California moves to close loophole
California is home to a bevy of professional sports organizations. Whether you’re watching the Warriors in the NBA playoffs or cheering on the San Francisco 49ers toward another divisional title, Californians are proud supporters of their players and teams. But did you know that athletes not based in the state of California are eligible to file workers’ comp claims should they suffer an injury while participating in a sporting event in the state?
Insurers may be on the hook for more than $1.5 billion in potential Workers’ Compensation claims filed by out-of-state athletes, according to Milliman Inc., a Seattle-based actuarial and consulting firm. Assembly Bill 1309 seeks to amend the California labor code in an attempt to offset these losses, saving California tax payers money.
California’s “Cumulative Trauma” Workers’ Compensation provision for professional athletes
In its current form, the California labor code provides that any injury defined as “cumulative” or occurring as repetitive mental and physical trauma with the combined effect of disability or the need for medical treatment may be covered by the state’s Workers Compensation provision. It does not require that professional athletes covered by the law be employed by a California based organization. Rather, the injury needs only to have occurred while in the state for the claimant to receive benefits.
The California Insurance Guarantee Association pays for insolvent insurers and is funded by assessments on California employers. The Milliman report alleges that CIGA has processed 1700 Workers’ Comp claims from players residing out-of-state, prompting speculation that guarantee fund assessments paid out by Californian employers will soon be on the rise.
Out-of-state athlete abuse
The statute of limitations to file a Workers’ Comp claim does not begin until an employee has been informed of their right to file and is valid for one year. Retired players suffering neurological and cognitive disorders as a result of their professional affiliations are the most likely to benefit from this loophole. Milliman estimates that claims by athletes having played professionally in California within the last 30 years could reach $1.57 billion with $825 million coming from retired players who have not yet filed claims. Approximately $1.23 billion or 78% of these claims are likely to come from out-of-state.
Assembly Bill 1309 would ban professional athletes and their dependents from receiving California Workers’ Comp benefits if the athlete was hired by an organization outside of the state. This includes minor/major league baseball, basketball, football, hockey and soccer.