On September 29, 2022, Governor Gavin Newsom signed Senate Bill 1127 (SB 1127). The bill reforms California’s workers’ compensation laws to provide additional statutory protections to many public safety workers—specifically most police officers and firefighters.

Notably, the bill imposed substantially increased penalties on employers that deny certain types of police/firefighter workers’ compensation claims involving presumptive liability. Within this article, our Bakersfield workers’ compensation defense lawyer discusses the key things municipal employers and their insurers should know about the increased penalties under SB 1127. 

Employers Face Penalty for Improper Rejection of Claim Covered By Statutory Presumption

As a background, it is important to note that municipalities/agencies in California that employ police officers and firefighters face financial penalties if they improperly reject a workers’ compensation claim that is covered by a statutory presumption. A statutory presumption of coverage in workers’ compensation refers to a legal assumption made by law that certain injuries or illnesses are work-related for specific categories of workers. As such, they are presumed to qualify for benefits. Employers/insurers (the defense) has the burden of proving that an applicant does not qualify.

Senate Bill 1127 Adds Labor Code § 5414.3: Up to $50,000.00 in Penalties

Senate Bill 1127 adds Labor Code § 5414.3 to the California Labor Code. This new section of California law states that an employer that unreasonably rejects a workers’ compensation claim for an injury or illness that is covered by Sections 3212 to 3213.2 of the Labor Code will face financial penalties. Here is an overview of the increased penalties:

  • Penalties for an unreasonable denial will be five times the value of the claim;
  • For a violation, the statutory maximum penalty is $50,000.00.

Reasonableness of Denial is a Matter for the WCAB

What constitutes an unreasonable denial? It depends entirely on the specific circumstances of the case. There is a category of denial that could be incorrect—meaning the employee could prevail on appeal—but may not be deemed unreasonable. The WCAB has the authority to review and assess the specific facts and circumstances of the case to determine whether or not a denial was unreasonable and, as such, should be subject to penalties under LC § 5414.3.

Important Caveat: Most reforms in SB 1127 only apply to police officers and firefighters. However, the increased penalties for unreasonable denial of presumptive coverage may also apply to private employers. This provision applies to presumptions related to COVID-19. Employers handling COVID-19 claims that are subject to statutory presumptions of coverage should be aware.

Set Up a Confidential Case Evaluation With a California Workers’ Compensation Defense Lawyer

At Yrulegui & Roberts, our California workers’ compensation defense attorneys are dedicated to helping clients find the most cost-effective solutions. If you have any specific questions or concerns about the penalties for unreasonable denial of police officer workers’ compensation benefits under SB 1127, please contact us today. Our firm provides workers’ compensation defense representation in Bakersfield, Kern County, and all across the wider region of Central California.