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The Honorable Arnold Schwarzenegger Governor, State of California State Capitol Sacramento, CA 95814 Dear Governor Schwarzenegger: I am requesting your SIGNATURE on AB 812 (Hernandez), which would help combat premium fraud in workers’ compensation insurance by giving insurance companies statutory authority to impose a financial penalty on employers who do not submit to required payroll audits for the purposes of verifying premium. While the vast majority of employers do not attempt to mislead insurers about payroll in an effort to reduce workers’ compensation premiums, the small number who do cause a great deal of harm. Workers’ compensation premiums can be prohibitively expensive for small employers with hazardous businesses. However, when employers defraud their insurance company through misrepresenting their payroll it is other employers who ultimately pay the cost. Premium fraud leads to higher rates for the majority of employers who are complying with the law. Additionally, those few employers who commit premium fraud gain a competitive advantage over other companies because they have a lower operating cost. AB 812 (Hernandez) provides a common sense approach to providing insurers with the tools necessary to properly evaluate premiums, while giving the majority of employers assurance that their premiums will not be inflated due to premium fraud. The bill outlines specific requirements for insurers who wish to utilize the tools provided by AB 812 (Hernandez). The insurer must make three attempts to access the requested payroll information over a period of 90 days. Even after that point, if the insured employer has a “compelling business reason” for the failure to comply then the provisions of this bill would not apply. AB 812 (Hernandez) takes a fair and reasonable approach to dealing with the issue of premium fraud that can be supported by both employers and insurers. For the above reasons, I respectfully REQUEST your SIGNATURE on AB 812 (Hernandez) when it comes before you for consideration.