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Legislative Update: Sept. 27, 2019 - New Privacy Initiative Back in 2020

New Privacy Initiative Emerges In California

Reported recently by many news outlets, Alastair Mactaggart, the father of the California Consumer Privacy Act of 2018 (CCPA), announced he will be going back to the ballot in 2020 with the California Consumer Privacy Act of 2020. At least part of the motivation behind this, according to Mactaggart, is to keep the Legislature from weakening privacy protections – a much more difficult task when a law is enacted as an initiative measure. The new ballot initiative, if qualifies and approved by voters, would allow the Legislature to make changes with a simple-majority vote, but only those made to further the law.

Qualifying an initiative statute would require 623,212 valid signatures, more than 250,000 beyond what Mactaggart needed last time. The effort could cost Mactaggart well over $3 million, based on what a coalition spent qualifying a now-defunct split-roll initiative that had a lower signature threshold. The measure was submitted to the Attorney General on September 23.

It would also:

   Create a new state agency to enforce the Privacy Act, a responsibility which now falls to Attorney General Xavier Becerra. The new entity, the California Privacy Protection Agency, would enforce the law and provide guidance to industry;

•   Triple penalties for the violation of children's privacy under the act. Current law requires companies to gain the consent of consumers under 16 before collecting their data;

•   Give Californians new rights around the use of sensitive personal information, including race, financial data and geolocation;

•   Require companies to disclose more details about algorithms used in decisions about employment, housing and credit, and to disclose whether and how they use personal information to influence elections.

According to one September 24 article in the New York Times, the ballot measure requires companies that use algorithms to automatically make decisions about insurance and lending to explain their system's reasoning to consumers. The proposal also creates a privacy regulator, taking away at least some of the role of the Department of Justice in enforcing the CCPA and this new measure, if it passes.

In something of an understatement, the initiative will be as disruptive to the insurance industry in general and the workers’ compensation system in particular as the original initiative. The initiative also states that “This Act shall become operative on January 1, 2021 and shall only apply to personal information collected by a business on or after January 1, 2020.” Compliance with the law as it will exist on January 1, 2020 could result in penalties due to some of the different provisions in the initiative on January 1, 2021.  

It is possible that the significant number of measures this year seeking to amend the CCPA may have inspired Mactaggart to move forward with this new initiative. While there is no indication that any of these privacy bills will be vetoed, it also serves as a reminder that the January 1, 2020 effective date is drawing close and that no implementing regulations have been unveiled by the Attorney General. Those regulations will prove critical to bringing some degree of clarity to the CCPA’s many requirements, in particular, Assembly Bill 25 (Chau) that defines employee and contractor data not subject to CCPA requirements.

Insurance Commissioner Identifies Disparities in Auto Insurance Discounts

The Department of Insurance has released data showing wide socioeconomic disparities in auto insurance group discounts offered to millions of California drivers. The investigation illustrates that many affinity groups disproportionately and adversely affect drivers residing in ZIP codes with lower per capita incomes, lower levels of educational attainment, and larger communities of color.

Some insurers offer lower automobile premium pricing to certain “affinity groups” including white-collar occupations and highly skilled workers. Department data shows that one-quarter of Californians receive an affinity group premium reduction ranging from 1.5% to 25.9% depending on the insurer and group.

Insurance Commissioner Ricardo Lara was disturbed by the new data after the first affinity group fact-finding hearing in the Department’s history last week in Los Angeles.

Among the findings released by the Department of Insurance: 

•     Customers in surveyed affinity groups tend to be in higher income ZIP codes. Only 26% of Californians in the lowest-earning areas ($22,516 per capita and below) receive group discounts, compared to 55% in the highest-earning areas ($49,070 per capita and above).

•    Those in affinity groups that were surveyed are more likely to reside in ZIP codes with a higher average educational attainment. Only 28% of those living in areas with the lowest number of college degrees receive discounts, compared to 56% for those where half or more have college degrees.

•    Those in affinity groups are more likely to reside in ZIP codes with a predominantly non-Hispanic white population. 47% of persons living in ZIP codes with a large non-Hispanic white population (62% or greater) receive an affinity group discount. Only 29% of those in heavily minority areas (greater than 83%) receive discounts.

•    Three-quarters of those in underserved communities were not in an affinity group, compared to 57% for the rest of the state.

The Department of Insurance is responsible for the review and approval of automobile insurance premiums in the state to ensure they are fair and based on objective factors. The 1988 voter-enacted Proposition 103 established the mandatory factors to be a driver’s driving safety record, miles driven, and years of driving experience, followed by optional factors that the Commissioner may permit for use in automobile insurance rating.

Split-Roll Proponents Change Their Initiative Again

Proponents of the split-roll initiative amended the measure September 17 to make several significant changes to the proposed ballot measure. The main provisions that would require annual market-value reassessments of business and commercial property were untouched.

A letter sent on September 10, from the California Assessors’ Association (CAA), criticized many provisions of the initiative. That letter stated that the measure is “both ambiguous in some sections and overly narrow in other sections,” and “will create significant unintended consequences for ALL property owners, including homeowners and small business owners.” The amendments appear to be in response to that letter.

The amendments do not fully address the assessors’ concerns, however. The CAA noted that the comments in its five-page letter did not cover all the problems with the initiative.

The split-roll initiative was filed in August but has not yet been cleared to circulate and gather signatures. If this initiative is cleared to circulate, it has 120 days to gather all needed signatures. Additionally, should it obtain the 25% signature threshold, it would not be able to have a hearing until the Legislature reconvenes in January, at the earliest. It was filed by the same proponents who qualified a split-roll measure for the November 2020 ballot, which includes the California League of Women Voters, California Calls, and PICO California.

Polling indicates that the qualified version does not have significant public support, but proponents hope the new version will fare better with voters and potential campaign funders. If proponents can qualify the new version, they can unilaterally remove the other initiative prior to ballots being finalized.

The amendments’ significant changes to the second version of the measure include: 

1.  Provisions establishing a “Task Force on Property Tax Administration” to examine and recommend to the Legislature all statutory and regulatory changes necessary to implement a split roll. The task force would consist of a county assessor or designee, a State Board of Equalization member or designee, a proponent of the ballot measure, a taxpayer representative, and a member of the Legislature or designee.

2.  Provides further guidance for the Legislature in crafting a process to hear appeals resulting from the reassessment of property. The new provisions require that the appeals process shall not include automatic acceptance of the taxpayer’s opinion of values within a given timeframe, and shift the burden of proof to the taxpayer to prove that the property was incorrectly valued.

3.  Changes the definition of “small business” under the initiative by removing the requirement that the owner and officers of the business are residents of California and that the business is not dominant in its field of operations.

4.  States that the initiative maintains the State Board of Equalization’s oversight of the property tax system.

5.  For residential properties with a mixed or limited commercial use, the initiative now would require that 75 percent or more of the property by square footage or value be residential to qualify for an exclusion from reassessment. 

Assessors have pointed out that the implementation date of the revised split-roll initiative would be incredibly difficult to meet, requiring counties to hire and train hundreds of new employees. It was also noted that assessment appeals for commercial and industrial properties would increase more than tenfold.

Initiative Fight Pending on Medical Injury Compensation

On the topic of new initiative efforts, another sequel intends to get on the November 2020 ballot. This one is intending to amend the Medical Injury Compensation Reform Act (MICRA), first passed in 1975. A coalition that includes Consumer Watchdog and a deep-pocketed trial lawyer, Nick Rowley, are launching an initiative that would multiply the amount that victims stand to receive in court due to medical negligence. This stands to be a political dogfight involving attorneys, insurers and doctors. 

This initiative would initially raise the cap for payout to $1.2 million, indexed to inflation, for people injured as a result of "non-economic" damages such as pain and suffering, loss of limbs or hearing and wrongful death. It is estimated the coalition will need $4 million to gather signatures and qualify the initiative. The effort comes nearly five years after another MICRA initiative was roundly defeated amid opposition from major health industry groups. 

The initiative comes as a result of the filers having been personally affected by the cap and are expected to submit the "Fairness for Injured Parents Act" today. Rowley said the lungs of his own infant son were "blown up" as a result of medical malpractice. 

In addition to raising the cap for inflation, the initiative would allow judges and jurors to provide additional damages above that cap for permanent disability or death and require that juries be informed about the existence of the cap, according to Consumer Watchdog. The new proposal would also require those who are found medically negligent to pay more of the cost of patient care for those injured by medical malpractice. 

A coalition opposing MICRA changes, Californians Allied for Patient Protection (CAPP), warned that this initiative would result in higher health care costs. CAPP represents doctors, dentists, insurers and hospitals, among others in the health industry.

State, Federal Efforts to Contain Drug Prices Stunted

Despite state and federal efforts to reduce costs on pharmaceuticals for patients, prices have continued to rise since 2017. This is according to the first public release of historical data required by a recent California drug price transparency law.

That recent drug pricing data is the first-ever national pricing snapshot for pharmaceuticals, both brand-names and generics, to track pricing movement. Advocates had believed the transparency law and resulting data would halt skyrocketing prescription drug prices, but were dismayed that the information suggests otherwise.

Reviewing the pricing since 2017 of some more popular drugs on the list, Afinitor, a chemotherapy drug used to combat breast and brain cancers, shot up more than 30 percent, while Viagra's price grew nearly 47 percent. Other drugs, such as one used to treat pain caused by arthritis, doubled in price. In total, the data show 1,020 drugs grew in price by more than 16 percent since January 2017.

The wholesale drug cost data from drug manufacturers is required to be submitted to the California Office of Statewide Health Planning and Development. That data, known as “list prices” or “sticker prices,” have traditionally been closely guarded. However, given distribution and markups in the supply line, that drug cost data does not necessarily reflect consumer costs at the pharmacy counter.

State law requires disclosure for drugs costing more than $40 that have seen price hikes higher than 16 percent over two years. Drugmakers that have raised prices more than 16 percent are then required to submit ongoing price increases to the state quarterly, which the state must publish and update regularly over a three-year time span. As prices adjusted to reflect changing market factors, those drug pricing numbers are also likely to change as additional data becomes available later this year.

Governor Gavin Newsom has continued to move forward with an effort to take on rising drug prices by adopting a strategy to uniformly negotiate state costs for purchasing pharmaceuticals, rather than agency by agency rates. His plan is still in its infancy but to date, San Francisco, Los Angeles, Santa Clara, and Alameda counties have signed on. Another component of the plan would upend how drugs are purchased in Medi-Cal. Newsom has proposed shifting Medi-Cal to fee-for-service arrangements for drug purchases rather than managed care, which could help lower costs for the state by eliminating some middleman arrangements.

Clinics across the state are sounding the alarm, as they expect significant revenue losses and an increase in patient suffering as a result. Health plans are also expressing overwhelming concerns about shifting the drug benefit for more than 13 million Medi-Cal patients into an untested early-stage delivery system.

Governor’s Action on Legislation

Governor Gavin Newsom has until October 13 to act on bills sent to him by the Legislature. Since there was a large number of bills passed at the end of session, many significant measures have been enrolled but no action has been taken by the Governor yet. Here are the measures the Governor has taken action on in the last week:


AB 58 by Assemblymember Luz Rivas (D-Arleta) – Homeless Coordinating and Financing Council. Chapter 334, Statutes of 2019.

AB 139 by Assemblymember Sharon Quirk-Silva (D-Fullerton) – Emergency and Transitional Housing Act of 2019. Chapter 335, Statutes of 2019

AB 143 by Assemblymember Sharon Quirk-Silva (D-Fullerton) – Shelter crisis: homeless shelters: Counties of Alameda and Orange: City of San Jose. Chapter 336, Statutes of 2019

AB 338 by Assemblymember Kansen Chu (D-San Jose) – Manufactured housing: smoke alarms: emergency preparedness. Chapter 299, Statutes of 2019.

AB 450 by Assemblymember Joaquin Arambula (D-Fresno) – Bees: Apiary Protection Act. Chapter 300, Statutes of 2019.

AB 466 by the Committee on Agriculture – Interstate shipments: market milk: 6 percent milk: Office of Farm to Fork: report. Chapter 301, Statutes of 2019.

AB 469 by Assemblymember Cottie Petrie-Norris (D-Laguna Beach) – State records management: records management coordinator. Chapter 302, Statutes of 2019.

AB 558 by Assemblymember Cottie Petrie-Norris (D-Laguna Beach) – State Bar of California: service members: legal services. Chapter 303, Statutes of 2019.

AB 590 by Assemblymember Devon Mathis (R-Visalia) – Milk. Chapter 304, Statutes of 2019.

AB 647 by Assemblymember Ash Kalra (D-San Jose) – Hazardous substances: cosmetics: disinfectants: safety documents. Chapter 305, Statutes of 2019.

AB 657 by Assemblymember Susan Talamantes Eggman (D-Stockton) – Agriculture: commercial feed. Chapter 306, Statutes of 2019.

AB 708 by Assemblymember Jim Frazier (D-Discovery Bay) – Traffic violator schools. Chapter 307, Statutes of 2019.

AB 728 by Assemblymember Miguel Santiago (D-Los Angeles) – Homeless multidisciplinary personnel teams. Chapter 337, Statutes of 2019

AB 761 by Assemblymember Adrin Nazarian (D-North Hollywood) – State armories: homeless shelters. Chapter 338, Statutes of 2019.

AB 779 by Assemblymember Evan Low (D-Campbell) – Acupuncture: place of practice: wall license. Chapter 308, Statutes of 2019.

AB 795 by Assemblymember Jacqui Irwin (D-Thousand Oaks) – Private cemeteries: endowment funds. Chapter 309, Statutes of 2019.

AB 892 by Assemblymember Chris Holden (D-Pasadena) – Transfers of real property. Chapter 310, Statutes of 2019.

AB 894 by Assemblymember Miguel Santiago (D-Los Angeles) – Attorney General: directors and employees: exemption from civil service. Chapter 311, Statutes of 2019.

AB 902 by Assemblymember Marc Levine (D-Marin County) – Political Reform Act of 1974: Fair Political Practices Commission: regulations. Chapter 312, Statutes of 2019.

AB 909 by Assemblymember James Gallagher (R-Yuba City) – Political Reform Act of 1974: statements of acknowledgment. Chapter 313, Statutes of 2019.

AB 923 by Assemblymember Buffy Wicks (D-Oakland) – Bay Area Rapid Transit District: electricity procurement and delivery. Chapter 314, Statutes of 2019.

AB 946 by the Committee on Elections and Redistricting – Political Reform Act of 1974. Chapter 315, Statutes of 2019.

AB 1188 by Assemblymember Jesse Gabriel (D-Encino) – Dwelling units: persons at risk of homelessness. Chapter 339, Statutes of 2019.

AB 1197 by Assemblymember Miguel Santiago (D-Los Angeles) – California Environmental Quality Act: exemption: City of Los Angeles: supportive housing and emergency shelters. Chapter 340, Statutes of 2019.

AB 1223 by Assemblymember Joaquin Arambula (D-Fresno) – Living organ donation. Chapter 316, Statutes of 2019.

AB 1235 by Assemblymember Kansen Chu (D-San Jose) – Youth homelessness prevention centers. Chapter 341, Statutes of 2019.

AB 1257 by Assemblymember Rudy Salas (D-Bakersfield) – Sales and use taxes: exemption: vehicle modifications: physically handicapped persons: veterans. Chapter 317, Statutes of 2019.

AB 1452 by Assemblymember Patrick O’Donnell (D-Long Beach) – State teachers’ retirement. Chapter 318, Statutes of 2019.

AB 1614 by Assemblymember Mike Gipson (D-Carson) – Vehicles: license plate pilot program. Chapter 319, Statutes of 2019.

AB 1637 by Assemblymember Christy Smith (D-Santa Clarita) – Unclaimed Property Law. Chapter 320, Statutes of 2019.

AB 1651 by Assemblymember Jose Medina (D-Riverside) – Licensed educational psychologists: supervision of associates and trainees. Chapter 321, Statutes of 2019.

AB 1671 by Assemblymember Marc Berman (D-Palo Alto) – Department of Transportation: motor vehicle technology testing. Chapter 322, Statutes of 2019.

AB 1723 by Assemblymember Jim Wood (D-Santa Rosa) – Pharmacy: clinics: purchasing drugs at wholesale. Chapter 323, Statutes of 2019.

AB 1745 by Assemblymember Ash Kalra (D-San Jose) – Shelter crisis: emergency bridge housing community: City of San Jose. Chapter 342, Statutes of 2019

AB 1801 by the Committee on Agriculture – Cattle: inspections. Chapter 324, Statutes of 2019.

SB 39 by Senator Jerry Hill (D-San Mateo) – Tobacco products. Chapter 295, Statutes of 2019.

SB 44 by Senator Nancy Skinner (D-Berkeley) – Medium- and heavy-duty vehicles: comprehensive strategy. Chapter 297, Statutes of 2019.

SB 210 by Senator Connie Leyva (D-Chino) – Heavy-Duty Vehicle Inspection and Maintenance Program. Chapter 298, Statutes of 2019.

SB 211 by Senator Jim Beall (D-San Jose) – State highways: leases. Chapter 343, Statutes of 2019.

SB 309 by Senator Susan Rubio (D-Baldwin Park) – Personal income tax: California Senior Citizen Advocacy Voluntary Tax Contribution Fund. Chapter 325, Statutes of 2019.

SB 385 by Senator Brian Jones (R-Santee) – Private Investigator Act. Chapter 326, Statutes of 2019.

SB 450 by Senator Tom Umberg (D-Santa Ana) – California Environmental Quality Act exemption: supportive and transitional housing: motel conversion. Chapter 344, Statutes of 2019.

SB 637 by Senator Mike McGuire (D-Healdsburg) – Personal income taxes: voluntary contributions: Prevention of Animal Homelessness and Cruelty Voluntary Tax Contribution Fund. Chapter 327, Statutes of 2019. Chapter 327, Statutes of 2019.

SB 641 by Senator Ben Allen (D-Santa Monica) – Special elections. Chapter 328, Statutes of 2019.

SB 687 by Senator Susan Rubio (D-Baldwin Park) – Homeless Coordinating and Financing Council. Chapter 345, Statutes of 2019.

SB 744 by Senator Anna Caballero (D-Salinas) – Planning and zoning: California Environmental Quality Act: permanent supportive housing. Chapter 346, Statutes of 2019.

SB 780 by the Committee on Governance and Finance – Local Government Omnibus Act of 2019. Chapter 329, Statutes of 2019.

SB 782 by the Committee on Labor, Public Employment and Retirement – Public employees’ and judges’ retirement: administration. Chapter 330, Statutes of 2019.

SB 787 by the Committee on Agriculture – Animal welfare. Chapter 331, Statutes of 2019.

SB 790 by the Committee on Governance and Finance – Income taxes: partnerships: audit adjustments: elections. Chapter 332, Statutes of 2019.

SB 791 by the Committee on Governance and Finance – Property taxation: valuation: certificated aircraft. Chapter 333, Statutes of 2019.