SECTIONS 11770-11805

11770.  (a) The State Compensation Insurance Fund is continued inexistence, to be administered by its board of directors for thepurpose of transacting workers' compensation insurance, and insuranceagainst the expense of defending any suit for serious and willfulmisconduct, against an employer or his or her agent, and insurance toemployees and other persons of the compensation fixed by the workers'compensation laws for employees and their dependents. Anyappropriation made therefrom or thereto before the effective date ofthis code shall continue to be available for the purposes for whichit was made. (b) (1) The Board of Directors of the State Compensation InsuranceFund is composed of 11 members, nine of whom shall be appointed bythe Governor. The Governor shall appoint the chairperson. One of themembers appointed by the Governor shall be from organized labor. Themembers appointed by the Governor, other than the labor member, shallhave substantial experience in positions involving workers'compensation, legal, investment, financial, corporate governance andmanagement, accounting, or auditing responsibilities with entities ofsufficient size as to make their qualifications relevant to anenterprise of the financial and operational size of the StateCompensation Insurance Fund. At all times the board shall have amember with auditing background for the purposes of fulfilling theresponsibility of the chair of the audit committee. A quorum is amajority of those appointed, provided that at no time shall a quorumbe established with less than five members. (2) The Speaker of the Assembly shall appoint one member who shallrepresent organized labor, and the Senate Committee on Rules shallappoint one member who shall have been a policyholder of the StateCompensation Insurance Fund, or an officer or employee of apolicyholder, for one year immediately preceding the appointment, andmust continue in this status during the period of his or hermembership. (3) The Director of Industrial Relations shall be an ex officio,nonvoting member of the board, and shall not be counted as members ofthe board for quorum purposes or any other purpose. (4) Notwithstanding subdivision (c), the initial term of themembers of the board added in the 2008 portion of the 2007-08 RegularSession shall be as follows: (A) One of the members appointed by the Governor shall serve aninitial term of two years, one shall serve an initial term of fouryears, and two shall serve an initial term of five years. (B) The member appointed by the Senate Committee on Rules shallserve an initial term of four years. (C) The member appointed by the Speaker of the Assembly shallserve an initial term of three years. (c) The term of office of the members of the board, other thanthat of the director, shall be five years and they shall hold officeuntil the appointment and qualification of their successors. (d) (1) Each member of the board shall receive his or her actualand necessary traveling expenses incurred in the performance of hisor her duties as a member and, with the exception of the ex officiomembers, one hundred dollars ($100) for each day of his or her actualattendance at meetings of the board. (2) (A) Each member of the board appointed pursuant to paragraphs(1) and (2) of subdivision (b) shall receive the compensation fixedpursuant to subparagraph (B). (B) Each board member described in subparagraph (A) shall be paidan annual compensation of fifty thousand dollars ($50,000), to beautomatically adjusted beginning January 1, 2010, by multiplying thecompensation in effect the prior June 30 by the percentage ofinflation that occurred during the previous year, adding this amountto the annual compensation from the previous year, and rounding offthe result to the nearest dollar. "Percentage of inflation" means thepercentage of inflation specified in the Consumer Price Index forAll Urban Consumers, as published by the Department of IndustrialRelations, Division of Labor Statistics and Research, or itssuccessor index. (e) Each member of the board of directors shall attend trainingapproved by the board of directors that covers topics, including, butnot limited to, the duties and obligations of members of a board ofdirectors, corporate governance, ethics, board of director legalissues, insurance, finance and investment, and informationtechnology. The training shall be conducted by persons or entitiesnot affiliated with the State Compensation Insurance Fund. (f) No person who has had a direct or indirect interest in anytransaction with the State Compensation Insurance Fund since thebeginning of the last fiscal year of the fund, or who has a direct orindirect material interest in any proposed transaction with thefund, where the amount involved in the transaction exceeds onehundred twenty thousand dollars ($120,000) shall be eligible forappointment as a member of the board of directors of the fund. Onceappointed, no member of the board of directors shall have a financialconflict of interest, as defined in Chapter 7 of Title 9 (commencingwith Section 87100) of the Government Code, and every member shallbe subject to Article 4 (commencing with Section 1090) of Chapter 1of Division 4 of Title 1 of the Government Code, provided that theexistence of a contract of insurance between the State CompensationInsurance Fund and the policyholder member appointed by the SenateCommittee on Rules shall not constitute a conflict of interestpursuant to this subdivision. For purposes of board actions affectinggenerally applicable rates, a member of the board of directors shallnot be deemed to have a financial interest, as defined in Article 4(commencing with Section 1090) of Chapter 1 of Division 4 of Title 1of, or pursuant to Chapter 7 (commencing with Section 87100) of Title9 of, the Government Code, in a contract of insurance between theState Compensation Insurance Fund and an organization of which anymember of the board of directors is an owner, officer, or employee. (g) The appointing authority of a member of the board may removethe member and make an appointment replacing the member for theduration of the term if the member ceases to discharge the duties ofhis or her office for the period of three consecutive board meetings. (h) The board of the State Compensation Insurance Fund shallcreate, at a minimum, an audit committee, an investment committee, acorporate governance committee, and other committees as the boarddetermines are necessary.11771.  The State shall not be liable beyond the assets of the StateCompensation Insurance Fund for any obligations in connectiontherewith.11771.5.  Any advertising of the State Compensation Insurance Fundshall include the following disclaimer: "The State CompensationInsurance Fund is not a branch of the State of California."11772.  There shall not be any liability in a private capacity onthe part of the board of directors or any member thereof, or anyofficer or employee of the fund for or on account of any actperformed or obligation entered into in an official capacity, whendone in good faith, without intent to defraud and in connection withthe administration, management or conduct of the fund or affairsrelating thereto.11773.  The fund shall be organized as a public enterprise fund.11774.  The assets of the fund shall be applicable to the payment oflosses sustained on account of insurance and to the payment of thesalaries and other expenses charged against it in accordance with theprovisions of this chapter.11775.  The fund shall, after a reasonable time during which it mayestablish a business, be fairly competitive with other insurers, andit is the intent of the Legislature that the fund shall ultimatelybecome neither more nor less than self-supporting. For that purposeloss experience and expense shall be ascertained and dividends orcredits may be made as provided in this article.11776.  The actual loss experience and expense of the fund shall beascertained on or about the first of January in each year for theyear preceding. If it is then shown that there exists an excess ofassets over liabilities, necessary reserves, and a reasonable surplusfor the catastrophe hazard, then a cash dividend may be declared to,or a credit allowed on the renewal premium of, each employer who hasbeen insured with the fund.11777.  Such cash dividend or credit is to be in an amount which theboard of directors in its discretion considers to be the employer'sproportion of divisible surplus.11778.  The fund may transact workers' compensation insurancerequired or authorized by law of this state to the same extent as anyother insurer. The fund shall be subject to the powers and authorityof the commissioner to the same extent as any other insurertransacting workers' compensation insurance, except wherespecifically exempted by reference. For purposes of Section 700, thefund shall be deemed admitted to transact this class of insurance.11779.  The fund may insure California employers against theirliability for compensation or damages for injury or death under theUnited States Longshoremen's and Harbor Workers' Compensation Act, orother federal or maritime laws, as fully as any private insurer.11780.  The fund may also insure an employer against his or herliability for damages under the laws of the State of Californiaarising out of bodily injury to or death of the employer's employeesoccurring within the State of California if the fund also issuesworkers' compensation insurance to the employer as to his or heremployees.11780.5.  The fund may also insure a California employer against hisliability for workers' compensation benefits, under the law of anyother state, for California employees temporarily working outside ofCalifornia on a specific assignment if the fund insures the employer's other employees who work within California.11781.  The board of directors is hereby vested with full power,authority and jurisdiction over the State Compensation InsuranceFund. The board of directors may perform all acts necessary orconvenient in the exercise of any power, authority or jurisdictionover the fund, either in the administration thereof or in connectionwith the insurance business to be carried on by it under theprovisions of this chapter, as fully and completely as the governingbody of a private insurance carrier. The principal office for thetransaction of the business of the State Compensation Insurance Fundis located in the City and County of San Francisco.11781.5.  The State Compensation Insurance Fund may acquire and ownreal property for a branch office in the City of Los Angeles when sodetermined by the board of directors, and may, if necessary,construct suitable buildings thereon in accordance with law.11782.  All business and affairs of the fund shall be conducted inthe name of the State Compensation Insurance Fund, and in that name,without any other name or title, the board of directors may performthe acts authorized by this chapter.11783.  The State Compensation Insurance Fund may: (a) Sue and be sued in all actions arising out of any act oromission in connection with its business or affairs. (b) Enter into any contracts or obligations relating to the StateCompensation Insurance Fund which are authorized or permitted by law. (c) Invest and reinvest the moneys belonging to the fund asprovided by this chapter. (d) Conduct all business and affairs and perform all acts relatingto the fund whether or not specifically designated in this chapter. (e) Commission an independent study, with the assistance of aninvestment banking firm, to determine the feasibility of the StateCompensation Insurance Fund issuing bonds or securities. The studymay include, among other things, the purpose for issuing bonds andany potential adverse consequences that may arise from that issuance.11784.  In conducting the business and affairs of the fund, thepresident of the fund may do any of the following: (a) Enter into contracts of workers' compensation insurance. (b) Sell annuities covering compensation benefits. (c) Decline to insure any risk in which the minimum requirementsof the industrial accident prevention authorities with regard toconstruction, equipment, and operation are not complied with, orwhich is beyond the safe carrying of the fund. Otherwise, he or sheshall not refuse to insure any workers' compensation risk under statelaw, tendered with the premium therefor. (d) Reinsure any risk or any part thereof. (e) Cause to be inspected and audited the payrolls of employersapplying to the fund for insurance. (f) Make rules for the settlement of claims against the fund anddetermine to whom and through whom the payments of compensation areto be made. (g) Contract with physicians and surgeons, and hospitals, formedical and surgical treatment and the care and nursing of injuredpersons entitled to benefits from the fund.11785.  (a) The board of directors shall appoint a president, achief financial officer, a chief operating officer, a chiefinformation technology officer, a chief investment officer, a chiefrisk officer, and a general counsel. The board of directors shall setthe salary for each position. These positions shall not be subjectto otherwise applicable provisions of the Government Code and thePublic Contract Code, and for those purposes the fund shall not beconsidered a state agency or other public entity. The president shallmanage and conduct the business and affairs of the fund under thegeneral direction and subject to the approval of the board ofdirectors, and shall perform other duties as the board of directorsprescribes. (b) Section 87406 of the Government Code, the Milton MarksPostgovernment Employment Restrictions Act of 1990, shall apply tothe fund. Members of the board, the president, the chief financialofficer, the chief operating officer, the general counsel, and anyother person designated by the fund shall be deemed to be designatedemployees for the purpose of that act. (c) Both the Bagley-Keene Open Meeting Act (Article 9 (commencingwith Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2of the Government Code) and the California Public Records Act(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1of the Government Code) shall apply to the fund.11786.  Before entering on the duties of his or her office, thepresident shall qualify by giving an official bond approved by theboard of directors in the sum of fifty thousand dollars ($50,000) andby taking and subscribing to an official oath. The approval of theboard shall be by written endorsement on the bond. The bond shall befiled in the office of the Secretary of State.11787.  The board of directors may delegate to the president of thefund, under those rules and regulations and subject to thoseconditions as it from time to time prescribes, any power, function,or duty conferred by law on the board of directors in connection withthe fund or in connection with the administration, management, andconduct of the business and affairs of the fund. The president mayexercise those powers and functions and perform those duties with thesame force and effect as the board of directors, but subject to itsapproval.11788.  The State Treasurer shall be custodian of all securitiesbelonging to the State Compensation Insurance Fund, except asotherwise provided in this chapter. He shall be liable on hisofficial bond for the safe keeping thereof.11790.  All securities belonging to the fund shall be delivered tothe State Treasurer and held by him until otherwise disposed of asprovided in this chapter. Upon delivery of such securities into thecustody of the State Treasurer, such securities shall be credited bythe State Treasurer to the fund.11793.  Expenditures made by the State Compensation Insurance Fundare exempted from the provisions of Part 3 (commencing with Section900) of Division 3.6 of Title 1 of the Government Code.11797.  (a) The board of directors shall cause all moneys in theState Compensation Insurance Fund that are in excess of currentrequirements to be invested and reinvested, from time to time, in thesame manner as provided for private insurance carriers pursuant toArticle 3 (commencing with Section 1170) and Article 4 (commencingwith Section 1190) of Chapter 2 of Part 2 of Division 1, butexcluding Sections 1191, 1191.1, 1191.5, 1192.2, 1192.4, 1192.6,1192.7, 1192.9, 1192.95, 1192.10, 1194.7, 1194.8, 1194.81, 1194.82,1194.85, 1198, and 1199. (b) (1) (A) Notwithstanding any other law, the State CompensationInsurance Fund may purchase general obligation bonds or otherevidence of indebtedness issued by the state, including, but notlimited to, notes issued pursuant to Part 5 (commencing with Section17300) of Division 4 of Title 2 of the Government Code or warrantsissued pursuant to Part 4 (commencing with Section 17000) of Division4 of Title 2 of the Government Code, in any amount and to enter intopurchase contracts with the state for this purpose. (B) Notwithstanding any other law, the State CompensationInsurance Fund may purchase Property Assessed Clean Energy (PACE)bonds, as defined in Section 26104 of the Public Resources Code. (2) The bonds or other evidence of indebtedness specified inparagraph (1), upon delivery to the State Compensation InsuranceFund, shall, for all purposes, be valid and binding obligations ofthe issuer thereof, be validly issued and outstanding in accordancewith their stated terms, and not be deemed to be owned by or onbehalf of the issuer thereof.11800.  All moneys in the State Compensation Insurance Fund, inexcess of current requirements and not otherwise invested, may bedeposited by the board of directors from time to time in financialinstitutions authorized by law to receive deposits of public moneys.11800.1.  The board of directors may, with the approval of the StateTreasurer, authorize the establishment of an account or fund in theState Treasury in the name of the State Compensation Insurance Fund,but such moneys deposited with the State Treasurer are not statemoneys within the intent of Section 16305.2 of the Government Code.11800.2.  The State Controller shall keep a special ledger accountpertaining to the State Compensation Insurance Fund. In the StateController's general ledger this account may appear as a cashaccount, like other accounts of funds in the State Treasury, and onlythe actual cash credited or deposited to the credit of the StateCompensation Insurance Fund shall be entered in the account.11801.  The assets, premiums, reserves, investment income, and anyand all property of whatsoever kind derived or acquired by the fundfrom its transaction of its workers' compensation insurance businessshall not be used, attached or levied upon in any manner whatsoeverby any person to satisfy claims or any other obligations or liabilityincurred, arising out of, or related to, the fund's transaction ofinsurance pursuant to the United States Longshoremen's and HarborWorkers' Act.11802.  All premiums, reserves, investment income, and all propertyof whatsoever kind derived or acquired by the fund from itstransaction of insurance pursuant to the United States Longshoremen'sand Harbor Workers' Compensation Act shall be maintained andidentified in separate accounts and records.11803.  All claims, costs of doing business, liabilities, expenses,and obligations arising out of or related to the fund's transactionof insurance pursuant to the United States Longshoremen's and HarborWorkers' Compensation Act shall be paid and charged to the income ofwhatsoever nature derived from its United States Longshoremen's andHarbor Workers' Compensation Act insurance business only.11804.  Joint or shared use of office building space, whether owned,leased or rented, and the joint use of all furniture, automobiles,office equipment, supplies and services shall be charged to eachclass of insurance business on an equitable and proportional basis.11805.  The State Compensation Insurance Fund shall report annuallyto the Legislature as soon after the close of the calendar year as isfeasible, with respect to its experience handling United Stateslongshoremen's and harbor workers' insurance pursuant to thischapter, including, but not limited to, a statement of resources andliabilities at the close of each annual period commencing December31, 1979.