Existing law makes it a misdemeanor or a felony to engage in specified acts of fraud or material misrepresentation for the purpose of obtaining or denying workers' compensation, as specified. Existing law, the Workers' Compensation Insurance Fraud Reporting Act (the act) , requires insurers and licensed rating organizations to release upon request to an authorized governmental agency, as defined, relevant information deemed important to the authorized governmental agency that the insurer or licensed rating organization may possess relating to any specific workers' compensation insurance fraud investigation. The act requires, under specified circumstances, an insurer or licensed rating organization to notify the local district attorney's office and the Fraud Division of the Department of Insurance, and requires that entity, unless specified circumstances exist, to notify any other authorized governmental agency of suspected fraud, as specified. The act also requires the Employment Development Department (EDD) to release, upon written request, to an authorized governmental agency relevant information that the EDD may possess relating to any specific workers' compensation insurance fraud investigation. The act requires, unless specified circumstances exist, an authorized governmental agency that is provided with information pursuant to those provisions to release or provide that information in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution, or prevention of insurance fraud or workers' compensation fraud.
This bill would require an insurer or licensed rating organization to notify the EDD, in addition to the local district attorney's office and Fraud Division on the Department of Insurance, of suspected fraud when the fraudulent act relates to premium fraud. The bill would authorize an insurer, an agent authorized by an insurer, or a licensed rating organization to submit wage records and employee counts for an employer to the EDD and would require the EDD to identify discrepancies in the submitted information, as specified, and report any discrepancies back to the submitting party. Upon request by an insurer, an agent of an insurer, or a licensed rating organization, the bill would require the EDD to release or provide detailed payroll information, including payroll summary totals, allowing the requester to compare the records with the information they are otherwise entitled to receive from employers in workers' compensation claims or pursuant to workers' compensation policies, unless doing so would violate federal law or compromise an ongoing investigation. The bill would require the EDD to only provide the information if specified requirements are met, and the requesting insurer, agent, or licensed rating organization to reimburse the department's actual, direct costs of releasing or providing this information. The bill would prohibit the provided documents from being used for specified purposes.
Existing federal regulations generally prohibit the disclosure of confidential unemployment compensation information unless disclosure is on the basis of, among other things, informed consent to an agent of an employer.
This bill would provide that by entering into a policy of workers' compensation insurance with an insurer, an employer in California consents and designates that insurer as the employer's agent to act for or in the place of the employer only with respect to a request for the above-described payroll information.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.

Statutes affected:
SB 536: 1877.3 INS
02/20/25 - Introduced: 1877.3 INS
04/30/25 - Amended Senate: 1877.3 INS
05/23/25 - Amended Senate: 1877.3 INS
05/18/26 - Amended Assembly: 1877.3 INS
SB536: 1877.3 INS