. He shall be liable on his
official bond for the safe keeping thereof.

11790. All securities belonging to the fund shall be delivered to
the State Treasurer and held by him until otherwise disposed of as
provided in this chapter. Upon delivery of such securities into the
custody of the State Treasurer, such securities shall be credited by
the State Treasurer to the fund.

11793. Expenditures made by the State Compensation Insurance Fund
are exempted from the provisions of Part 3 (commencing with Section
900) of Division 3.6 of Title 1 of the Government Code.

11797. (a) The board of directors shall cause all moneys in the
State Compensation Insurance Fund that are in excess of current
requirements to be invested and reinvested, from time to time, in the
same manner as provided for private insurance carriers pursuant to
Article 3 (commencing with Section 1170) and Article 4 (commencing
with Section 1190) of Chapter 2 of Part 2 of Division 1, but
excluding Sections 1191, 1191.1, 1191.5, 1192.2, 1192.4, 1192.6,
1192.7, 1192.9, 1192.95, 1192.10, 1194.7, 1194.8, 1194.81, 1194.82,
1194.85, 1198, and 1199.
(b) (1) (A) Notwithstanding any other law, the State Compensation
Insurance Fund may purchase general obligation bonds or other
evidence of indebtedness issued by the state, including, but not
limited to, notes issued pursuant to Part 5 (commencing with Section
17300) of Division 4 of Title 2 of the Government Code or warrants
issued pursuant to Part 4 (commencing with Section 17000) of Division
4 of Title 2 of the Government Code, in any amount and to enter into
purchase contracts with the state for this purpose.
(B) Notwithstanding any other law, the State Compensation
Insurance Fund may purchase Property Assessed Clean Energy (PACE)
bonds, as defined in Section 26104 of the Public Resources Code.
(2) The bonds or other evidence of indebtedness specified in
paragraph (1), upon delivery to the State Compensation Insurance
Fund, shall, for all purposes, be valid and binding obligations of
the issuer thereof, be validly issued and outstanding in accordance
with their stated terms, and not be deemed to be owned by or on
behalf of the issuer thereof.

11800. All moneys in the State Compensation Insurance Fund, in
excess of current requirements and not otherwise invested, may be
deposited by the board of directors from time to time in financial
institutions authorized by law to receive deposits of public moneys.

11800.1. The board of directors may, with the approval of the State
Treasurer, authorize the establishment of an account or fund in the
State Treasury in the name of the State Compensation Insurance Fund,
but such moneys deposited with the State Treasurer are not state
moneys within the intent of Section 16305.2 of the Government Code.

11800.2. The State Controller shall keep a special ledger account
pertaining to the State Compensation Insurance Fund. In the State
Controller's general ledger this account may appear as a cash
account, like other accounts of funds in the State Treasury, and only
the actual cash credited or deposited to the credit of the State
Compensation Insurance Fund shall be entered in the account.

11801. The assets, premiums, reserves, investment income, and any
and all property of whatsoever kind derived or acquired by the fund
from its transaction of its workers' compensation insurance business
shall not be used, attached or levied upon in any manner whatsoever
by any person to satisfy claims or any other obligations or liability
incurred, arising out of, or related to, the fund's transaction of
insurance pursuant to the United States Longshoremen's and Harbor
Workers' Act.

11802. All premiums, reserves, investment income, and all property
of whatsoever kind derived or acquired by the fund from its
transaction of insurance pursuant to the United States Longshoremen's
and Harbor Workers' Compensation Act shall be maintained and
identified in separate accounts and records.

11803. All claims, costs of doing business, liabilities, expenses,
and obligations arising out of or related to the fund's transaction
of insurance pursuant to the United States Longshoremen's and Harbor
Workers' Compensation Act shall be paid and charged to the income of
whatsoever nature derived from its United States Longshoremen's and
Harbor Workers' Compensation Act insurance business only.

11804. Joint or shared use of office building space, whether owned,
leased or rented, and the joint use of all furniture, automobiles,
office equipment, supplies and services shall be charged to each
class of insurance business on an equitable and proportional basis.

11805. The State Compensation Insurance Fund shall report annually
to the Legislature as soon after the close of the calendar year as is
feasible, with respect to its experience handling United States
longshoremen's and harbor workers' insurance pursuant to this
chapter, including, but not limited to, a statement of resources and
liabilities at the close of each annual period commencing December
31, 1979.