HB 2634 Text

H. B. 2634

(By Delegate Smith)
[Introduced March 18, 1993; referred to the
Committee on the Judiciary.]

A BILL to amend and reenact section nine, article two, chapter twenty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to workers' compensation; and self-insured West Virginia municipalities.

Be it enacted by the Legislature of West Virginia:

That section nine, article two, chapter twenty-three of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:

ARTICLE 2. EMPLOYERS AND EMPLOYEES SUBJECT TO CHAPTER; EXTRATERRITORIAL COVERAGE.

§ 23 - 2 - 9. Election of employer to provide own system of compensation; mandatory participation in second injury reserve of surplus fund and exceptions; election to provide catastrophe coverage.

(a) (1) Notwithstanding anything contained in this chapter, employers subject to this chapter who are of sufficient financial responsibility to ensure the payment of compensation to injured employees and the dependents of fatally injured employees, whether in the form of pecuniary compensation or medical attention, funeral expenses or otherwise as herein provided, of the value at least equal to the compensation provided in this chapter, or employers of such financial responsibility who maintain their own benefit funds, or system of compensation to which their employees are not required or permitted to contribute, or such employers as shall furnish bond or other security to ensure such payments, may, upon a finding of such facts by the commissioner, elect to pay individually and directly, or from such benefit funds, department or association, such compensation and expenses to injured employees or fatally injured employees' dependents. The commissioner shall require security or bond from such employer, to be approved by the commissioner, and of such amount as is by the commissioner considered adequate and sufficient to compel or secure to such employees, or their dependents, payment of the compensation and expenses herein provided for, which shall in no event be less than the compensation paid or furnished out of the state workers' compensation fund in similar cases to injured employees or the dependents of fatally injured employees whose employers contribute to such fund: Provided , That in the case of self-insured municipal corporations, the commissioner shall interpret "security" to mean any reasonable evidence or demonstration of the ability of the municipality to secure future benefits of employees and their dependents: Provided, however, That if any self-insured municipal corporation fails to make any payment of the compensation and expenses herein provided for, and the failure to pay continues for a period of sixty days after the payment is due, the self-insured municipal corporation shall be determined to be delinquent, and the delinquency shall be certified to the tax commissioner by the workers' compensation commissioner. If any self-insured municipal corporation becomes delinquent, as provided herein, the tax commissioner is authorized and directed to withhold any money due that self-insured municipal corporation by the state until the delinquency, together with regular interest thereon, from the date due, is satisfied. The money so withheld by the tax commissioner shall be paid to the workers' compensation fund.

(2) Any employer electing under this section to ensure payment of compensation to injured employees and the dependents of fatally injured employees shall on or before the last day of the first month of each quarter, for the preceding quarter, file with the commissioner a sworn statement of the total earnings of all the employer's employees subject to this chapter for such preceding quarter, and shall pay into the workers' compensation fund as self-insurance premium contributions:
(A) A sum sufficient to pay the employer's proper proportion of the expenses of the administration of this chapter;
(B) A sum sufficient to pay the employer's proper portion of the expenses for claims for those employers who are delinquent in the payment of premiums;
(C) A sum sufficient to pay the employer's fair portion of the expenses of the disabled workers' relief fund, as may be determined by the commissioner; and
(D) A sum sufficient to maintain as an advance deposit an amount equal to the previous quarter's payment of each of the foregoing three factors.
(3) The commissioner shall make and promulgate legislative rules in accordance with chapter twenty-nine-a of this code governing the mode and manner of making application, and the nature and extent of the proof required to justify the finding of facts by the commissioner, to consider and pass upon such election by employers subject to this chapter, which rules shall be general in their application.
(4) Any employer whose record upon the books of the commissioner shows a liability against the workers' compensation fund incurred on account of injury to or death of any of the employer's employees, in excess of premiums paid by such employer, shall not be granted the right, individually and directly or from such benefit funds, department or association, to compensate the employer's injured employees and the dependents of the employer's fatally injured employees until the employer has paid into the workers' compensation fund the amount of such excess of liability over premiums paid, including the employer's proper proportion of the liability incurred on account of explosions, catastrophies or second injuries as defined in section one, article three of this chapter, occurring within the state and charged against such fund.
(b) (1) Subject to any limitations set forth herein, all employers who have heretofore elected, or shall hereafter elect, to pay compensation and expenses directly as provided in subsection (a) of this section, shall, unless they be permitted under the provisions of this subsection hereinafter set forth to give the second injury security or bond hereinafter provided for, pay into the second injury reserve of the surplus fund referred to in section one, article three of this chapter, upon the basis set forth herein, such payments to be made at the same time as provided in this section for the payment of proportion of expenses of administration.
(2) To determine the contribution for second injury coverage for self-insured employers, the commissioner shall first establish, based upon actuarial advice, the projected funding cost for incurred losses for the second injury reserve of the surplus fund for the prospective year for each industrial group or class, so that industrial groups or classes with significantly different experience in use of the second injury reserve shall pay their proper share based upon the record of that industrial group or class: Provided, That the commissioner shall establish industrial groups or classes as permitted by section four of this article but need not establish the same number of industrial groups or classes as the number established for purposes of section four of this article. The commissioner shall establish a rate for each industrial group or class based upon the total expected second injury fund base rate premium for that industrial group or class and shall further modify such rate for individual employers based upon the ratio of the individual employer's record of actual second injury awards to the average cost of second injury awards for all employers in that industrial group or class. The commissioner may limit such modifications. Actual second injury awards shall mean awards made under this chapter on and after the first day of January, one thousand nine hundred ninety-one, as reflected on the books of the commissioner for a period not to exceed three years ending the thirty-first day of December of the year preceding the year in which the rate is to be effective: Provided, however, That any employer whose record for such period cannot be obtained shall be given a rate based upon the employer's record for any part of such period as may be deemed just and equitable by the commissioner: Provided further, That for the period from the first day of January, one thousand nine hundred ninety-one, through the thirtieth day of June, one thousand nine hundred ninety-two, inclusive, the commissioner shall consider second injury premium based on a percentage of the base rates assigned to each industrial group or class.
(3) In case there be a second injury, as defined in section one, article three of this chapter, to an employee of any employer making such second injury reserve payments, the employer shall be liable to pay compensation or expenses arising from or necessitated by the second injury, and such compensation and expenses shall be charged against such employer: Provided, That in addition to such compensation and expenses, and after the completion of the payments therefor, the employee shall be paid the remainder of the compensation and expenses that would be due for permanent total disability from the second injury reserve of the surplus fund. Such additional compensation and expenses shall be paid from the second injury reserve of the surplus fund in the same manner and to the same extent as in the case of premium-paying subscribers and such additional compensation and expenses shall not be charged against such employer.
(4) (A) Any employer who has heretofore elected to pay compensation and expenses directly under the provisions of subsection (a) of this section, and who:
(i) Elected prior to the first day of January, one thousand nine hundred eighty-nine, not to make payments into the second injury reserve of the surplus fund; and
(ii) Continuously without interruption, from the first day of January, one thousand nine hundred eighty-nine, to the effective date of this section, elected not to make payments into the second injury reserve of the surplus fund, may elect to continue not to make payments into the second injury reserve of the surplus fund.
(B) Any employer who has heretofore elected to pay compensation and expenses directly under the provisions of subsection (a) of this section, and who:
(i) Was making payments into the second injury reserve of the surplus fund on the first day of January, one thousand nine hundred eighty-nine; and
(ii) Elected not to make such payments during calendar year one thousand nine hundred eighty-nine; and
(iii) Has not thereafter, to the effective date of this section, recommenced making such payments, shall elect one of the two following options:
(I) Begin payments into the second injury reserve of the surplus fund as of the first day of July, one thousand nine hundred ninety, in which event such employer shall not thereafter be permitted to elect not to make such payments; or
(II) Elect to continue not making such payments in which event the commissioner shall examine the employer's record with regard to the second injury reserve of the surplus fund upon the books of the commissioner and if such record shows a liability against the surplus fund incurred on account of injury to any of the employer's employees, in excess of premiums paid by such employer to the second injury reserve of the surplus fund, then such employer shall pay to the commissioner the present value of that liability.
(C) Any employer who is permitted by paragraphs (A) and (B) of this subdivision not to make payments into the second injury reserve of the surplus fund shall, in addition to bond or security required by subsection (a) of this section, furnish second injury security or bond, approved by the commissioner, in such amount and form as the commissioner shall consider adequate and sufficient to compel or secure payment of all compensation and expenses arising from, or necessitated by, any second injury that is or remains to be paid by the employer: Provided, That any second injury security or bond given by any such employer pursuant to rules promulgated by the commissioner and with the approval of the commissioner prior to the effective date of this section shall remain valid upon the effective date of this section until such time thereafter as the commissioner notifies such employer to the contrary.
(D) Any employer permitted by paragraphs (A) and (B) of this subdivision not to make payments into the second injury reserve of the surplus fund who on or after the effective date of this section elects to make payments into the second injury reserve of the surplus fund shall not thereafter be permitted to elect not to make such payments.
(5) Except as provided in paragraphs (A) and (B), subdivision (4) of this subsection, all other employers who have heretofore elected or who henceforth elect to pay compensation and expenses directly under the provisions of subsection (a) of this section shall pay into the second injury reserve of the surplus fund such amounts as are determined by the commissioner pursuant to subdivision (2), subsection (b) of this section: Provided, That all such other employers who, as of the date immediately preceding the effective date of this section, have been permitted by the commissioner not to make such payments are not required to commence making such payments until the first day of July, one thousand nine hundred ninety.
(c) (1) All employers who have heretofore elected, or shall hereafter elect, to pay compensation and expenses directly as provided in subsection (a) of this section shall, unless they give the catastrophe security or bond hereinafter provided for, pay into the catastrophe reserve of the surplus fund referred to in section one, article three of this chapter, upon the same basis and in the same percentages, subject to the limitations herein set forth, as funds are set aside for the maintenance of the catastrophe reserve of the surplus fund out of payments made by premium-paying subscribers, such payments to be made at the same time as hereinbefore provided with respect to payment of proportion of expenses of administration.
(2) In case there be a catastrophe, as defined in section one, article three of this chapter, to the employees of any employer making such payments, the employer shall not be liable to pay compensation or expenses arising from or necessitated by the catastrophe, and such compensation and expenses shall not be charged against such employer, but such compensation and expenses shall be paid from the catastrophe reserve of the surplus fund in the same manner and to the same extent as in the case of premium-paying subscribers.
(3) If an employer elects to make payments into the catastrophe reserve of the surplus fund as aforesaid, then the bond or other security required by this section shall be of such amount as the commissioner considers adequate and sufficient to compel or secure to the employees or their dependents payments of compensation and expenses, except any compensation and expenses that may arise from, or be necessitated by, any catastrophe as defined in section one, article three of this chapter, which last are secured by and shall be paid from the catastrophe reserve of the surplus fund as hereinbefore provided.
(4) If any employer elects not to make payments into the catastrophe reserve of the surplus fund, as hereinbefore provided, then, in addition to bond or security in the amount hereinbefore set forth, such employer shall furnish catastrophe security or bond, approved by the commissioner, in such additional amount as the commissioner shall consider adequate and sufficient to compel or secure payment of all compensation and expenses arising from, or necessitated by, any catastrophe that might thereafter ensue.
(5) All employers hereafter making application to carry their own risk under the provisions of this subsection shall, with such application, make a written statement as to whether such employer elects to make payments as aforesaid into the catastrophe reserve of the surplus fund or not to make such payments and to give catastrophe security or bond hereinbefore in such case provided for.
(d) In any case under the provisions of this section that shall require the payment of compensation or benefits by an employer in periodical payments, and the nature of the case makes it possible to compute the present value of all future payments, the commissioner may, in his or her discretion, at any time compute and permit or require to be paid into the workers' compensation fund an amount equal to the present value of all unpaid compensation for which liability exists, in trust; and thereupon such employer shall be discharged from any further liability upon such award, and payment of the same shall be assumed by the workers' compensation fund.
(e) Any employer subject to this chapter who shall elect to carry the employer's own risk and who has complied with the requirements of this section and the rules of the commissioner shall not be liable to respond in damages at common law or by statute for the injury or death of any employee, however occurring, after such election and during the period that the employer is allowed by the commissioner to carry the employer's own risk.

NOTE: The purpose of this bill is to relieve municipalities of the requirement to post a bond or security when electing to act as a self-insured employer under Workers' Compensation. The bill allows the commissioner to interpret "security" to mean any reasonable evidence or demonstration of the ability of the municipality to secure future benefits of employees and their dependents. It also permits the Tax Commissioner to withhold money due the municipality if the municipality becomes delinquent in the payment of benefits to employees or their dependents. A similar provision now exists for a municipality with regard to any payment due the Public Employees Retirement System, §5-10-33(b) of the code of West Virginia.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Print On Demand