Governor Brown Signs Bill Putting A End To Insurance Company Cost Shifting

Insurance Commissioner Dave Jones today applauded Governor Jerry Brown for signing legislation protecting consumers from "discretionary clauses" in life, health, and disability insurance policies. SB 621, authored by Senate Insurance Committee Chair Ron Calderon (D-Montebello) and sponsored by Insurance Commissioner Dave Jones, makes discretionary clauses in new or renewed policies void and unenforceable.


Discretionary clauses are policy provisions that give the insurer the sole discretion to interpret the policy and to decide if an insured is entitled to benefits. Even if a consumer has a doctor certify that they are disabled and entitled to benefits, with a discretionary clause in the insurance policy, the insurance company can substitute its own decision that the consumer is not disabled and deny him or her the disability insurance they or their employer paid for. Insurers use the discretionary clauses to deny claims, knowing that if challenged the consumer has a very high and insurmountable legal burden to overcome to prove that the insurance company acted arbitrarily.


"SB 621 protects consumers of life, health, and disability insurance from 'discretionary clauses' in their insurance policies which give the insurer the sole discretion to decide if a beneficiary has become disabled, even if the consumer has a doctor certify that they are disabled," said Commissioner Jones. "Discretionary clauses have been increasingly relied upon by insurers to reject legitimate claims for disability insurance when a consumer becomes disabled - insurers know that many consumers will give up their claim and that those who challenge the claim denial face a very high legal burden to overcome the denial since the discretionary clause vests sole discretion in the insurer to decide if the consumer is disabled. SB 621 levels the playing field and gives consumers an even chance to prove that they are entitled to disability and other insurance, by eliminating the 'discretionary clauses' that insurers have been putting into their insurance policies."


Insurance companies have used discretionary clauses to protect their decisions from being challenged by consumers or reversed by the courts. The practice has left many consumers without benefits at a time when they are sick, disabled, or grieving the loss of a loved one, and in dire financial need.


SB 621 goes into effect on January 1, 2012.

Hundreds of thousands of workers are injured on the job in California and many face disaster. Seriously injured workers today are confronted with fighting for their healthcare even though they have been injured on the job and are supposed to be protected. The so called "reform" deregulation of workers compensation SB899 was pushed by the governor, the corporate media and the multi-billion dollar insurance industry and has meant that many of these seriously injured workers are no longer getting their injuries taken care of.

Today $8 billion instead of going to injured workers has now gone to the insurance moguls profits and the employers. Every day in California workers are killed on the job and some have committed suicide or died as a result of not getting quick and proper medical treatment for their injuries. This failure caused by the deregulation of workers' comp to get quick treatment leads to a deterioration of the injuries resulting in permanent life time disability in many many cases. New rules called ACOEM have also been instituted that prevent proper treatment. They even excluded acupuncture which has been used successfully in the past to treat California injured workers.

Also using these new regulations, most workers are stuck with company doctors who do not even have to live in California and are making medical decisions that hurt them but financially benefit the insurance companies and self-insured employers. We need the basic right to go to our own doctors and medical care providers. On top of this, injured workers are forced to find lawyers to defend themselves and get the medical coverage they believe they are entitled to. Why should injured workers have to find lawyers to negotiate with insurance companies and self insured employers to get healthcare for their injuries?

These insurance companies and their lawyers are pushing injured workers to get their care from SSI, DSI or public hospitals. This massive COST SHIFTING SCAM is making the tax payers pay for the costs of taking care of injured workers and these companies should be prosecuted. We support legislative hearings in California on this cost shifting by the insurance industry.

This coalition supports a Single Payer healthcare system that provides healthcare for all, regardless of where you get injured. Even the Department of Workers' Compensation DWC Acting Director and former insurance adjuster Carrie Nevins has admitted that 30,000 injured California workers are not getting treatment from injuries on the job and are suffering in pain. Many workers have also left their jobs due to bullying on the job and this is another struggle facing California workers and requires protective legislation.

One additional problem is the Fraud Assessment Commission (FAC). This commission is one of the committees which are supposed to provide oversight, and doles out $22 million to California district attorneys to prosecute fraud. The chair of this regulatory agency, William Zachry is also a Safeway VP for risk management. How can you have insurance executives regulating the insurance industry? This same commission has told injured workers they do not prosecute insurance companies for fraud. Is this equal justice for injured workers? Many have lost their homes, their families and any hope of recovering from their injuries and are told by District Attorneys that they will not prosecute fraud by insurance companies.

CA-OSHA has been severely cutback over the last 10 years. There are more fish & game inspectors today in California than OSHA inspectors. There is also no longer a doctor in the entire CA-OSHA system and workers who complain are retaliated against even though this is illegal under the law.

We will also be having Iraq veterans speak who have been refused medical care despite their injuries in the service. They like other injured workers have a human right to receive medical care and a decent life for themselves and their families.

Bring your family and fellow workers on the job. We need to make our voices heard on Workers Memorial Day.

Endorsed by the California Coalition For Workers Memorial Day, Californians Injured At Work (CIAW), BEST, California Healthy Workplace Advocates, Veterans For Peace-Chapter 69 Bay Area, SF Healthcare For All, Labor Video Project, USMWF.org United Support & Memorial for Workplace Fatalities, CA Peace & Freedom Party.