Compensation Insurance and Security

Section 3700§Sections

Every employer except the state shall secure the payment of compensation in one or more of the following ways:

(a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state.

(b) By securing from the Director of Industrial Relations a certificate of consent to self-insure either as an individual employer, or as one employer in a group of employers, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his or her employees.

(c) For any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state, including each member of a pooling arrangement under a joint exercise of powers agreement (but not the state itself), by securing from the Director of Industrial Relations a certificate of consent to self-insure against workers’ compensation claims, which certificate may be given upon furnishing proof satisfactory to the director of ability to administer workers’ compensation claims properly, and to pay workers’ compensation claims that may become due to its employees. On or before March 31, 1979, a political subdivision of the state which, on December 31, 1978, was uninsured for its liability to pay compensation, shall file a properly completed and executed application for a certificate of consent to self-insure against workers’ compensation claims. The certificate shall be issued and be subject to the provisions of Section 3702.

For purposes of this section, “state” shall include the superior courts of California.

(Amended by Stats. 2002, Ch. 905, Sec. 10. Effective January 1, 2003.)

Section 3700.1§Sections

As used in this article:

(a) “Director” means the Director of Industrial Relations.

(b) “Private self-insurer” means a private employer which has secured the payment of compensation pursuant to Section 3701.

(c) “Trustees” means the Board of Trustees of the Self-Insurers’ Security Fund.

(d) “Member” means a private self-insurer which participates in the Self-Insurers’ Security Fund.

(e) “Incurred liabilities for the payment of compensation” means the sum of an estimate of future compensation, as compensation is defined by Section 3207, plus an estimate of the amount necessary to provide for the administration of claims, including legal costs.

(Amended by Stats. 2012, Ch. 363, Sec. 10. (SB 863) Effective January 1, 2013.)

Section 3700.5§Sections

(a) The failure to secure the payment of compensation as required by this article by one who knew, or because of his or her knowledge or experience should be reasonably expected to have known, of the obligation to secure the payment of compensation, is a misdemeanor punishable by imprisonment in the county jail for up to one year, or by a fine of up to double the amount of premium, as determined by the court, that would otherwise have been due to secure the payment of compensation during the time compensation was not secured, but not less than ten thousand dollars ($10,000), or by both that imprisonment and fine.

(b) A second or subsequent conviction shall be punished by imprisonment in the county jail for a period not to exceed one year, by a fine of triple the amount of premium, or by both that imprisonment and fine, as determined by the court, that would otherwise have been due to secure the payment of compensation during the time payment was not secured, but not less than fifty thousand dollars ($50,000).

(c) Upon a first conviction of a person under this section, the person may be charged the costs of investigation at the discretion of the court. Upon a subsequent conviction, the person shall be charged the costs of investigation in addition to any other penalties pursuant to subdivision (b). The costs of investigation shall be paid only after the payment of any benefits that may be owed to injured workers, any reimbursement that may be owed to the director for benefits provided to the injured worker pursuant to Section 3717, and any other penalty assessments that may be owed.

(Amended by Stats. 2004, 4th Ex. Sess., Ch. 2, Sec. 3. Effective March 6, 2005.)

Section 3701§Sections

(a) Each year every private self-insuring employer shall secure incurred liabilities for the payment of compensation and the performance of the obligations of employers imposed under this chapter by renewing the prior year’s security deposit or by making a new deposit of security. If a new deposit is made, it shall be posted within 60 days of the filing of the self-insured employer’s annual report with the director, but in no event later than May 1.

(b) The solvency risk and security deposit amount for each private and group self-insurer shall be acceptable to the Self-Insurers’ Security Fund.

(c) Unless otherwise permitted by regulation, the deposit shall be an amount equal to the self-insurer’s projected losses, net of specific excess insurance coverage, if any, and inclusive of incurred but not reported (IBNR) liabilities, allocated loss adjustment expense, and unallocated loss adjustment expense, calculated as of December 31 of each year. The calculation of projected losses and expenses shall be reflected in a written actuarial report that projects ultimate liabilities of the private self-insured employer at the expected actuarial confidence level, to ensure that all claims and associated costs are recognized. The written actuarial report shall be prepared by an actuary meeting the qualifications prescribed by the director in regulation.

(d) In determining the amount of the deposit required to secure incurred liabilities for the payment of compensation and the performance of obligations of a self-insured employer imposed under this chapter, the director shall offset estimated future liabilities for the same claims covered by a self-insured plan under the federal Longshore and Harbor Workers’ Compensation Act (33 U.S.C. Sec. 901 et seq.), but in no event shall the offset exceed the estimated future liabilities for the claims under this chapter.

(e) The director may only accept as security, and the employer shall deposit as security, cash, securities, surety bonds, or irrevocable letters of credit in any combination the director, in his or her discretion, deems adequate security. The current deposit shall include any amounts covered by terminated surety bonds or excess insurance policies, as shall be set forth in regulations adopted by the director pursuant to Section 3702.10.

(f) Surety bonds, irrevocable letters of credit, and documents showing issuance of any irrevocable letter of credit shall be deposited with, and be in a form approved by, the director, shall be exonerated only according to its terms and, in no event, by the posting of additional security.

(g) The director may accept as security a joint security deposit that secures an employer’s obligation under this chapter and that also secures that employer’s obligations under the federal Longshore and Harbor Workers’ Compensation Act.

(h) The liability of the Self-Insurers’ Security Fund, with respect to any claims brought under both this chapter and under the federal Longshore and Harbor Workers’ Compensation Act, to pay for shortfalls in a security deposit shall be limited to the amount of claim liability owing the employee under this chapter offset by the amount of any claim liability owing under the federal Longshore and Harbor Workers’ Compensation Act, but in no event shall the liability of the fund exceed the claim liability under this chapter. The employee shall be entitled to pursue recovery under either or both the state and federal programs.

(i) Securities shall be deposited on behalf of the director by the self-insured employer with the Treasurer. Securities shall be accepted by the Treasurer for deposit and shall be withdrawn only upon written order of the director.

(j) Cash shall be deposited in a financial institution approved by the director, and in the account assigned to the director. Cash shall be withdrawn only upon written order of the director.

(k) Upon the sending by the director of a request to renew, request to post, or request to increase or decrease a security deposit, a perfected security interest is created in the private self-insured’s assets in favor of the director and the Self-Insurers’ Security Fund to the extent of any then unsecured portion of the self-insured’s incurred liabilities. That perfected security interest is transferred to any cash or securities thereafter posted by the private self-insured with the director and is released only upon either of the following:

(1) The acceptance by the director of a surety bond or irrevocable letter of credit for the full amount of the incurred liabilities for the payment of compensation.

(2) The return of cash or securities by the director.

The private self-insured employer loses all right, title, and interest in, and any right to control, all assets or obligations posted or left on deposit as security. The director may liquidate the deposit as provided in Section 3701.5 and apply it to the self-insured employer’s incurred liabilities either directly or through the Self-Insurers’ Security Fund.

(Amended by Stats. 2012, Ch. 363, Sec. 11. (SB 863) Effective January 1, 2013.)

Section 3701.3§Sections

The director shall return to a private self-insured employer all individual security determined, with the consent of the Self-Insurers’ Security Fund, to be in excess of that needed to ensure the administration of the employer’s self insuring, including legal fees, and the payment of any future claims. This section shall not apply to any security posted as part of the composite deposit, or to any security turned over to the Self-Insurers’ Security Fund following an order of default under Section 3701.5.

(Amended by Stats. 2012, Ch. 363, Sec. 12. (SB 863) Effective January 1, 2013.)

Section 3701.5§Sections

(a) If the director determines that a private self-insured employer has failed to pay workers’ compensation as required by this division, the security deposit shall be utilized to administer and pay the employer’s compensation obligations.

(b) If the director determines the security deposit has not been immediately made available for the payment of compensation, the director shall determine the method of payment and claims administration as appropriate, which may include, but is not limited to, payment by a surety that issued the bond, or payment by an issuer of an irrevocable letter of credit, and administration by a surety or by an adjusting agency, or through the Self-Insurers’ Security Fund, or any combination thereof. If the director arranges for administration and payment by any person other than the Self-Insurers’ Security Fund after a default is declared, the fund shall have no responsibility for claims administration or payment of the claims.

(c) If the director determines the payment of benefits and claims administration shall be made through the Self-Insurers’ Security Fund, the fund shall commence payment of the private self-insured employer’s obligations for which it is liable under Section 3743 within 30 days of notification. Payments shall be made to claimants whose entitlement to benefits can be ascertained by the fund, with or without proceedings before the appeals board. Upon the assumption of obligations by the fund pursuant to the director’s determination, the fund shall have a right to immediate possession of any posted security and the custodian, surety, or issuer of any irrevocable letter of credit shall turn over the security to the fund together with the interest that has accrued since the date of the self-insured employer’s default or insolvency.

(d) The payment of benefits by the Self-Insurers’ Security Fund from security deposit proceeds shall release and discharge any custodian of the security deposit, surety, any issuer of a letter of credit, and the self-insured employer, from liability to fulfill obligations to provide those same benefits as compensation, but does not release any person from any liability to the fund for full reimbursement. Payment by a surety constitutes a full release of the surety’s liability under the bond to the extent of that payment, and entitles the surety to full reimbursement by the principal or his or her estate. Full reimbursement includes necessary attorney fees and other costs and expenses, without prior claim or proceedings on the part of the injured employee or other beneficiaries. Any decision or determination made, or any settlement approved, by the director or by the appeals board under subdivision (f) shall conclusively be presumed valid and binding as to any and all known claims arising out of the underlying dispute, unless an appeal is made within the time limit specified in Section 5950.

(e) The director shall advise the Self-Insurers’ Security Fund promptly after receipt of information indicating that a private self-insured employer may be unable to meet its compensation obligations. The director shall also advise the Self-Insurers’ Security Fund of all determinations and directives made or issued pursuant to this section. All financial, actuarial, or claims information received by the director from any self-insurer may be shared by the director with the Self-Insurers’ Security Fund.

(f) Disputes concerning the posting, renewal, termination, exoneration, or return of all or any portion of the security deposit, or any liability arising out of the posting or failure to post security, or adequacy of the security or reasonableness of administrative costs, including legal fees, and arising between or among a surety, the issuer of an agreement of assumption and guarantee of workers’ compensation liabilities, the issuer of a letter of credit, any custodian of the security deposit, a self-insured employer, or the Self-Insurers’ Security Fund shall be resolved by the director. An appeal from the director’s decision or determination may be taken to the appropriate superior court by petition for writ of mandate. Payment of claims from the security deposit or by the Self-Insurers’ Security Fund shall not be stayed pending the resolution of the disputes unless and until the superior court issues a determination staying a payment of claims decision or determination of the director.

(Amended by Stats. 2012, Ch. 363, Sec. 13. (SB 863) Effective January 1, 2013.)

Section 3701.7§Sections

Where any employer requesting coverage under a new or existing certificate of consent to self-insure has had a period of unlawful uninsurance, either for an applicant in its entirety or for a subsidiary or member of a joint powers authority legally responsible for its own workers’ compensation obligations, the following special conditions shall apply before the director may determine if the requesting employer can operate under a certificate of consent to self-insure:

(a) The director may require a deposit of not less than 200 percent of the outstanding liabilities remaining unpaid at the time of application, which had been incurred during the uninsurance period.

(b) At the discretion of the director, where a public or private employer has been previously totally uninsured for workers’ compensation pursuant to Section 3700, the director may require an additional deposit not to exceed 100 percent of the total outstanding liabilities for the uninsured period, or the sum of two hundred fifty thousand dollars ($250,000), whichever is greater.

(c) In addition to the deposits required by subdivisions (a) and (b), a penalty shall be paid to the Uninsured Employers Fund of 10 percent per year of the remaining unpaid liabilities, for every year liabilities remain outstanding. In addition, an additional application fee, not to exceed one thousand dollars ($1,000), plus assessments, pursuant to Section 3702.5 and subdivision (b) of Section 3745, may be imposed by the director and the Self-Insurers’ Security Fund, respectively, against private self-insured employers.

(d) A certificate of consent to self-insure shall not be granted to an applicant that has had a period of unlawful uninsurance without the written approval of the Self-Insurers’ Security Fund.

(e) An employer may retrospectively insure the outstanding liabilities arising out of the uninsured period, either before or after an application for self-insurance has been approved. Upon proof of insurance acceptable to the director, no deposit shall be required for the period of uninsurance.

The penalties to be paid to the Uninsured Employers Fund shall consist of a one-time payment of 20 percent of the outstanding liabilities for the period of uninsurance remaining unpaid at the time of application, in lieu of any other penalty for being unlawfully uninsured pursuant to this code.

(f) In the case of a subsidiary which meets all of the following conditions, a certificate shall issue without penalty:

(1) The subsidiary has never had a certificate revoked for reasons set forth in Section 3702.

(2) Employee injuries were reported to the Office of Self-Insurance Plans in annual reports.

(3) The security deposit of the certificate holder was calculated to include the entity’s compensation liabilities.

(4) Application for a separate certificate or corrected certificate is made within 90 days and completed within 180 days of notice from the Office of Self-Insurance Plans. If the requirements of this subdivision are not met, all penalties pursuant to subdivision (b) of Section 3702.9 shall apply.

(g) The director may approve an application on the date the application is substantially completed, subject to completion requirements, and may make the certificate effective on an earlier date, covering a period of uninsurance, if the employer complies with the requirements of this section.

(h) Any decision by the director may be contested by an entity in the manner provided in Section 3701.5.

(i) Nothing in this section shall abrogate the right of an employee to bring an action against an uninsured employer pursuant to Section 3706.

(j) Nothing in this statute shall abrogate the right of a self-insured employer to insure against known or unknown claims arising out of the self-insurance period.

(Amended by Stats. 2012, Ch. 363, Sec. 14. (SB 863) Effective January 1, 2013.)

Section 3701.8§Sections

(a) As an alternative to each private self-insuring employer securing its own incurred liabilities as provided in Section 3701, the director may provide by regulation for an alternative security system whereby all private self-insureds designated for full participation by the director shall collectively secure their aggregate incurred liabilities through the Self-Insurers’ Security Fund. The regulations shall provide for the director to set a total security requirement for these participating self-insured employers based on a review of their annual reports and any other self-insurer information as may be specified by the director. The Self-Insurers’ Security Fund shall propose to the director a combination of cash and securities, surety bonds, irrevocable letters of credit, insurance, or other financial instruments or guarantees satisfactory to the director sufficient to meet the security requirement set by the director. Upon approval by the director and posting by the Self-Insurers’ Security Fund on or before the date set by the director, that combination shall be the composite deposit. The noncash elements of the composite deposit may be one-year or multiple-year instruments. If the Self-Insurers’ Security Fund fails to post the required composite deposit by the date set by the director, then within 30 days after that date, each private self-insuring employer shall secure its incurred liabilities in the manner required by Section 3701. Self-insured employers not designated for full participation by the director shall meet all requirements as may be set by the director pursuant to subdivision (g).

(b) In order to provide for the composite deposit approved by the director, the Self-Insurers’ Security Fund shall assess, in a manner approved by the director, each fully participating private self-insuring employer a deposit assessment payable within 30 days of assessment. The amount of the deposit assessment charged each fully participating self-insured employer shall be set by the Self-Insurers’ Security Fund, based on its reasonable consideration of all the following factors:

(1) The total amount needed to provide the composite deposit.

(2) The self-insuring employer’s paid or incurred liabilities as reflected in its annual report.

(3) The financial strength and creditworthiness of the self-insured.

(4) Any other reasonable factors as may be authorized by regulation.

(5) In order to make a composite deposit proposal to the director and set the deposit assessment to be charged each fully participating self-insured, the Self-Insurers’ Security Fund shall have access to the annual reports and other information submitted by all self-insuring employers to the director, under terms and conditions as may be set by the director, to preserve the confidentiality of the self-insured’s financial information.

(c) Upon payment of the deposit assessment and except as provided herein, the self-insuring employer loses all right, title, and interest in the deposit assessment. To the extent that in any one year the deposit assessment paid by self-insurers is not exhausted in the purchase of securities, surety bonds, irrevocable letters of credit, insurance, or other financial instruments to post with the director as part of the composite deposit, the surplus shall remain posted with the director, and the principal and interest earned on that surplus shall remain as part of the composite deposit in subsequent years. In the event that in any one year the Self-Insurers’ Security Fund fails to post the required composite deposit by the date set the by the director, and the director requires each private self-insuring employer to secure its incurred liabilities in the manner required by Section 3701, then any deposit assessment paid in that year shall be refunded to the self-insuring employer that paid the deposit assessment.

(d) If any private self-insuring employer objects to the calculation, posting, or any other aspect of its deposit assessment, upon payment of the assessment in the time provided, the employer shall have the right to appeal the assessment to the director, who shall have exclusive jurisdiction over this dispute. If any private self-insuring employer fails to pay the deposit assessment in the time provided, the director shall order the self-insuring employer to pay a penalty of not less than 10 percent of its deposit assessment, plus interest on any unpaid amount at the prejudgment rate, and to post a separate security deposit in the manner provided by Section 3701. The penalty and interest shall be paid directly to the Self-Insurers’ Security Fund. The director may also revoke the certificate of consent to self-insure of any self-insuring employer who fails to pay the deposit assessment in the time provided.

(e) Upon the posting by the Self-Insurers’ Security Fund of the composite deposit with the director, the deposit shall be held until the director determines that a private self-insured employer has failed to pay workers’ compensation as required by this division, and the director orders the Self-Insurers’ Security Fund to commence payment. Upon ordering the Self-Insurers’ Security Fund to commence payment, the director shall make available to the fund that portion of the composite deposit necessary to pay the workers’ compensation benefits of the defaulting self-insuring employer. In the event additional funds are needed in subsequent years to pay the workers’ compensation benefits of any self-insuring employer who defaulted in earlier years, the director shall make available to the Self-Insurers’ Security Fund any portions of the composite deposit as may be needed to pay those benefits. In making the deposit available to the Self-Insurers’ Security Fund, the director shall also allow any amounts as may be reasonably necessary to pay for the administrative and other activities of the fund.

(f) The cash portion of the composite deposit shall be segregated from all other funds held by the director, and shall be invested by the director for the sole benefit of the Self-Insurers’ Security Fund and the injured workers of private self-insured employers, and may not be used for any other purpose by the state. Alternatively, the director, in his discretion, may allow the Self-Insurers’ Security Fund to hold, invest, and draw upon the cash portion of the composite deposit as prescribed by regulation.

(g) Notwithstanding any other provision of this section, the director shall, by regulation, set minimum credit, financial, or other conditions that a private self-insured must meet in order to be a fully participating self-insurer in the alternative security system. In the event any private self-insuring employer is unable to meet the conditions set by the director, or upon application of the Self-Insurers’ Security Fund to exclude an employer for credit or financial reasons, the director shall exclude the self-insuring employer from full participation in the alternative security system. In the event a self-insuring employer is excluded from full participation, the nonfully participating private self-insuring employer shall post a separate security deposit in the manner provided by Section 3701 and pay a deposit assessment set by the director. Alternatively, the director may order that the nonfully participating private self-insuring employer post a separate security deposit to secure a portion of its incurred liabilities and pay a deposit assessment set by the director.

(h) An employer who self-insures through group self-insurance and an employer whose certificate to self-insure has been revoked may fully participate in the alternative security system if both the director and the Self-Insurers’ Security Fund approve the participation of the self-insurer. If not approved for full participation, or if an employer is issued a certificate to self-insure after the composite deposit is posted, the employer shall satisfy the requirements of subdivision (g) for nonfully participating private self-insurers.

(i) At all times, a self-insured employer shall have secured its incurred workers’ compensation liabilities either in the manner required by Section 3701 or through the alternative security system, and there shall not be any lapse in the security.

(Amended by Stats. 2012, Ch. 363, Sec. 15. (SB 863) Effective January 1, 2013.)

Section 3701.9§Sections

(a) A certificate of consent to self-insure shall not be issued after January 1, 2013, to any of the following:

(1) A professional employer organization.

(2) A leasing employer, as defined in Section 606.5 of the Unemployment Insurance Code.

(3) A temporary services employer, as defined in Section 606.5 of the Unemployment Insurance Code.

(4) Any employer, regardless of name or form of organization, which the director determines to be in the business of providing employees to other employers.

(b) A certificate of consent to self-insure that has been issued to any employer described in subdivision (a) shall be revoked by the director not later than January 1, 2015.

(Added by Stats. 2012, Ch. 363, Sec. 16. (SB 863) Effective January 1, 2013.)

Section 3702§Sections

(a) A certificate of consent to self-insure may be revoked by the director at any time for good cause after a hearing. Good cause includes, among other things, a recommendation by the Self-Insurers’ Security Fund to revoke the certificate of consent, the impairment of the solvency of the employer to the extent that there is a marked reduction of the employer’s financial strength, failure to maintain a security deposit as required by Section 3701, failure to pay assessments of the Self-Insurers’ Security Fund, frequent or flagrant violations of state safety and health orders, the failure or inability of the employer to fulfill his or her obligations, or any of the following practices by the employer or his or her agent in charge of the administration of obligations under this division:

(1) Habitually and as a matter of practice and custom inducing claimants for compensation to accept less than the compensation due or making it necessary for them to resort to proceedings against the employer to secure compensation due.

(2) Where liability for temporary disability indemnity is not in dispute, intentionally failing to pay temporary disability indemnity without good cause in order to influence the amount of permanent disability benefits due.

(3) Intentionally refusing to comply with known and legally indisputable compensation obligations.

(4) Discharging or administering his or her compensation obligations in a dishonest manner.

(5) Discharging or administering his or her compensation obligations in such a manner as to cause injury to the public or those dealing with the employer.

(b) Where revocation is in part based upon the director’s finding of a marked reduction of the employer’s financial strength or the failure or inability of the employer to fulfill his or her obligations, or a practice of discharging obligations in a dishonest manner, it is a condition precedent to the employer’s challenge or appeal of the revocation that the employer have in effect insurance against liability to pay compensation.

(c) The director may hold a hearing to determine whether good cause exists to revoke an employer’s certificate of consent to self-insure if the employer is cited for a willful, or repeat serious violation of the standard adopted pursuant to Section 6401.7 and the citation has become final.

(Amended by Stats. 2012, Ch. 363, Sec. 17. (SB 863) Effective January 1, 2013.)

Section 3702.1§Sections

(a) No person, firm, or corporation, other than an insurer admitted to transact workers’ compensation insurance in this state, shall contract to administer claims of self-insured employers as a third-party administrator unless in possession of a certificate of consent to administer self-insured employers’ workers’ compensation claims.

(b) As a condition of receiving a certificate of consent, all persons given discretion by a third-party administrator to deny, accept, or negotiate a workers’ compensation claim shall demonstrate their competency to the director by written examination, or other methods approved by the director.

(c) A separate certificate shall be required for each adjusting location operated by a third-party administrator. A third-party administrator holding a certificate of consent shall be subject to regulation only under this division with respect to the adjustment, administration, and management of workers’ compensation claims for any self-insured employer.

(d) A third-party administrator retained by a self-insured employer to administer the employer’s workers’ compensation claims shall estimate the total accrued liability of the employer for the payment of compensation for the employer’s annual report to the director and shall make the estimate both in good faith and with the exercise of a reasonable degree of care. The use of a third-party administrator shall not, however, discharge or alter the employer’s responsibilities with respect to the report.

(Amended by Stats. 2009, Ch. 140, Sec. 137. (AB 1164) Effective January 1, 2010.)

Section 3702.2§Sections

(a) All self-insured employers shall file a self-insurer’s annual report in a form prescribed by the director. Public self-insured employers shall provide detailed information as the director determines necessary to evaluate the costs of administration, workers’ compensation benefit expenditures, and solvency and performance of the public self-insured employer workers’ compensation programs, on a schedule established by the director. The director may grant deferrals to public self-insured employers that are not yet capable of accurately reporting the information required, giving priority to bringing larger programs into compliance with the more detailed reporting.

(b) To enable the director to determine the amount of the security deposit required by subdivision (c) of Section 3701, the annual report of a self-insured employer who has self-insured both state and federal workers’ compensation liability shall also set forth (1) the amount of all compensation liability incurred, paid-to-date, and estimated future liability under both this chapter and under the federal Longshore and Harbor Workers’ Compensation Act (33 U.S.C. Sec. 901 et seq.), and (2) the identity and the amount of the security deposit securing the employer’s liability under state and federal self-insured programs.

(c) The director shall annually prepare an aggregated summary of all self-insured employer liability to pay compensation reported on the self-insurers’ employers annual reports, including a separate summary for public and private employer self-insurers. The summaries shall be in the same format as the individual self-insured employers are required to report that liability on the employer self-insurer’s annual report forms prescribed by the director. The aggregated summaries shall be made available to the public on the self-insurance section of the department’s Internet Web site. This subdivision does not authorize the director to release or make available information regarding private self-insured employers that is aggregated by industry or business type, that identifies individual self-insured filers, or that includes any individually identifiable claimant information. The director may publish information regarding the costs of administration, workers’ compensation benefit expenditures, and solvency and performance of public self-insured employers’ workers’ compensation programs, including, but not limited to, information aggregated by industry or business type, and that may contain data identifying individual public self-insured filers, their third-party administrators, and their joint powers authorities, as long as the information does not include any individually identifiable claimant information. For purposes of this section, “individually identifiable claimant information” means any data concerning an injury or claim that is linked to a uniquely identifiable employee, employee’s dependent, or a specific claim.

(d) The director may release a copy, or make available an electronic version, of the data contained in any public sector employer self-insurer’s annual reports received from an individual public entity self-insurer or from a joint powers authority employer and its membership. However, the release of any annual report information by the director shall not include any portion of any listing of open indemnity claims that contains individually identifiable claimant information, or any portion of excess insurance coverage information that contains any individually identifiable claimant information.

(Amended by Stats. 2018, Ch. 538, Sec. 3. (AB 2334) Effective January 1, 2019.)

Section 3702.3§Sections

Failure to submit reports or information as deemed necessary by the director to implement the purposes of Section 3701, 3702, or 3702.2 may result in the assessment of a civil penalty as set forth in subdivision (a) of Section 3702.9. Moneys collected shall be used for the administration of self-insurance plans.

(Amended by Stats. 1992, Ch. 532, Sec. 1. Effective January 1, 1993.)

Section 3702.5§Sections

(a) (1) The cost of administration of the public self-insured program by the Director of Industrial Relations shall be borne by the Workers’ Compensation Administration Revolving Fund.

(2) The cost of administration of the private self-insured program by the Director of Industrial Relations shall be borne by the private self-insurers through payment of certificate fees which shall be established by the director in broad ranges based on the comparative numbers of employees insured by the private self-insurers and the number of adjusting locations. The director may assess other fees as necessary to cover the costs of special audits or services rendered to private self-insured employers. The director may assess a civil penalty for late filing as set forth in subdivision (a) of Section 3702.9.

(b) All revenues from fees and penalties paid by private self-insured employers shall be deposited into the Self-Insurance Plans Fund, which is hereby created for the administration of the private self-insurance program. Any unencumbered balance in subdivision (a) of Item 8350-001-001 of the Budget Act of 1983 shall be transferred to the Self-Insurance Plans Fund. The director shall annually eliminate any unused surplus in the Self-Insurance Plans Fund by reducing certificate fee assessments by an appropriate amount in the subsequent year. Moneys paid into the Self-Insurance Plans Fund for administration of the private self-insured program shall not be used by any other department or agency or for any purpose other than administration of the private self-insurance program. Detailed accountability shall be maintained by the director for any security deposit or other funds held in trust for the Self-Insurer’s Security Fund in the Self-Insurance Plans Fund.

Moneys held by the director shall be invested in the Surplus Money Investment Fund. Interest shall be paid on all moneys transferred to the General Fund in accordance with Section 16310 of the Government Code. The Treasurer’s and Controller’s administrative costs may be charged to the interest earnings upon approval of the director.

(Amended by Stats. 2012, Ch. 363, Sec. 20. (SB 863) Effective January 1, 2013.)

Section 3702.6§Sections

(a) The director shall establish an audit program addressing the adequacy of estimates of future liability of claims for all private self-insured employers, and shall ensure that all private self-insured employers are audited within a three-year cycle by the Office of Self Insurance Plans.

(b) Each public self-insurer shall advise its governing board within 90 days after submission of the self-insurer’s annual report of the total liabilities reported and whether current funding of those workers’ compensation liabilities is in compliance with the requirements of Government Accounting Standards Board Publication No. 10.

(c) The director shall, upon a showing of good cause, order a special audit of any public self-insured employer to determine the adequacy of estimates of future liability of claims.

(d) For purposes of this section, “good cause” means that there exists circumstances sufficient to raise concerns regarding the adequacy of estimates of future liability of claims to justify a special audit.

(Amended by Stats. 1992, Ch. 532, Sec. 3. Effective January 1, 1993.)

Section 3702.7§Sections

A certificate of consent to administer claims of self-insured employers may be revoked by the director at any time for good cause after a hearing. Good cause includes, but is not limited to, the violation of subsection (1), (2), (3), (4), or (5) of subdivision (a) of Section 3702. In lieu of revocation of a certificate of consent, the director may impose a fine of not less than fifty dollars ($50) nor more than five hundred dollars ($500) for each violation.

(Added by Stats. 1984, Ch. 1521, Sec. 4. Operative July 1, 1985, by Sec. 5 of Ch. 1521.)

Section 3702.8§Sections

(a) Employers who have ceased to be self-insured employers shall discharge their continuing obligations to secure the payment of workers’ compensation that accrued during the period of self-insurance, for purposes of Sections 3700, 3700.5, 3706, and 3715, and shall comply with all of the following obligations of current certificate holders:

(1) Filing annual reports as deemed necessary by the director to carry out the requirements of this chapter.

(2) In the case of a private employer, depositing and maintaining a security deposit for accrued liability for the payment of any workers’ compensation that may become due, pursuant to subdivision (b) of Section 3700 and Section 3701, except as provided in subdivision (c).

(3) Paying within 30 days all assessments of which notice is sent, pursuant to subdivision (b) of Section 3745, within 36 months from the last day the employer’s certificate of self-insurance was in effect. Assessments shall be based on the benefits paid by the employer during the last full calendar year of self-insurance on claims incurred during that year.

(b) In addition to proceedings to establish liabilities and penalties otherwise provided, a failure to comply may be the subject of a proceeding before the director. An appeal from the director’s determination shall be taken to the appropriate superior court by petition for writ of mandate.

(c) Notwithstanding subdivision (a), any employer who is currently self-insured or who has ceased to be self-insured may purchase a special excess workers’ compensation policy to discharge any or all of the employer’s continuing obligations as a self-insurer to pay compensation or to secure the payment of compensation.

(1) The special excess workers’ compensation insurance policy shall be issued by an insurer authorized to transact workers’ compensation insurance in this state.

(2) Each carrier’s special excess workers’ compensation policy shall be approved as to form and substance by the Insurance Commissioner, and rates for special excess workers’ compensation insurance shall be subject to the filing requirements set forth in Section 11735 of the Insurance Code.

(3) Each special excess workers’ compensation insurance policy shall be submitted by the employer to the director. The director shall adopt and publish minimum insurer financial rating standards for companies issuing special excess workers’ compensation policies.

(4) Upon acceptance by the director, a special excess workers’ compensation policy shall provide coverage for all or any portion of the purchasing employer’s claims for compensation arising out of injuries occurring during the period the employer was self-insured in accordance with Sections 3755, 3756, and 3757 of the Labor Code and Sections 11651 and 11654 of the Insurance Code. The director’s acceptance shall discharge the Self-Insurer’s Security Fund, without recourse or liability to the Self-Insurer’s Security Fund, of any continuing liability for the claims covered by the special excess workers’ compensation insurance policy.

(5) For public employers, no security deposit or financial guarantee bond or other security shall be required. The director shall set minimum financial rating standards for insurers issuing special excess workers’ compensation policies for public employers.

(d) (1) In order for the special excess workers’ compensation insurance policy to discharge the full obligations of a private employer to maintain a security deposit with the director for the payment of self-insured claims, applicable to the period to be covered by the policy, the special excess policy shall provide coverage for all claims for compensation arising out of that liability. The employer shall maintain the required deposit for the period covered by the policy with the director for a period of three years after the issuance date of the special excess policy.

(2) If the special workers’ compensation insurance policy does not provide coverage for all of the continuing obligations for which the private self-insured employer is liable, to the extent the employer’s obligations are not covered by the policy a private employer shall maintain the required deposit with the director. In addition, the employer shall maintain with the director the required deposit for the period covered by the policy for a period of three years after the issuance date of the special excess policy.

(e) The director shall adopt regulations pursuant to Section 3702.10 that are reasonably necessary to implement this section in order to reasonably protect injured workers, employers, the Self-Insurers’ Security Fund, and the California Insurance Guarantee Association.

(f) The posting of a special excess workers’ compensation insurance policy with the director shall discharge the obligation of the Self-Insurer’s Security Fund pursuant to Section 3744 to pay claims in the event of an insolvency of a private employer to the extent of coverage of compensation liabilities under the special excess workers’ compensation insurance policy. The California Insurance Guarantee Association and the Self-Insurers’ Security Fund shall be advised by the director whenever a special excess workers’ compensation insurance policy is posted.

(Amended by Stats. 2012, Ch. 363, Sec. 21. (SB 863) Effective January 1, 2013.)

Section 3702.9§Sections

(a) In addition to remedies and penalties otherwise provided for a failure to secure the payment of compensation, the director may, after a determination that an obligation created in this article has been violated, also enter an order against any self-insured employer, including employers who are no longer self-insured, but who are required to comply with Section 3702.8, directing compliance, restitution for any losses, and a civil penalty in an amount not to exceed the following:

(1) For a failure to file a complete or timely annual report, an amount up to 5 percent of the incurred liabilities in the last report or one thousand five hundred dollars ($1,500), whichever is less, for each 30 days or portion thereof during which there is a failure.

(2) For failure to deposit and maintain a security deposit, an amount up to 10 percent of the increase not timely filed or five thousand dollars ($5,000), whichever is less, for each 30 days or portion thereof during which there is a failure.

(3) For a failure to timely or completely pay an assessment or failure to make payment of an assessment by electronic funds transfer, an amount as determined pursuant to paragraph (1) of subdivision (f) of Section 62.5.

(4) Where the failure was by an employer which knew or reasonably should have known of the obligation, the director shall, in addition, award reimbursement for all expenditures and costs by the fund or any intervening party, including a reasonable attorney fee.

(5) Where the failure was malicious, fraudulent, in bad faith, or a repeated violation, the director may award, as an additional civil penalty, liquidated damages of up to double the amounts assessed under paragraphs (1) to (4), inclusive, for deposit in the General Fund.

(b) An employer may deposit and maintain a security deposit or pay an assessment, reserving its right to challenge the amount or liability therefor at a hearing. If the director or the appeals board or a court, upon appeal, concludes that the employer is not liable or the amounts are excessive, then the director may waive, release, compromise, refund, or otherwise remit amounts which had been paid or deposited by an employer. The director may condition the waiver, release, compromise, refund, or remittance upon the present and continued future compliance with the obligations of subdivision (a) of Section 3702.8 for a period up to two years.

(c) Notwithstanding subdivision (b), where a violation has occurred, the director may waive, release, compromise, or otherwise reduce any civil penalty otherwise due upon a showing that a violation occurred through the employer’s mistake, inadvertence, surprise, or excusable neglect. Neglect is not excusable within the meaning of this subdivision where the employer knew, or reasonably should have known, of the obligations. This subdivision does not apply to the penalty described in paragraph (3) of subdivision (a) or any penalty imposed pursuant to Section 62.5.

(Amended by Stats. 2026, Ch. 83, Sec. 5. (SB 171) Effective July 13, 2026.)

Section 3702.10§Sections

The director, in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, may adopt, amend, and repeal rules and regulations reasonably necessary to carry out the purposes of Section 129 and Article 1 (commencing with Section 3700), Article 2 (commencing with Section 3710), and Article 2.5 (commencing with Section 3740). This authorization includes, but is not limited to, the adoption of regulations to do all of the following:

(a) Specifying what constitutes ability to self-insure and to pay any compensation which may become due under Section 3700.

(b) Specifying what constitutes a marked reduction of an employer’s financial strength.

(c) Specifying what constitutes a failure or inability to fulfill the employer’s obligations under Section 3702.

(d) Interpreting and defining the terms used.

(e) Establishing procedures and standards for hearing and determinations, and providing for those determinations to be appealed to the appeals board.

(f) Specifying the standards, form, and content of agreements, forms, and reports between parties who have obligations pursuant to this chapter.

(g) Providing for the combinations and relative liabilities of security deposits, assumptions, and guarantees used pursuant to this chapter.

(h) Disclosing otherwise confidential financial information concerning self-insureds to courts or the Self-Insurers’ Security Fund and specifying appropriate safeguards for that information.

(i) Requiring an amount to be added to each security deposit to secure the cost of administration of claims and to pay all legal costs.

(j) Regulating the workers’ compensation self-insurance obligations of self-insurance groups and professional employer organizations, leasing employers as defined in Section 606.5 of the Unemployment Insurance Code, or temporary services employers, as defined in Section 606.5 of the Unemployment Insurance Code, holding certificates of consent to self-insure.

(Amended by Stats. 2012, Ch. 363, Sec. 22. (SB 863) Effective January 1, 2013.)

Section 3703§Sections

So long as the certificate has not been revoked, and the self-insurer maintains on deposit the requisite bond or securities, the self-insurer shall not be required or obliged to pay into the State Compensation Insurance Fund any sums covering liability for compensation excepting life pensions; and the self-insurer may fully administer any compensation benefits assessed against the self-insurer.

(Amended by Stats. 1959, Ch. 951.)

Section 3705§Sections

The Self-Insurers’ Security Fund or the surety making payment of compensation hereunder shall have the same preference over the other debts of the principal or his or her estate as is given by law to the person directly entitled to the compensation.

(Amended by Stats. 1986, Ch. 1128, Sec. 14. Effective September 25, 1986.)

Section 3706§Sections

If any employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against such employer for damages, as if this division did not apply.

(Amended by Stats. 1971, Ch. 1598.)

Section 3706.5§Sections

The provisions of this article and Sections 4553, 4554, and 4555, and any other penalty provided by law for failure to secure the payment of compensation for employees, shall not apply to individual members of a board or governing body of a public agency or to members of a private, nonprofit organization, if the agency or organization performs officiating services relating to amateur sporting events and those members are excluded from the definition of “employee” pursuant to paragraph (10) of subdivision (a) of Section 3352.

(Amended by Stats. 2017, Ch. 770, Sec. 6. (SB 189) Effective January 1, 2018.)

Section 3707§Sections

The injured employee or his dependents may in such action attach the property of the employer, at any time upon or after the institution of such action, in an amount fixed by the court, to secure the payment of any judgment which is ultimately obtained. The provisions of the Code of Civil Procedure, not inconsistent with this division, shall govern the issuance of, and proceedings upon such attachment.

(Enacted by Stats. 1937, Ch. 90.)

Section 3708§Sections

In such action it is presumed that the injury to the employee was a direct result and grew out of the negligence of the employer, and the burden of proof is upon the employer, to rebut the presumption of negligence. It is not a defense to the employer that the employee was guilty of contributory negligence, or assumed the risk of the hazard complained of, or that the injury was caused by the negligence of a fellow servant. No contract or regulation shall restore to the employer any of the foregoing defenses.

This section shall not apply to any employer of an employee, as defined in subdivision (d) of Section 3351, with respect to such employee, but shall apply to employers of employees described in subdivision (b) of Section 3715, with respect to such employees.

(Amended by Stats. 1977, Ch. 17.)

Section 3708.5§Sections

If an employee brings such an action for damages, the employee shall forthwith give a copy of the complaint to the Uninsured Employers Fund of the action by personal service or certified mail. Proof of such service shall be filed in such action. If a civil action has been initiated against the employer pursuant to Section 3717, the actions shall be consolidated.

(Added by Stats. 1980, Ch. 1091.)

Section 3709§Sections

If, as a result of such action for damages, a judgment is obtained against the employer, any compensation awarded, paid, or secured by the employer shall be credited against the judgment. The court shall allow as a first lien against such judgment the amount of compensation paid by the director from the Uninsured Employers Fund pursuant to Section 3716.

Such judgment shall include a reasonable attorney’s fee fixed by the court. The director, as administrator of the Uninsured Employers Fund, shall have a first lien against any proceeds of settlement in such action, before or after judgment, in the amount of compensation paid by the director from the Uninsured Employers Fund pursuant to Section 3716.

No satisfaction of a judgment in such action, in whole or in part, shall be valid as against the director without giving the director notice and a reasonable opportunity to perfect and satisfy his lien.

(Amended by Stats. 1980, Ch. 1091.)

Section 3709.5§Sections

After the payment of attorney’s fees fixed by the court, the employer shall be relieved from the obligation to pay further compensation to or on behalf of the employee under this division up to the entire amount of the balance of the judgment, if satisfied, or such portion as has been satisfied.

After the satisfaction by the employer of the attorney’s fees fixed by the court, the Uninsured Employers Fund shall be relieved from the obligation to pay further compensation to or on behalf of the employee pursuant to Section 3716, up to the entire amount of the balance of the judgment, if satisfied, or such portion as has been satisfied.

The appeals board shall allow as a credit to the employer and to the Uninsured Employers Fund, to be applied against the liability for compensation, the amount recovered by the employee in such action, either by settlement or after the judgment, as has not been applied to the expense of attorney’s fees and costs.

(Added by Stats. 1980, Ch. 1091.)

Section 3710§Sections

(a) The Director of Industrial Relations shall enforce the provisions of this article. The director may employ necessary investigators, clerks, and other employees, and make use of the services of any employee of the department whom he may assign to assist him in the enforcement of this article. Prosecutions for criminal violations of this division may be conducted by the appropriate public official of the county in which the offense is committed, by the Attorney General, or by any attorney in the civil service of the Department of Industrial Relations designated by the director for such purpose.

(b) The director, in accordance with the provisions of Chapter 4 (commencing at Section 11370) of Part 1 of Division 3 of Title 2 of the Government Code, may adopt, amend and repeal such rules and regulations as are reasonably necessary for the purpose of enforcing and administering this article and as are not inconsistent with law.

(c) As used in this article, “director” means the Director of Industrial Relations or the director’s designated agents.

(Amended by Stats. 1980, Ch. 852.)

Section 3710.1§Sections

Where an employer has failed to secure the payment of compensation as required by Section 3700, the director shall issue and serve on such employer a stop order prohibiting the use of employee labor by such employer until the employer’s compliance with the provisions of Section 3700. Such stop order shall become effective immediately upon service. Any employee so affected by such work stoppage shall be paid by the employer for such time lost, not exceeding 10 days, pending compliance by the employer. Such employer may protest the stop order by making and filing with the director a written request for a hearing within 20 days after service of such stop order. Such hearing shall be held within 5 days from the date of filing such request. The director shall notify the employer of the time and place of the hearing by mail. At the conclusion of the hearing the stop order shall be immediately affirmed or dismissed, and within 24 hours thereafter the director shall issue and serve on all parties to the hearing by registered or certified mail a written notice of findings and findings. A writ of mandate may be taken from the findings to the appropriate superior court. Such writ must be taken within 45 days after the mailing of the notice of findings and findings.

(Repealed and added by Stats. 1980, Ch. 852.)

Section 3710.2§Sections

Failure of an employer, officer, or anyone having direction, management, or control of any place of employment or of employees to observe a stop order issued and served upon him or her pursuant to Section 3710.1 is a misdemeanor punishable by imprisonment in the county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both. Fines shall be paid into the State Treasury to the credit of the Uninsured Employers Fund. The director may also obtain injunctive and other relief from the courts to carry out the purposes of Section 3710.1. The failure to obtain a policy of workers’ compensation insurance or a certificate of consent to self-insure as required by Section 3700 is a misdemeanor in accordance with Section 3700.5.

(Amended by Stats. 1991, Ch. 600, Sec. 1.)

Section 3710.3§Sections

Whenever a stop order has been issued pursuant to Section 3710.1 to a motor carrier of property subject to the jurisdiction and control of the Department of Motor Vehicles or to a household goods carrier, passenger stage corporation, or charter-party carrier of passengers subject to the jurisdiction and control of the Public Utilities Commission, the director shall transmit the stop order to the Public Utilities Commission or the Department of Motor Vehicles, whichever has jurisdiction over the affected carrier, within 30 days.

(Amended by Stats. 1998, Ch. 485, Sec. 123. Effective January 1, 1999.)

Section 3711§Sections

The director, an investigator for the Department of Insurance Fraud Bureau or its successor, or a district attorney investigator assigned to investigate workers’ compensation fraud may, at any time, require an employer to furnish a written statement showing the name of his or her insurer or the manner in which the employer has complied with Section 3700. Failure of the employer for a period of 10 days to furnish the written statement is prima facie evidence that he or she has failed or neglected in respect to the matters so required. The 10-day period may not be construed to allow an uninsured employer, so found by the director, any extension of time from the application of the provisions of Section 3710.1. An insured employer who fails to respond to an inquiry respecting his or her status as to his or her workers’ compensation security shall be assessed and required to pay a penalty of five hundred dollars ($500) to the director for deposit in the State Treasury to the credit of the Uninsured Employers Fund. In any prosecution under this article, the burden of proof is upon the defendant to show that he or she has secured the payment of compensation in one of the two ways set forth in Section 3700.

(Amended by Stats. 2004, 4th Ex. Sess., Ch. 2, Sec. 4. Effective March 6, 2005.)

Section 3712§Sections

(a) The securing of the payment of compensation in a way provided in this division is essential to the functioning of the expressly declared social public policy of this state in the matter of workers’ compensation. The conduct or operation of any business or undertaking without full compensation security, in continuing violation of social policy, shall be subject to imposition of business strictures and monetary penalties by the director, including, but not limited to, resort to the superior court of any county in which all or some part of the business is being thus unlawfully conducted or operated, for carrying out the intent of this article.

(b) In a proceeding before the superior court in matters concerned with this article, no filing fee shall be charged to the plaintiff; nor may any charge or cost be imposed for any act or service required of or done by any state or county officer or employee in connection with the proceeding. If the court or the judge before whom the order to show cause in the proceeding is made returnable, finds that the defendant is conducting or operating a business or undertaking without the full compensation security required, the court or judge shall forthwith, and without continuance, issue an order restraining the future or further conduct and operation of the business or undertaking so long as the violation of social public policy continues. The action shall be prosecuted by the Attorney General of California, the district attorney of the county in which suit is brought, the city attorney of any city in which such a business or undertaking is being operated or conducted without full compensation security, or any attorney possessing civil service status who is an employee of the Department of Industrial Relations who may be designated by the director for that purpose. No finding made in the course of any such action is binding on the appeals board in any subsequent proceeding before it for benefits under this division.

(Amended by Stats. 1982, Ch. 517, Sec. 309.)

Section 3714§Sections

(a) All cases involving the Uninsured Employers Fund or the Subsequent Injuries Fund as a party or involving death without dependents shall only be heard for conference, mandatory settlement conference pursuant to subdivision (d) of Section 5502, standby conference, or rating calendar at the district Workers’ Compensation Appeals Board located in San Francisco, Los Angeles, Van Nuys, Anaheim, Sacramento, or San Diego, except for good cause shown and with the consent of the director. This subdivision shall not apply to trials or hearings pursuant to Section 5309 or to expedited hearings pursuant to subdivision (b) of Section 5502.

(b) For the cases specified in subdivision (a), the presiding judge of the Workers’ Compensation Appeals Board located in San Francisco, Los Angeles, Van Nuys, Anaheim, Sacramento, or San Diego shall have the authority, either by standing order or on a case-by-case basis, to order a conference, mandatory settlement conference pursuant to subdivision (d) of Section 5502, standby conference, or rating calendar in which no testimony will be taken to be conducted by telephone conference call among the parties and their attorneys of record who do not reside in the county in which that appeals board is located. The cost of the scheduling of the conference call shall be charged against the appropriate fund of the department.

(c) Any filings of documents necessary for the proceedings specified in subdivisions (a) and (b) may be served on the appeals board and the parties by facsimile machine, but if so served, within five workings days service shall be made on the appeals board and the parties as required by regulation.

(d) This section shall remain in effect for two years commencing on the date that the administrative director certifies and publishes that the rearrangement of judicial resources required by this section, and conference call facilities required for this section are in place. The certification shall be published in the California Notice Register, but shall be required to have been posted in the office of each appeals board at least 30 days prior to that publication. Notwithstanding this section, with the permission of the presiding judge and under standards set by the administrative director, parties may be permitted to conclude existing cases where they were filed. This section shall cease to be operative at the end of that two-year period, and shall be repealed on January 1 following that date.

(Added by Stats. 1992, Ch. 611, Sec. 1. Effective January 1, 1993. Section operative on date prescribed by subd. (d). Inoperative two years after operative date. Repealed on January 1 after inoperative date, by its own provisions.)

Section 3715§Sections

(a) Any employee, except an employee as defined in subdivision (d) of Section 3351, whose employer has failed to secure the payment of compensation as required by this division, or his or her dependents in case death has ensued, may, in addition to proceeding against his or her employer by civil action in the courts as provided in Section 3706, file his or her application with the appeals board for compensation and the appeals board shall hear and determine the application for compensation in like manner as in other claims and shall make the award to the claimant as he or she would be entitled to receive if the employer had secured the payment of compensation as required, and the employer shall pay the award in the manner and amount fixed thereby or shall furnish to the appeals board a bond, in any amount and with any sureties as the appeals board requires, to pay the employee the award in the manner and amount fixed thereby.

(b) Notwithstanding this section or any other provision of this chapter except Section 3708, any person described in subdivision (d) of Section 3351 who is (1) engaged in household domestic service who is employed by one employer for over 52 hours per week, (2) engaged as a part-time gardener in connection with a private dwelling, if the number of hours devoted to the gardening work for any individual regularly exceeds 44 hours per month, or (3) engaged in casual employment where the work contemplated is to be completed in not less than 10 working days, without regard to the number of persons employed, and where the total labor cost of the work is not less than one hundred dollars ($100) (which amount shall not include charges other than for personal services), shall be entitled, in addition to proceeding against his or her employer by civil action in the courts as provided in Section 3706, to file his or her application with the appeals board for compensation. The appeals board shall hear and determine the application for compensation in like manner as in other claims, and shall make the award to the claimant as he or she would be entitled to receive if the person’s employer had secured the payment of compensation as required, and the employer shall pay the award in the manner and amount fixed thereby, or shall furnish to the appeals board a bond, in any amount and with any sureties as the appeals board requires, to pay the employee the award in the manner and amount fixed thereby.

It is the intent of the Legislature that the amendments to this section by Chapter 17 of the Statutes of 1977, make no change in the law as it applied to those types of employees covered by this subdivision prior to the effective date of Chapter 1263 of the 1975 Regular Session.

(c) In any claim in which it is alleged that the employer has failed to secure the payment of compensation, the director, only for purposes of this section and Section 3720, shall determine, on the basis of the evidence available to him or her, whether the employer was prima facie illegally uninsured. A finding that the employer was prima facie illegally uninsured shall be made when the director determines that there is sufficient evidence to constitute a prima facie case that the employer employed an employee on the date of the alleged injury and had failed to secure the payment of compensation, and that the employee was injured arising out of, and occurring in the course of, the employment.

Failure of the employer to furnish within 10 days the written statement in response to a written demand for a written statement prescribed in Section 3711, addressed to the employer at its address as shown on the official address record of the appeals board, shall constitute in itself sufficient evidence for a prima facie case that the employer failed to secure the payment of compensation.

A written denial by the insurer named in the statement furnished by the employer as prescribed in Section 3711, that the employer was so insured as claimed, or the nonexistence of a valid certificate of consent to self-insure for the time of the claimed injury, if the statement furnished by the employer claims the employer was self-insured, shall constitute in itself sufficient evidence for a prima facie case that the employer had failed to secure the payment of compensation.

The nonexistence of a record of the employer’s insurance with the Workers’ Compensation Insurance Rating Bureau shall constitute in itself sufficient evidence for a prima facie case that the employer failed to secure the payment of compensation.

The unrebutted written declaration under penalty of perjury by the injured employee, or applicant other than the employee, that the employee was employed by the employer at the time of the injury, and that he or she was injured in the course of his or her employment, shall constitute, in itself, sufficient evidence for a prima facie case that the employer employed the employee at the time of the injury, and that the employee was injured arising out of, and occurring in the course of, the employment.

(d) When the director determines that an employer was prima facie illegally uninsured, the director shall mail a written notice of the determination to the employer at his or her address as shown on the official address record of the appeals board, and to any other more recent address the director may possess. The notice shall advise the employer of its right to appeal the finding, and that a lien may be placed against the employer’s and any parent corporation’s property, or the property of substantial shareholders of a corporate employer as defined by Section 3717.

Any employer aggrieved by a finding of the director that it was prima facie illegally uninsured may appeal the finding by filing a petition before the appeals board. The petition shall be filed within 20 days after the finding is issued. The appeals board shall hold a hearing on the petition within 20 days after the petition is filed with the appeals board. The appeals board shall have exclusive jurisdiction to determine appeals of the findings by the director, and no court of this state has jurisdiction to review, annul, or suspend the findings or the liens created thereunder, except as provided by Article 2 (commencing with Section 5950) of Chapter 7 of Part 4 of Division 4.

(e) Any claim brought against an employer under this section may be resolved by the director by compromise and release or stipulated findings and award as long as the appeals board has acquired jurisdiction over the employer and the employer has been given notice and an opportunity to object.

Notice may be given by service on the employer of an appeals board notice of intention to approve the compromise and release or stipulated findings and award. The employer shall have 20 days after service of the notice of intention to file an objection with the appeals board and show good cause therefor.

If the employer objects, the appeals board shall determine if there is good cause for the objection.

If the appeals board finds good cause for the objection, the director may proceed with the compromise and release or stipulated findings and award if doing so best serves the interest of the Uninsured Employers Fund, but shall have no cause of action against the employer under Section 3717 unless the appeals board case is tried to its conclusion and the employer is found liable.

If the appeals board does not find good cause for the objection, and the compromise and release or stipulated findings and award is approved, the Uninsured Employers Fund shall have a cause of action against the employer pursuant to Section 3717.

(f) The director may adopt regulations to implement and interpret the procedures provided for in this section.

(Amended by Stats. 1989, Ch. 461, Sec. 1.)

Section 3716§Sections

(a) If the employer fails to pay the compensation required by Section 3715 to the person entitled thereto, or fails to furnish the bond required by Section 3715 within a period of 10 days after notification of the award, the award, upon application by the person entitled thereto, shall be paid by the director from the Uninsured Employers Benefits Trust Fund. The expenses of the director in administering these provisions, directly or by contract pursuant to Section 3716.1, shall be paid from the Workers’ Compensation Administration Revolving Fund. Refunds may be paid from the Uninsured Employers Benefits Trust Fund for amounts remitted erroneously to the fund, or the director may authorize offsetting subsequent remittances to the fund.

(b) It is the intent of the Legislature that the Uninsured Employers Benefits Trust Fund is created to ensure that workers who happen to be employed by illegally uninsured employers are not deprived of workers’ compensation benefits, and is not created as a source of contribution to insurance carriers, or self-insured, or legally insured employers. The Uninsured Employers Benefits Trust Fund has no liability for claims of occupational disease or cumulative injury unless no employer during the period of the occupational disease or cumulative injury during which liability is imposed under Section 5500.5 was insured for workers’ compensation, was permissibly self-insured, or was legally uninsured. No employer has a right of contribution against the Uninsured Employers Benefits Trust Fund for the liability of an illegally uninsured employer under an award of benefits for occupational disease or cumulative injury, nor may an employee in a claim of occupational disease or cumulative injury elect to proceed against an illegally uninsured employer.

(c) The Uninsured Employers Benefits Trust Fund has no liability to pay for medical, surgical, chiropractic, hospital, or other treatment, the liability for which treatment is imposed upon the employer pursuant to Section 4600, and which treatment has been provided or paid for by the State Department of Health Services pursuant to the California Medical Assistance Program.

(d) The Uninsured Employers Benefits Trust Fund shall have no liability to pay compensation, nor shall it be joined in any appeals board proceeding, unless the employer alleged to be illegally uninsured shall first either have made a general appearance or have been served with the application specified in Section 3715 and with a special notice of lawsuit issued by the appeals board. The special notice of lawsuit shall be in a form to be prescribed by the appeals board, and it shall contain at least the information and warnings required by the Code of Civil Procedure to be contained in the summons issued in a civil action. The special notice of lawsuit shall also contain a notice that if the appeals board makes an award against the defendant that his or her house or other dwelling and other property may be taken to satisfy the award in a nonjudicial sale, with no exemptions from execution. The special notice of lawsuit shall, in addition, contain a notice that a lien may be imposed upon the defendant’s property without further hearing and before the issuance of an award. The applicant shall identify a legal person or entity as the employer named in the special notice of lawsuit. The reasonable expense of serving the application and special notice of lawsuit, when incurred by the employee, shall be awarded as a cost. Proof of service of the special notice of lawsuit and application shall be filed with the appeals board.

(1) The application and special notice of lawsuit may be served, within or without this state, in the manner provided for service of summons in the Code of Civil Procedure. Thereafter, an employer, alleged to be illegally uninsured, shall notify the appeals board of the address at which it may be served with official notices and papers, and shall notify the appeals board of any changes in the address. No findings, order, decision, award, or other notice or paper need be served in this manner on an employer, alleged to be illegally uninsured, who has been served as provided in this section, and who has not filed an answer, otherwise made a general appearance, or furnished the appeals board with its address. The findings, orders, decisions, awards, or other notice or paper may be mailed to the employer as the board, by regulation, may provide.

(2) Notwithstanding paragraph (1), if the employer alleged to be illegally uninsured has not filed an answer, otherwise made a general appearance, or furnished the appeals board with its address, the appeals board shall serve any findings, order, decision, award, or other notice or paper on the employer by mail at the address the appeals board has for the employer. The failure of delivery at that address or the lack of personal service on an employer who has been served as provided in this section, of these findings, order, decision, award, or other notice or paper, shall not constitute grounds for reopening or invalidating any appeals board action pursuant to Section 5506, or for contesting the validity of any judgment obtained under Section 3716 or 5806, a lien under Section 3720, or a settlement under subdivision (e) of Section 3715.

(3) The board, by regulation, may provide for service procedures in cases where a request for new and further benefits is made after the issuance of any findings and award and a substantial period of time has passed since the first service or attempted service.

(4) The director, on behalf of the Uninsured Employers Benefits Trust Fund, shall furnish information as to the identities, legal capacities, and addresses of uninsured employers known to the director upon request of the board or upon a showing of good cause by the employee or the employee’s representative. Good cause shall include a declaration by the employee’s representative, filed under penalty of perjury, that the information is necessary to represent the employee in proceedings under this division.

(Amended by Stats. 2003, Ch. 228, Sec. 28. Effective August 11, 2003.)

Section 3716.1§Sections

(a) In any hearing, investigation, or proceeding, the Attorney General, or attorneys of the Department of Industrial Relations, shall represent the director and the state. Expenses incident to representation of the director and the state, before the appeals board and in civil court, by the Attorney General or Department of Industrial Relations attorneys, shall be reimbursed from the Workers’ Compensation Administration Revolving Fund. Expenses incident to representation by the Attorney General or attorneys of the Department of Industrial Relations incurred in attempts to recover moneys pursuant to Section 3717 of the Labor Code shall not exceed the total amounts recovered by the director on behalf of the Uninsured Employers Benefits Trust Fund pursuant to this chapter.

(b) The director shall assign investigative and claims’ adjustment services respecting matters concerning uninsured employers injury cases. The director or his or her representative may make these service assignments within the department, or he or she may contract for these services with the State Compensation Insurance Fund, except insofar as these matters might conflict with the interests of the State Compensation Insurance Fund. The administrative costs associated with these services shall be reimbursed from the Workers’ Compensation Administration Revolving Fund and the nonadministrative costs from the Uninsured Employers Benefits Trust Fund, except when a budget impasse requires advances as described in subdivision (c) of Section 62.5. To the extent permitted by state law, the director may contract for audits or reports of services under this section.

(Amended by Stats. 2012, Ch. 728, Sec. 120. (SB 71) Effective January 1, 2013.)

Section 3716.2§Sections

Notwithstanding the precise elements of an award of compensation benefits, and notwithstanding the claim and demand for payment being made therefor to the director, the director, as administrator of the Uninsured Employers Fund, shall pay the claimant only such benefits allowed, recognizing proper liens thereon, that would have accrued against an employer properly insured for workers’ compensation liability. The Uninsured Employers Fund shall not be liable for any penalties or for the payment of interest on any awards. However, in civil suits by the director to enforce payment of an award, including procedures pursuant to Section 3717, the total amount of the award, including interest, other penalties, and attorney’s fees granted by the award, shall be sought. Recovery by the director, in a civil suit or by other means, of awarded benefits in excess of amounts paid to the claimant by the Uninsured Employers Fund shall be paid over to the injured employee or his representative, as the case may be.

(Amended by Stats. 1999, Ch. 83, Sec. 133. Effective January 1, 2000.)

Section 3716.3§Sections

(a) Notwithstanding any other provision of law to the contrary, when the director obtains a judgment against an uninsured employer, the director may, in addition to any other remedies provided by law, enforce the judgment by nonjudicial foreclosure. This enforcement shall not be subject to Chapter 4 (commencing with Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure relating to claiming exemptions after levy.

(b) To enforce the judgment by nonjudicial foreclosure, the director shall record with the county recorder of any county in which real property of the parties against whom the judgment is taken is located, a certified copy of the judgment together with the director’s notice of intent to foreclose. The notice of intent to foreclose shall set forth all of the following:

(1) The name, address, and telephone number of the trustee authorized by the director to enforce the lien by sale.

(2) The legal description of the real property to be foreclosed upon.

(3) Proof of service by registered or certified mail on the following:

(A) The parties against whom the foreclosure is sought at their last known address as shown on the official records of the appeals board and as shown on the latest recorded deed, deed of trust, or mortgage affecting the real property which is the subject of the foreclosure.

(B) All of the owners of the real property which is subject to the foreclosure at their last address as shown on the latest equalized assessment roll.

(c) Upon the expiration of 20 days following recording of the judgment and notice of intent to foreclose, the trustee may proceed to sell the real property. Any sale by the trustee shall be conducted in accordance with Article 1 (commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code applicable to the exercise of powers of sale of property under powers created by mortgages and deeds of trust.

(d) The director may authorize any person, including an attorney, corporation, or other business entity, to act as trustee pursuant to subdivision (b).

(e) Except as provided in subdivision (f), this section shall apply to all judgments which the director has obtained or may obtain pursuant to Section 3717, 3726, or 5806.

(f) This section shall not apply to the principal residence of an employer if the appeals board finds that the employer, on the date of injury, employed 10 or fewer employees. An employer seeking this exemption shall provide proof of payment of tax withholding required pursuant to Division 6 (commencing with Section 13000) of the Unemployment Insurance Code, to assist in determining the number of employees on the date of injury.

(Added by Stats. 1990, Ch. 770, Sec. 2. Applicable retroactively as prescribed by Sec. 4 of Ch. 770.)

Section 3716.4§Sections

Whenever a final judgment has been entered against a motor carrier of property subject to the jurisdiction and control of the Department of Motor Vehicles or a passenger stage corporation, charter-party carrier of passengers, or a household goods carrier subject to the jurisdiction and control of the Public Utilities Commission as a result of an award having been made pursuant to Section 3716.2, the director may transmit to the Public Utilities Commission or the Department of Motor Vehicles, whichever has jurisdiction over the affected carrier, a copy of the judgment along with the name and address of the regulated entity and any other persons, corporations, or entities named in the judgment which are jointly and severally liable for the debt to the State Treasury with a complaint requesting that the Public Utilities Commission or the Department of Motor Vehicles immediately revoke the carrier’s Public Utilities Commission certificate of public convenience and necessity or Department of Motor Vehicles motor carrier permit.

(Amended by Stats. 1996, Ch. 1042, Sec. 2.5. Effective September 29, 1996.)

Section 3716.5§Sections

In the payment of workers’ compensation benefits from the Uninsured Employers Fund, the director shall do the following:

(a) Designate the job classifications of employees who are paid compensation from the fund.

(b) Compile data on the job classifications of employees paid compensation from the fund and report this data to the Legislature by November 1, 1990, and annually thereafter.

(Added by Stats. 1989, Ch. 827, Sec. 1.)

Section 3717§Sections

(a) A findings and award that is the subject of a demand on the Uninsured Employers Fund or an approved compromise and release or stipulated findings and award entered into by the director pursuant to subdivision (e) of Section 3715, or a decision and order of the rehabilitation unit of the Division of Workers’ Compensation, that has become final, shall constitute a liquidated claim for damages against an employer in the amount so ascertained and fixed by the appeals board, and the appeals board shall certify the same to the director who may institute a civil action against the employer in the name of the director, as administrator of the Uninsured Employers Fund, for the collection of the award, or may obtain a judgment against the employer pursuant to Section 5806. In the event that the appeals board finds that a corporation is the employer of an injured employee, and that the corporation has not secured the payment of compensation as required by this chapter, the following persons shall be jointly and severally liable with the corporation to the director in the action:

(1) All persons who are a parent, as defined in Section 175 of the Corporations Code, of the corporation.

(2) All persons who are substantial shareholders, as defined in subdivision (b), of the corporation or its parent. In the action it shall be sufficient for plaintiff to set forth a copy of the findings and award of the appeals board relative to the claims as certified by the appeals board to the director and to state that there is due to plaintiff on account of the finding and award of the appeals board a specified sum which plaintiff claims with interest. The director shall be further entitled to costs and reasonable attorney fees, and to his or her investigation and litigation expenses for the appeals board proceedings, and a reasonable attorney fee for litigating the appeals board proceedings. A certified copy of the findings and award in the claim shall be attached to the complaint. The contents of the findings and award shall be deemed proved. The answer or demurrer to the complaint shall be filed within 10 days, the reply or demurrer to the answer within 20 days, and the demurrer to the reply within 30 days after the return day of the summons or service by publication. All motions and demurrers shall be submitted to the court within 10 days after they are filed. At the time the civil action filed pursuant to this section is at issue, it shall be placed at the head of the trial docket and shall be first in order for trial.

Nothing in this chapter shall be construed to preclude informal adjustment by the director of a claim for compensation benefits before the issuance of findings and award wherever it appears to the director that the employer is uninsured and that informal adjustment will facilitate the expeditious delivery of compensation benefits to the injured employee.

(b) As used in this section, “substantial shareholder” means a shareholder who owns at least 15 percent of the total value of all classes of stock, or, if no stock has been issued, who owns at least 15 percent of the beneficial interests in the corporation.

(c) For purposes of this section, in determining the ownership of stock or beneficial interest in the corporation, in the determination of whether a person is a substantial shareholder of the corporation, the rules of attribution of ownership of Section 17384 of the Revenue and Taxation Code shall be applied.

(d) For purposes of this section, “corporation” shall not include:

(1) Any corporation which is the issuer of any security which is exempted by Section 25101 of the Corporations Code from Section 25130 of the Corporations Code.

(2) Any corporation which is the issuer of any security exempted by subdivision (c), (d), or (i) of Section 25100 of the Corporations Code from Sections 25110, 25120, and 25130 of the Corporations Code.

(3) Any corporation which is the issuer of any security which has qualified either by coordination, as provided by Section 25111 of the Corporations Code, or by notification, as provided by Section 25112 of the Corporations Code.

(Amended by Stats. 1994, Ch. 146, Sec. 148. Effective January 1, 1995.)

Section 3717.1§Sections

In any claim in which an alleged uninsured employer is a corporation, the director may cause substantial shareholders and parents, as defined by Section 3717, to be joined as parties. Substantial shareholders may be served as provided in this division for service on adverse parties, or if they cannot be found with reasonable diligence, by serving the corporation. The corporation, upon this service, shall notify the shareholder of the service, and mail the served document to him or her at the shareholder’s last address known to the corporation.

(Added by Stats. 1985, Ch. 1547, Sec. 3.)

Section 3717.2§Sections

Upon request of the director, the appeals board shall make findings of whether persons are substantial shareholders or parents, as defined in Section 3717. The director may in his or her discretion proceed against substantial shareholders and parents pursuant to Section 3717 without those findings of the appeals board.

(Added by Stats. 1985, Ch. 1547, Sec. 4.)

Section 3718§Sections

The cause of action provided in Section 3717 and any cause of action arising out of Section 3722 may be joined in one action against an employer. The amount recovered in such action from such employer shall be paid into the State Treasury to the credit of the Uninsured Employers Fund.

(Amended by Stats. 1976, Ch. 1036.)

Section 3719§Sections

Any suit, action, proceeding, or award brought or made against any employer under Section 3717 may be compromised by the director, or such suit, action, or proceeding may be prosecuted to final judgment as in the discretion of the director may best subserve the interests of the Uninsured Employers Fund.

(Amended by Stats. 1980, Ch. 852.)

Section 3720§Sections

(a) When the appeals board or the director determines under Section 3715 or 3716 that an employer has not secured the payment of compensation as required by this division or when the director has determined that the employer is prima facie illegally uninsured, the director may file for record in the office of the county recorder in the counties where the employer’s property is possibly located, a certificate of lien showing the date that the employer was determined to be illegally uninsured or the date that the director has determined that the employer was prima facie illegally uninsured. The certificate shall show the name and address of the employer against whom it was filed, and the fact that the employer has not secured the payment of compensation as required by this division. Upon the recordation, the certificate shall constitute a valid lien in favor of the director, and shall have the same force, effect and priority as a judgment lien and shall continue for 10 years from the time of the recording of the certificate unless sooner released or otherwise discharged. A copy of the certificate shall be served upon the employer by mail, by the director. A facsimile signature of the director accompanied by the seal imprint of the department shall be sufficient for recording purposes of liens and releases or cancellations thereof considered herein. Certificates of liens may be filed in any or all counties of the state, depending upon the information the director obtains concerning the employer’s assets.

(b) For purposes of this section, in the event the employer is a corporation, those persons whom either the appeals board finds are the parent or the substantial shareholders of the corporation or its parent, or whom the director finds pursuant to Section 3720.1 to be prima facie the parent or the substantial shareholders of the corporation or its parent, as defined in Section 3717, shall be deemed to be the employer, and the director may file the certificates against those persons.

(c) A person who claims to be aggrieved by the filing of a lien against the property of an uninsured employer because he or she has the same or a similar name, may apply to the director to have filed an amended certificate of lien which shows that the aggrieved applicant is not the uninsured employer which is the subject of the lien. If the director finds that the aggrieved applicant is not the same as the uninsured employer, the director shall file an amended certificate of lien with the county recorder of the county in which the aggrieved applicant has property, which shall show, by reasonably identifying information furnished by the aggrieved applicant, that the uninsured employer and the aggrieved applicant are not the same. If the director does not file the amended certificate of lien within 60 days of application therefor, the applicant may appeal the director’s failure to so find by filing a petition with the appeals board, which shall make a finding as to whether the applicant and the uninsured employer are the same.

(d) Liens filed under this section have continued existence independent of, and may be foreclosed upon independently of, any right of action arising out of Section 3717 or 5806.

(Amended by Stats. 1992, Ch. 1226, Sec. 2. Effective January 1, 1993.)

Section 3720.1§Sections

(a) In any claim in which the alleged uninsured employer is a corporation, for purposes of filing certificates of lien pursuant to Section 3720, the director may determine, according to the evidence available to him or her, whether a person is prima facie a parent or substantial shareholder, as defined in Section 3717. A finding that a person was prima facie a parent or substantial shareholder shall be made when the director determines that there is sufficient evidence to constitute a prima facie case that the person was a parent or substantial shareholder.

(b) Any person aggrieved by a finding of the director that he or she was prima facie a parent or substantial shareholder may request a hearing on the finding by filing a written request for hearing with the director. The director shall hold a hearing on the matter within 20 days of the receipt of the request for hearing, and shall mail a notice of time and place of hearing to the person requesting hearing at least 10 days prior to the hearing. The hearing officer shall hear and receive evidence, and within 10 days of the hearing, file his or her findings on whether there is sufficient evidence to constitute a prima facie case that the person was a substantial shareholder or parent. The hearing officer shall serve with his or her findings a summary of evidence received and relied upon, and the reasons for the findings. A party may at his or her own expense require that the hearing proceedings be recorded and transcribed.

(c) A party aggrieved by the findings of the hearing officer may within 20 days apply for a writ of mandate to the superior court. Venue shall lie in the county in which is located the office of the director which issued the findings after the hearing.

(Added by Stats. 1985, Ch. 1547, Sec. 6.)

Section 3720.2§Sections

(a) In a claim in which the uninsured employer or a substantial shareholder, as determined pursuant to this article, has caused to be recorded in a county a vesting deed conveying an ownership interest in real property after the date of the employee’s injury and prior to the recording of a certificate of lien in the county by the director pursuant to Section 3720, and provided that such property has not subsequently been transferred to a bona fide purchaser, the director may determine according to the evidence available to the director whether the transferor of such real property intended to retain a beneficial interest in the real property, such that a resulting trust for the benefit of the uninsured employer or substantial shareholder was created. A prima facie finding that the transaction created a resulting trust for the benefit of the uninsured employer or substantial shareholder may be made when the director determines that there is sufficient evidence to show either of the following circumstances are present:

(1) The recorded vesting deed indicates thereon that the transfer was made as a gift or that no transfer tax to the county was paid.

(2) The transferor made the transfer with actual intent to hinder, delay, or defraud collection of reimbursement for funds paid by the Uninsured Employers Benefits Trust Fund to or on behalf of an injured worker. A finding made pursuant to this paragraph may be made when at least three or more of the following circumstances are present:

(A) The transfer was to a personal or business associate or a relative by blood, affinity, or marriage of the transferor.

(B) The transferor maintains the real property as a place of residence or business after the transfer.

(C) The transferring parties did not employ an escrow or title company to close the transaction transferring the real property.

(D) The value of the consideration received by the transferor was not reasonably equivalent to the value of the real property transferred.

(E) The transferor failed to attend scheduled hearings and trials of the appeals board after the transfer.

(F) The transferor owns legal title to no other real property in the county.

(b) When the director determines pursuant to subdivision (a) that a transfer of real property by the uninsured employer or a substantial shareholder created a resulting trust for the benefit of such transferor, a certificate of lien recorded by the director pursuant to Section 3720 shall attach to that resulting trust in the property and shall constitute a valid lien against the property in favor of the director in the same manner as if the transfer had not occurred.

(c) When the director determines pursuant to subdivision (a) that a transfer created a resulting trust for benefit of the transferor, the director shall mail written notices of the prima facie determination of said resulting trust to the transferor and transferee at their addresses as shown on the recorded vesting deed, the official address record of the appeals board, and to any other more recent addresses the director may have. The notice shall advise the transferring parties of their right to appeal the finding, and that a lien may record and attach against the subject real property stating therein that, “THE DIRECTOR HAS MADE A PRIMA FACIE DETERMINATION PURSUANT TO LABOR CODE SECTION 3720.2 THAT THE TRANSFEREE, [FIRST AND LAST NAME], HOLDS TITLE TO THE REAL PROPERTY AT [STREET ADDRESS, CITY AND PARCEL NUMBERS] ON BEHALF OF THE TRANSFEROR, [FIRST AND LAST NAME], IN A RESULTING TRUST” in bold and uppercase letters on the certificate of lien.

(d) A person aggrieved by a prima facie finding of the director pursuant to subdivision (a) that the transferor of the property intended to retain a beneficial interest, such that a resulting trust was created, may request a hearing on the finding by filing a written request for hearing with the director. The director, through a hearing officer appointed by the director, shall hold a hearing on the matter within 20 days of the receipt of the request for hearing and shall mail a notice of time and place of hearing to the person requesting the hearing at least 10 days prior to the hearing. The hearing officer shall hear and receive evidence, and within 10 days of the hearing, file findings on whether there is sufficient evidence to constitute a prima facie case that the transfer of real property is subject to a resulting trust. The hearing officer shall serve with the findings a summary of evidence received and relied upon and the reasons for the findings. A party may at their own expense require that the hearing proceedings be recorded and transcribed.

(e) A party aggrieved by the findings of the hearing officer may within 20 days apply for a writ of mandate to the superior court. The venue shall lie in the county in which the real property is located.

(f) This section does not affect the interests, priorities, and ownership rights of bona fide encumbrancers and purchasers.

(Added by Stats. 2025, Ch. 790, Sec. 1. (SB 847) Effective January 1, 2026.)

Section 3721§Sections

The director shall provide the employer with a certificate of cancellation of lien after the employer has paid to the claimant or to the Uninsured Employers Fund the amount of the compensation or benefits which has been ordered paid to the claimant, or when the application has finally been denied after the claimant has exhausted the remedies provided by law in those cases, or when the employer has filed a bond in the amount and with such surety as the appeals board approves conditioned on the payment of all sums ordered paid to the claimant, or when, after a finding that the employer was prima facie illegally uninsured, it is finally determined that the finding was in error. The recorder shall make no charge for filing the certificates of lien, for filing amended certificates of lien, or for cancellation when liens are filed in error. Cancellation of lien certificates provided to the employer may be filed for recordation by the employer at his or her expense.

(Amended by Stats. 1985, Ch. 1547, Sec. 7.)

Section 3722§Sections

(a) At the time the stop order is issued and served pursuant to Section 3710.1, the director shall also issue and serve a penalty assessment order requiring the uninsured employer to pay to the director, for deposit in the State Treasury to the credit of the Uninsured Employers Fund, the sum of one thousand five hundred dollars ($1,500) per employee employed at the time the order is issued and served, as an additional penalty for being uninsured at that time or issue and serve a penalty assessment order pursuant to subdivision (b).

(b) At any time that the director determines that an employer has been uninsured for a period in excess of one week during the calendar year preceding the determination, the director shall issue and serve a penalty assessment order requiring the uninsured employer to pay to the director, for deposit in the State Treasury to the credit of the Uninsured Employers Fund, the greater of (1) twice the amount the employer would have paid in workers’ compensation premiums during the period the employer was uninsured, determined according to subdivision (c), or (2) the sum of one thousand five hundred dollars ($1,500) per employee employed during the period the employer was uninsured. A penalty assessment issued and served by the director pursuant to this subdivision shall be in lieu of, and not in addition to, any other penalty issued and served by the director pursuant to subdivision (a).

(c) If the employer is currently insured, or becomes insured during the period during which the penalty under subdivision (b) is being determined, the amount an employer would have paid in workers’ compensation premiums shall be calculated by prorating the current premium for the number of weeks the employer was uninsured within the three-year period immediately prior to the date the penalty assessment is issued. If the employer is uninsured at the time the penalty under subdivision (b) is being determined, the amount an employer would have paid in workers’ compensation premiums shall be the product of the employer’s payroll for all periods of time the employer was uninsured within the three-year period immediately prior to the date the penalty assessment is issued multiplied by a rate determined in accordance with regulations that may be adopted by the director or, if none has been adopted, the manual rate or rates of the State Compensation Insurance Fund for the employer’s governing classification pursuant to the standard classification system approved by the Insurance Commissioner. The classification shall be determined by the director or the director’s designee at the time the penalty assessment is issued on the basis of any information available to the director regarding the employer’s operations. Unless the amount of the employer’s payroll for all periods during which the employer was uninsured within the three-year period is otherwise proven by a preponderance of evidence, the employer’s payroll for each week the employer was uninsured shall be presumed to be the state average weekly wage multiplied by the number of persons employed by the employer at the time the penalty assessment is issued. For purposes of this subdivision, “state average weekly wage” means the average weekly wage paid by employers to employees covered by unemployment insurance as reported by the United States Department of Labor for California for the 12-month period ending March 31 of the calendar year preceding the year in which the penalty assessment order is issued.

(d) If upon the filing of a claim for compensation under this division the Workers’ Compensation Appeals Board finds that any employer has not secured the payment of compensation as required by this division and finds the claim either noncompensable or compensable, the appeals board shall mail a copy of their findings to the uninsured employer and the director, together with a direction to the uninsured employer to file a verified statement pursuant to subdivision (e).

After the time for any appeal has expired and the adjudication of the claim has become final, the uninsured employer shall be assessed and pay as a penalty either of the following:

(1) In noncompensable cases, two thousand dollars ($2,000) per each employee employed at the time of the claimed injury.

(2) In compensable cases, ten thousand dollars ($10,000) per each employee employed on the date of the injury.

(e) In order to establish the number of employees the uninsured employer had on the date of the claimed injury in noncompensable cases and on the date of injury in compensable cases, the employer shall submit to the director within 10 days after service of findings, awards, and orders of the Workers’ Compensation Appeals Board a verified statement of the number of employees in his or her employ on the date of injury. If the employer fails to submit to the director this verified statement or if the director disputes the accuracy of the number of employees reported by the employer, the director shall use any information regarding the number of employees as the director may have or otherwise obtains.

(f) Except for penalties assessed under subdivision (b), the maximum amount of penalties which may be assessed pursuant to this section is one hundred thousand dollars ($100,000). Payment shall be transmitted to the director for deposit in the State Treasury to the credit of the Uninsured Employers Fund.

(g) (1) The Workers’ Compensation Appeals Board may provide for a summary hearing on the sole issue of compensation coverage to effect the provisions of this section.

(2) In the event a claim is settled by the director pursuant to subdivision (e) of Section 3715 by means of a compromise and release or stipulations with request for award, the appeals board may also provide for a summary hearing on the issue of compensability.

(Amended by Stats. 2009, Ch. 640, Sec. 1. (SB 313) Effective January 1, 2011. Note: Because Ch. 640 was chaptered on November 2, 2009, its effective date is January 1, 2011, not January 1, 2010.)

Section 3725§Sections

If an employer desires to contest a penalty assessment order, the employer shall file with the director a written request for a hearing within 15 days after service of the order. Upon receipt of the request, the director shall set the matter for a hearing within 30 days thereafter and shall notify the employer of the time and place of the hearing by mail at least 10 days prior to the date of the hearing. The decision of the director shall consist of a notice of findings and findings which shall be served on all parties to the hearing by registered or certified mail within 15 days after the hearing. Any amount found due by the director as a result of a hearing shall become due and payable 45 days after notice of the findings and written findings have been mailed by registered or certified mail to the party assessed. A writ of mandate may be taken from these findings to the appropriate superior court upon the execution by the party assessed of a bond to the state in double the amount found due and ordered paid by the director, as long as the party agrees to pay any judgment and costs rendered against the party for the assessment. The writ shall be taken within 45 days after mailing the notice of findings and findings.

(Amended by Stats. 1988, Ch. 96, Sec. 13.)

Section 3726§Sections

(a) When no petition objecting to a penalty assessment order is filed, a certified copy of the order may be filed by the director in the office of the clerk of the superior court in any county in which the employer has property or in which the employer has or had a place of business. The clerk, immediately upon such filing, shall enter judgment for the state against the employer in the amount shown on the penalty assessment order.

(b) When findings are made affirming or modifying a penalty assessment order after hearing, a certified copy of such order and a certified copy of such findings may be filed by the director in the office of the clerk of the superior court in any county in which the employer has property or in which the employer has or had a place of business. The clerk, immediately upon such filing, shall enter judgment for the state against the employer in the amount shown on the penalty assessment order or in the amount shown in the findings if the order has been modified.

(c) A judgment entered pursuant to the provisions of this section may be filed by the clerk in a looseleaf book entitled “Special Judgments for State Uninsured Employers Fund.” Such judgment shall bear the same rate of interest and shall have the same effect as other judgments and be given the same preference allowed by law on other judgments rendered for claims for taxes. The clerk shall make no charge for the service provided by this section to be performed by him.

(Amended by Stats. 1980, Ch. 852.)

Section 3727§Sections

If the director determines pursuant to Section 3722 that an employer has failed to secure the payment of compensation as required by this division, the director may file with the county recorder of any counties in which such employer’s property may be located his certificate of the amount of penalty due from such employer and such amount shall be a lien in favor of the director from the date of such filing against the real property and personal property of the employer within the county in which such certificate is filed. The recorder shall accept and file such certificate and record the same as a mortgage on real estate and shall file the same as a security interest and he shall index the same as mortgage on real estate and as a security interest. Certificates of liens may be filed in any and all counties of the state, depending upon the information the director obtains concerning the employer’s assets. The recorder shall make no charge for the services provided by this section to be performed by him. Upon payment of the penalty assessment, the director shall issue a certificate of cancellation of penalty assessment, which may be recorded by the employer at his expense.

(Amended by Stats. 1980, Ch. 852.)

Section 3727.1§Sections

The director may withdraw a stop order or a penalty assessment order where investigation reveals the employer had secured the payment of compensation as required by Section 3700 on the date and at the time of service of such order. The director also may withdraw a penalty assessment order where investigation discloses that the employer was insured on the date and at the time of an injury or claimed injury, or where an insured employer responded in writing to a request to furnish the status of his workers’ compensation coverage within the time prescribed.

(Added by Stats. 1980, Ch. 852.)

Section 3728§Sections

(a) The director may draw from the State Treasury out of the Uninsured Employers Benefits Trust Fund for the purposes of Sections 3716 and 3716.1, without at the time presenting vouchers and itemized statements, a sum not to exceed in the aggregate the level provided for pursuant to Section 16400 of the Government Code, to be used as a cash revolving fund. The revolving fund shall be deposited in any banks and under any conditions as the Department of General Services determines. The Controller shall draw his or her warrants in favor of the Director of Industrial Relations for the amounts so withdrawn and the Treasurer shall pay these warrants.

(b) Expenditures made from the revolving fund in payment of claims for compensation due from the Uninsured Employers Benefits Trust Fund and from the Workers’ Compensation Administration Revolving Fund for administrative and adjusting services rendered are exempted from the operation of Section 925.6 of the Government Code. Reimbursement of the revolving fund from the Uninsured Employers Benefits Trust Fund or the Workers’ Compensation Administration Revolving Fund for expenditures shall be made upon presentation to the Controller of an abstract or statement of the expenditures. The abstract or statement shall be in any form as the Controller requires.

(Amended by Stats. 2003, Ch. 228, Sec. 30. Effective August 11, 2003.)

Section 3730§Sections

When the last day for filing any instrument or other document pursuant to this chapter falls upon a Saturday, Sunday or other holiday, such act may be performed upon the next business day with the same effect as if it had been performed upon the day appointed.

(Added by Stats. 1980, Ch. 852.)

Section 3731§Sections

Any stop order or penalty assessment order may be personally served upon the employer either by (1) manual delivery of the order to the employer personally or by (2) leaving signed copies of the order during usual office hours with the person who is apparently in charge of the office and by thereafter mailing copies of the order by first class mail, postage prepaid to the employer at the place where signed copies of the order were left.

(Added by Stats. 1980, Ch. 852.)

Section 3732§Sections

(a) If compensation is paid or becomes payable from the Uninsured Employers Fund, whether as a result of a findings and award, award based upon stipulations, compromise and release executed on behalf of the director, or payments voluntarily furnished by the director pursuant to Section 4903.3, the director may recover damages from any person or entity, other than the employer, whose tortious act or omission proximately caused the injury or death of the employee. The damages shall include any compensation, including additional compensation by way of interest or penalty, paid or payable by the director, plus the expense incurred by the director in investigating and litigating the workers’ compensation claim and a reasonable attorney fee for litigating the workers’ compensation claim. The director may compromise, or settle and release any claim, and may waive any claim, including the lien allowed by this section, in whole or in part, for the convenience of the director.

(b) Except as otherwise provided in this section, Chapter 5 (commencing with Section 3850) of Part 1 of Division 4 shall be applicable to these actions, the director being treated as an employer within the meaning of Chapter 5 to the extent not inconsistent with this section.

(c) Actions brought under this section shall be commenced within one year after the later of either the time the director pays or the time the director becomes obligated to pay any compensation from the Uninsured Employers Fund.

(d) In the trial of these actions, any negligence attributable to the employer shall not be imputed to the director or to the Uninsured Employers Fund, and the damages recoverable by the director shall not be reduced by any percentage of fault or negligence attributable to the employer or to the employee.

(e) In determining the credit to the Uninsured Employers Fund provided by Section 3861, the appeals board shall not take into consideration any negligence of the employer, but shall allow a credit for the entire amount of the employee’s recovery either by settlement or after judgment, as has not theretofore been applied to the payment of expenses or attorney’s fees.

(f) When an action or claim is brought by an employee, his or her guardian, conservator, personal representative, estate, survivors, or heirs against a third party who may be liable for causing the injury or death of the employee, any settlement or judgment obtained is subject to the director’s claim for damages recoverable by the director pursuant to subdivision (a), and the director shall have a lien against any settlement in the amount of the damages.

(g) No judgment or settlement in any action or claim by an employee, his or her guardian, conservator, personal representative, survivors, or heirs to recover damages for injuries, where the director has an interest, shall be satisfied without first giving the director notice and a reasonable opportunity to perfect and satisfy his or her lien. The director shall be mailed a copy of the complaint in the third-party action as soon as reasonable after it is filed with the court.

(h) When the director has perfected a lien upon a judgment or settlement in favor of an employee, his or her guardian, conservator, personal representative, survivors or heirs against any third party, the director shall be entitled to a writ of execution as a lien claimant to enforce payment of the lien against the third party with interest and other accruing costs as in the case of other executions. In the event the amount of the judgment or settlement so recovered has been paid to the employee, his or her guardian, conservator, personal representative, survivors, or heirs, the director shall be entitled to a writ of execution against the employee, his or her guardian, conservator, personal representative, survivors, or heirs to the extent of the director’s lien, with interest and other accruing costs as in the cost of other executions.

(i) Except as otherwise provided in this section, notwithstanding any other provision of law, the entire amount of any settlement of the action or claim of the employee, his or her guardian, conservator, personal representative, survivors, or heirs, with or without suit, is subject to the director’s lien claim for the damages recoverable by the director pursuant to subdivision (a).

(j) Where the action or claim is brought by the employee, his or her guardian, conservator, personal representative, estate, survivors, or heirs, and the director has not joined in the action, and the employee, his or her guardian, conservator, personal representative, estate, survivors, or heirs incur a personal liability to pay attorney’s fees and costs of litigation, the director’s claim for damages shall be limited to the amount of the director’s claim for damages less that portion of the costs of litigation expenses determined by multiplying the total cost of litigation expenses by the ratio of the full amount of the director’s claim for damages to the full amount of the judgment, award, or settlement, and less 25 percent of the balance after subtracting the director’s share of litigation expenses, which represents the director’s reasonable share of attorney’s fees incurred.

(k) In the trial of the director’s action for damages, and in the allowance of his or her lien in an action by the employee, guardian, executor, personal representative, survivors, or heirs, the compensation paid from the Uninsured Employers Fund pursuant to an award as provided in Section 3716 is conclusively presumed to be reasonable in amount and to be proximately caused by the event or events which caused the employee’s injury or death.

(l) In the action for damages the director shall be entitled to recover, if he or she prevails, the entire amount of the damages recoverable by the director pursuant to subdivision (a), regardless of whether the damages recoverable by the employee, guardian, conservator, personal representative, survivors, or heirs are of lesser amount.

(Amended by Stats. 1989, Ch. 461, Sec. 3.)

Section 3733§Sections

(a) The Legislature finds and declares that it is in the best interest of the State of California to provide a person, regardless of his or her citizenship or immigration status, with the benefits provided pursuant to this article, and therefore enacts this section pursuant to Section 1621(d) of Title 8 of the United States Code.

(b) A person shall not be prohibited from receiving compensation paid or payable from the Uninsured Employers Benefits Trust Fund solely because of his or her citizenship or immigration status.

(c) It is the intent of the Legislature to override Section 15740 of Article 1 of Subchapter 2.1.1 of Chapter 8 of Division 1 of Title 8 of the California Code of Regulations.

(d) The provisions of this section are declaratory of existing law.

(Added by Stats. 2015, Ch. 290, Sec. 1. (SB 623) Effective January 1, 2016.)

Section 3740§Sections

It is the intent of the Legislature in enacting this article and Article 1 (commencing with Section 3700) to provide for the continuation of workers’ compensation benefits delayed due to the failure of a private self-insured employer to meet its compensation obligations when the employers’ security deposit is either inadequate or not immediately accessible for the payment of benefits. With respect to the continued liability of a surety for claims that arose under a bond after termination of that bond and to a surety’s liability for the cost of administration of claims, it is the intent of the Legislature to clarify existing law. The Legislature finds and declares that the establishment of the Self-Insurers’ Security Fund is a necessary component of a complete system of workers’ compensation, required by Section 4 of Article XIV of the California Constitution, to have adequate provisions for the comfort, health and safety, and general welfare of any and all workers and their dependents to the extent of relieving the consequences of any industrial injury or death, and full provision for securing the payment of compensation.

(Amended by Stats. 1986, Ch. 1128, Sec. 15. Effective September 25, 1986.)

Section 3741§Sections

As used in this article:

(a) “Director” means the Director of Industrial Relations.

(b) “Private self-insurer” means a private employer which has secured the payment of compensation pursuant to subdivision (b) of Section 3700.

(c) “Insolvent self-insurer” means a private self-insurer who has failed to pay compensation and whose security deposit has been called by the director pursuant to Section 3701.5.

(d) “Fund” means the Self-Insurers’ Security Fund established pursuant to Section 3742.

(e) “Trustees” means the Board of Trustees of the Self-Insurers’ Security Fund.

(f) “Member” means a private self-insurer which participates in the Self-Insurers’ Security Fund.

(Added by Stats. 1984, Ch. 252, Sec. 5. Effective June 27, 1984.)

Section 3742§Sections

(a) The Self-Insurers’ Security Fund shall be established as a Nonprofit Mutual Benefit Corporation pursuant to Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code and this article. If any provision of the Nonprofit Mutual Benefit Corporation Law conflicts with any provision of this article, the provisions of this article shall apply. Each private self-insurer shall participate as a member in the fund, unless its liabilities have been turned over to the fund pursuant to Section 3701.5, at which time its membership in the fund is relinquished.

(b) The fund shall be governed by a board of trustees with no more than eight members, as established by the bylaws of the Self-Insurers’ Security Fund. The director shall hold ex officio status, with full powers equal to those of a trustee, except that the director shall not have a vote. The director, or a delegate authorized in writing to act as the director’s representative on the board of trustees, shall carry out exclusively the responsibilities set forth in Division 1 (commencing with Section 50) through Division 4 (commencing with Section 3200) and shall not have the obligations of a trustee under the Nonprofit Mutual Benefit Corporation Law. The fund shall adopt bylaws to segregate the director from all matters that may involve fund litigation against the department or fund participation in legal proceedings before the director. Although not voting, the director or a delegate authorized in writing to represent the director, shall be counted toward a quorum of trustees. The remaining trustees shall be representatives of private self-insurers. The self-insurer trustees shall be elected by the members of the fund, each member having one vote. Trustees shall be elected to four-year terms, and shall serve until their successors are elected and assume office pursuant to the bylaws of the fund.

(c) The fund shall establish bylaws as are necessary to effectuate the purposes of this article and to carry out the responsibilities of the fund, including, but not limited to, any obligations imposed by the director pursuant to Section 3701.8. The fund may carry out its responsibilities directly or by contract, and may purchase services and insurance and borrow funds as it deems necessary for the protection of the members and their employees. The fund may receive confidential information concerning the financial condition of self-insured employers whose liabilities to pay compensation may devolve upon it and shall adopt bylaws to prevent dissemination of that information.

(d) The director may also require fund members to subscribe to financial instruments or guarantees to be posted with the director in order to satisfy the security requirements set by the director pursuant to Section 3701.8.

(Amended by Stats. 2012, Ch. 363, Sec. 23. (SB 863) Effective January 1, 2013.)

Section 3743§Sections

(a) Upon order of the director pursuant to Section 3701.5, the fund shall assume the workers’ compensation obligations of an insolvent self-insurer.

(b) Notwithstanding subdivision (a), the fund shall not be liable for the payment of any penalties assessed for any act or omission on the part of any person other than the fund, including, but not limited to, the penalties provided in Section 132a, 3706, 4553, 4554, 4556, 4557, 4558, 4601.5, 5814, or 5814.1.

(c) The fund shall be a party in interest in all proceedings involving compensation claims against an insolvent self-insurer whose compensation obligations have been paid or assumed by the fund. The fund shall have the same rights and defenses as the insolvent self-insurer, including, but not limited to, all of the following:

(1) To appear, defend, and appeal claims.

(2) To receive notice of, investigate, adjust, compromise, settle, and pay claims.

(3) To investigate, handle, and deny claims.

(Added by Stats. 1984, Ch. 252, Sec. 5. Effective June 27, 1984.)

Section 3744§Sections

(a) (1) The fund shall have the right and obligation to obtain reimbursement from an insolvent self-insurer up to the amount of the self-insurer’s workers’ compensation obligations paid and assumed by the fund, including reasonable administrative and legal costs. This right includes, but is not limited to, a right to claim for wages and other necessities of life advanced to claimants as subrogee of the claimants in any action to collect against the self-insured as debtor. For purposes of this section, “insolvent self-insurer” includes the entity to which the certificate of consent to self-insure was issued, any guarantor of the entity’s liabilities under the certificate, any member of a self-insurance group to which the certificate was issued, and any employer who obtained employees from a self-insured employer under subdivision (d) of Section 3602.

(2) The Legislature finds and declares that the amendments made to this subdivision by the act adding this paragraph are declaratory of existing law.

(b) The fund shall have the right and obligation to obtain from the security deposit of an insolvent self-insurer the amount of the self-insurer’s compensation obligations, including reasonable administrative and legal costs, paid or assumed by the fund. Reimbursement of administrative costs, including legal costs, shall be subject to approval by a majority vote of the fund’s trustees. The fund shall be a party in interest in any action to obtain the security deposit for the payment of compensation obligations of an insolvent self-insurer.

(c) The fund shall have the right to bring an action against any person to recover compensation paid and liability assumed by the fund, including, but not limited to, any excess insurance carrier of the self-insured employer, and any person whose negligence or breach of any obligation contributed to any underestimation of the self-insured employer’s total accrued liability as reported to the director.

(d) The fund may be a party in interest in any action brought by any other person seeking damages resulting from the failure of an insolvent self-insurer to pay workers’ compensation required pursuant to this division.

(e) At the election of the Self-Insurers’ Security Fund, venue shall be in the Superior Court for the State of California, County of Sacramento, for any action under this section. All actions in which the Self-Insurers’ Security Fund and two or more members or former members of one self-insurance group are parties shall be consolidated if requested by the Self-Insurers’ Security Fund.

(Amended by Stats. 2012, Ch. 363, Sec. 24. (SB 863) Effective January 1, 2013.)

Section 3745§Sections

(a) The fund shall maintain cash, readily marketable securities, or other assets, or a line of credit, approved by the director, sufficient to immediately continue the payment of the compensation obligations of an insolvent self-insurer pending assessment of the members. The director may establish the minimum amount to be maintained by, or immediately available to, the fund for this purpose.

(b) The fund may assess each of its members a pro rata share of the funding necessary to carry out the purposes of this article.

(c) The trustees shall certify to the director the collection and receipt of all moneys from assessments, noting any delinquencies. The trustees shall take any action deemed appropriate to collect any delinquent assessments.

(Amended by Stats. 2012, Ch. 363, Sec. 25. (SB 863) Effective January 1, 2013.)

Section 3746§Sections

The fund shall annually contract for an independent certified audit of the financial activities of the fund. An annual report on the financial status of the fund as of June 30 shall be submitted to the director and to each member, or at the election of the fund, posted on the fund’s Internet Web site.

(Amended by Stats. 2012, Ch. 363, Sec. 26. (SB 863) Effective January 1, 2013.)

Section 3747§Sections

This article shall be known and may be referred to as the “Young-La Follette Self-Insurers’ Security Act.”

(Added by Stats. 1984, Ch. 252, Sec. 5. Effective June 27, 1984.)

Section 3750§Sections

Nothing in this division shall affect:

(a) The organization of any mutual or other insurer.

(b) Any existing contract for insurance.

(c) The right of the employer to insure in mutual or other insurers, in whole or in part, against liability for the compensation provided by this division.

(d) The right to provide by mutual or other insurance, or by arrangement with his employees, or otherwise, for the payment to such employees, their families, dependents or representatives, of sick, accident, or death benefits, in addition to the compensation provided for by this division.

(e) The right of the employer to waive the waiting period provided for herein by insurance coverage.

(Enacted by Stats. 1937, Ch. 90.)

Section 3751§Sections

(a) No employer shall exact or receive from any employee any contribution, or make or take any deduction from the earnings of any employee, either directly or indirectly, to cover the whole or any part of the cost of compensation under this division. Violation of this subdivision is a misdemeanor.

(b) If an employee has filed a claim form pursuant to Section 5401, a provider of medical services shall not, with actual knowledge that a claim is pending, collect money directly from the employee for services to cure or relieve the effects of the injury for which the claim form was filed, unless the medical provider has received written notice that liability for the injury has been rejected by the employer and the medical provider has provided a copy of this notice to the employee. Any medical provider who violates this subdivision shall be liable for three times the amount unlawfully collected, plus reasonable attorney’s fees and costs.

(Amended by Stats. 1990, Ch. 997, Sec. 1.)

Section 3752§Sections

Liability for compensation shall not be reduced or affected by any insurance, contribution or other benefit whatsoever due to or received by the person entitled to such compensation, except as otherwise provided by this division.

(Enacted by Stats. 1937, Ch. 90.)

Section 3753§Sections

The person entitled to compensation may, irrespective of any insurance or other contract, except as otherwise provided in this division, recover such compensation directly from the employer. In addition thereto, he may enforce in his own name, in the manner provided by this division the liability of any insurer either by making the insurer a party to the original application or by filing a separate application for any portion of such compensation.

(Enacted by Stats. 1937, Ch. 90.)

Section 3754§Sections

Except as provided in paragraph (12) of subdivision (f) of Section 1202.4 of the Penal Code, payment, in whole or in part, of compensation by either the employer or the insurer shall, to the extent thereof, be a bar to recovery against each of them of the amount so paid.

(Amended by Stats. 2012, Ch. 868, Sec. 2. (SB 1177) Effective January 1, 2013.)

Section 3755§Sections

If the employer is insured against liability for compensation, and if after the suffering of any injury the insurer causes to be served upon any compensation claimant a notice that it has assumed and agreed to pay any compensation to the claimant for which the employer is liable, such employer shall be relieved from liability for compensation to such claimant upon the filing of a copy of such notice with the appeals board. The insurer shall, without further notice, be substituted in place of the employer in any proceeding theretofore or thereafter instituted by such claimant to recover such compensation, and the employer shall be dismissed therefrom.

Such proceedings shall not abate on account of such substitution but shall be continued against such insurer.

(Amended by Stats. 1965, Ch. 1513.)

Section 3756§Sections

If at the time of the suffering of a compensable injury, the employer is insured against liability for the full amount of compensation payable, he may cause to be served upon the compensation claimant and upon the insurer a notice that the insurer has agreed to pay any compensation for which the employer is liable. The employer may also file a copy of such notice with the appeals board.

(Amended by Stats. 1965, Ch. 1513.)

Section 3757§Sections

If it thereafter appears to the satisfaction of the appeals board that the insurer has assumed the liability for compensation, the employer shall thereupon be relieved from liability for compensation to the claimant. The insurer shall, after notice, be substituted in place of the employer in any proceeding instituted by the claimant to recover compensation, and the employer shall be dismissed therefrom.

(Amended by Stats. 1965, Ch. 1513.)

Section 3758§Sections

A proceeding to obtain compensation shall not abate on account of substitution of the insurer in place of the employer and on account of the dismissal of the employer, but shall be continued against such insurer.

(Enacted by Stats. 1937, Ch. 90.)

Section 3759§Sections

The appeals board may enter its order relieving the employer from liability where it appears from the pleadings, stipulations, or proof that an insurer joined as party to the proceeding is liable for the full compensation for which the employer in such proceeding is liable.

(Amended by Stats. 1965, Ch. 1513.)

Section 3760§Sections

Every employer who is insured against any liability imposed by this division shall file with the insurer a complete report of every injury to each employee as specified in Section 6409.1. If not so filed, the insurer may petition the appeals board for an order, or the appeals board may of its own motion issue an order, directing the employer to submit a report of the injury within five days after service of the order. Failure of the employer to comply with the appeals board’s order may be punished by the appeals board as a contempt.

(Amended by Stats. 1987, Ch. 1019, Sec. 4.)

Section 3800§Sections

(a) Every county or city which requires the issuance of a permit as a condition precedent to the construction, alteration, improvement, demolition, or repair of any building or structure shall require that each applicant for the permit sign a declaration under penalty of perjury verifying workers’ compensation coverage or exemption from coverage, as required by Section 19825 of the Health and Safety Code.

(b) At the time of permit issuance, contractors shall show their valid workers’ compensation insurance certificate, or the city or county may verify the workers’ compensation coverage by electronic means.

(Amended by Stats. 1999, Ch. 982, Sec. 8. Effective January 1, 2000.)