H. B. 504
(By Mr. Speaker, Mr. Kiss, and Delegate Trump
By Request of the Executive)
[Introduced November 13, 2005]
____________
A BILL to amend and reenact §23-2C-2, §23-2C-7, §23-2C-8, §23-2C-16
and §23-2C-20 of the Code of West Virginia, 1931, as amended,
relating to the administration of the old fund, uninsured
employer fund, self-insured employer guaranty risk pool,
self-insured employer security risk pool, and private carrier
guaranty fund.
Be it enacted by the Legislature of West Virginia:
That §23-2C-2, §23-2C-7, §23-2C-8, §23-2C-16 and §23-2C-20 of
the Code of West Virginia, 1931, as amended, be amended and
reenacted, all to read as follows:
ARTICLE 2C. EMPLOYERS' MUTUAL INSURANCE COMPANY.
§23-2C-2. Definitions.
(a) "Executive director" means the executive director of the
West Virginia workers' compensation commission as provided in
section one-b, article one, chapter twenty-three of this code.
(b) "Commission" means the West Virginia workers' compensation
commission as provided by section one, article one, chapter
twenty-three of this code.
(c) "Insurance commissioner" means the insurance commissioner
of West Virginia as provided in section one, article two, chapter
thirty-three of this code.
(d) "Company" or "successor to the commission" means the
employers' mutual insurance company created pursuant to the terms
of this article.
(e) "Policy default" shall mean a policyholder that has failed
to comply with the terms of its workers' compensation insurance
policy and is consequently without workers' compensation insurance
coverage.
(f) "Industrial insurance" means insurance which provides all
compensation and benefits required by chapter twenty-three of this
code.
(g) "Insurer" includes:
(1) A self-insured employer; and
(2) A private carrier.
(h) "Industrial council" means the advisory group established
in section five of this article.
(i) "Mutualization transition fund" shall be a fund over which
the state treasurer is custodian. Moneys transferred or otherwise
payable to the mutualization transition fund shall be deposited in the state treasury to the credit of the mutualization transition
fund. Disbursements shall be made from the mutualization
transition fund upon requisitions signed by the executive director,
and, upon termination of the commission, the insurance
commissioner, and shall be reasonably related to the legal,
operational, consultative and human resource related expenses
associated with the establishment of the company and the
transferring of personnel from the commission to the company.
(j) "New fund" shall mean a fund owned and operated by the
commission and, upon termination of the commission, the successor
organization of the West Virginia workers' compensation commission
and shall consist of those funds transferred to it from the
workers' compensation fund and any other applicable funds. New
fund shall include all moneys due and payable to the workers'
compensation fund for the quarters ending the thirtieth day of
September, two thousand five and the thirty-first day of December,
two thousand five, which have not been collected by the workers'
compensation fund as of the thirty-first day of December, two
thousand five.
(k) "New fund liabilities" shall mean all claims payment
obligations (indemnity and medical expenses) for all claims, actual
and incurred but not reported, for any claim with a date of injury
or last exposure on or after the first day of July, two thousand
five:
Provided, That new fund liabilities shall begin with claims payments becoming due and owing on said claims on or after the
first day of January, two thousand six.
(l) "Old fund" shall mean a fund held by the state treasurer's
office consisting of those funds transferred to it from the
workers' compensation fund or other sources and those funds due and
owing the workers' compensation fund as of the thirtieth day of
June, two thousand five that are thereafter collected. The old
fund and assets therein shall remain property of the state and
shall not novate or otherwise transfer to the company.
(m) "Old fund liabilities" mean all claims payment obligations
(indemnity and medical expenses), related liabilities and
appropriate administrative expenses necessary for the
administration of all claims, actual and incurred but not reported,
for any claim with a date of injury or last exposure on or before
the thirtieth day of June, two thousand five:
Provided, That old
fund liabilities shall include all claims payments for any claim,
regardless of date of injury or last exposure, through the thirty-
first day of December, two thousand five:
Provided, however, That
old fund liabilities shall include all claims with dates of
injuries or last exposure prior to the first day of July, two
thousand four for bankrupt self-insured employers that had
defaulted on their claims obligations which have been recognized by
the commission in its actuarially determined liability number as of
the thirtieth day of June, two thousand five.
(n) "Private carrier" means any insurer or the legal
representative of an insurer authorized by the insurance
commissioner to provide workers' compensation insurance pursuant to
this chapter and which maintains an office in the state. The term
does not include a self-insured employer or private employers but
shall include any successor to the commission.
(o) "Uninsured employer fund" means a fund held by the state
treasurer's office consisting of those funds transferred to it from
the workers' compensation fund and any other source. Disbursements
from the uninsured employer fund shall be upon requisitions signed
by the insurance commissioner,
and the administrator of the fund
and as otherwise set forth in an exempt legislative rule
promulgated by the workers' compensation board of managers.
(p) "Self-insured employer guaranty risk pool" shall be a fund
held by the state treasurer's office consisting of those funds
transferred to it from the guaranty pool created pursuant to 85 CSR
§19 (2004) and any future funds collected through continued
administration of that exempt legislative rule as administered by
the insurance commissioner. Disbursements shall be made from the
self-insured employer guaranty risk pool upon requisitions signed
by the insurance commissioner.
and the administrator of the fund
The obligations of the fund shall be as provided in 85 CSR §19
(2004).
The company shall administer the self-insured employer
guaranty risk pool for a term and administrative fee as provided in the administration of the old fund.
(q) "Self-insured employer security risk pool" shall be a fund
held by the state's treasurer consisting of those funds paid into
it through the insurance commissioner's administration of 85 CSR §
19 (2004). Disbursement from said fund shall be made from the
self-insured employer security risk pool upon requisitions signed
by the insurance commissioner.
and the administrator of the fund
The obligations of the fund shall be as provided in 85 CSR §19:
Provided, That said liabilities shall be limited to those
self-insured employers who default on their claims obligations
after the termination of the commission.
The company shall
administer the self-insured employer security risk pool for a term
and administrative fee as provided in the administration of the old
fund.
(r) "Private carrier guaranty fund" shall be a fund held by
the state treasurer's office consisting of funds deposited pursuant
to this article. Disbursements shall be made from the private
carrier guaranty fund upon requisitions signed by the insurance
commissioner.
and the administrator of the fund The obligations
of the fund shall be as provided in this article.
The company
shall administer the private carrier guaranty fund for a term and
administrative fee as provided in the administration of the old
fund.
(s) "Assigned risk fund" shall be a fund held by the state treasurer's office consisting of funds deposited pursuant to this
article. Disbursements shall be made from the assigned risk fund
upon requisitions signed by the insurance commissioner. The
obligations of the fund shall be as provided in this article.
(t) "Comprehensive financial plan" shall mean the plan
compiled by the director for acceptance by the insurance
commissioner identifying and forecasting cash flows, funding
sources, debt terms and structures, and scheduled amortization and
permanent resolution of all old fund liabilities. The
comprehensive financial plan shall provide for the retirement of
the revenue bonds authorized by article two-d, chapter twenty-three
of this code and all realized and potential claims against the old
fund shall be fully reserved. The comprehensive financial plan may
include any other information the insurance commissioner may
require as a basis for managing the post-transition fiscal
soundness of the old fund.
§23-2C-7. Custody, investment and disbursement of funds.
(a) The state treasurer shall be the custodian of the workers'
compensation old fund, workers' compensation uninsured employers'
fund, the self-
insured employer guaranty risk pool, the
self-
insured employer security risk pool, the private carrier
guaranty fund and the assigned risk pool and moneys payable to each
of these funds shall be deposited in the state treasury to the
credit of the funds. Each fund shall be a separate and distinct fund upon the books and records of the auditor and treasurer.
Disbursements from these funds shall be made upon requisitions
signed by the executive director and, effective upon termination of
the commission, the administrator of the funds and the insurance
commissioner. The workers' compensation old fund, the workers'
compensation uninsured employer fund, the self-
insured employer
guaranty risk pool, self-
insured employer security risk pool, the
private carrier guaranty fund and the assigned risk fund are
participant plans as defined in section two, article six, chapter
twelve of this code and are subject to the provisions of section
nine-a of said article. The funds may be invested by the
investment management board in accordance with said article.
(b) If the governor issues the proclamation set forth in this
article, then, effective upon termination of the commission, all
remaining assets and funds contained in the workers' compensation
fund which are payable to the new fund shall be so disbursed and
paid to the company by communication of the executive director to
the state treasurer or other appropriate state official prior to
the termination of the commission.
§23-2C-8. West Virginia uninsured employers' fund.
(a) The West Virginia uninsured employers' fund shall be
governed by the following:
(1) All money and securities in the fund must be held by the
state treasurer as custodian thereof to be used solely as provided in this article.
(2) The state treasurer may disburse money from the fund only
upon written requisition of the insurance commissioner. and
administrator of the fund
(3) The insurance commissioner shall assess each private
carrier and all self-insured employers an amount to be deposited in
the fund. The assessment may be collected by each private carrier
from its policy holders in the form of a policy surcharge. To
establish the amount of the assessment, the insurance commissioner
shall determine the amount of money necessary to maintain an
appropriate balance in the fund for each fiscal year and shall
allocate a portion of that amount to be payable by private
carriers, a portion to be payable by self-insured employers, and a
portion to be paid by any other appropriate group. After
allocating the amounts payable, the insurance commissioner shall
apply an assessment rate to the:
(A) Private carriers that reflects the relative hazard of the
employments covered by the private carriers, results in an
equitable distribution of costs among the private carriers and is
based upon expected annual premiums to be received;
(B) Self-insured employers that results in an equitable
distribution of costs among the self-insured employers and is based
upon expected annual expenditures for claims; and
(c) Any other categories of payees that results in an equitable distribution of costs among them and is based upon
expected annual expenditures for claims or premium to be received.
(4) The workers' compensation board of managers may adopt
rules for the establishment and administration of the assessment
methodologies, rates, payments and any penalties that the workers'
compensation board of managers determines are necessary to carry
out the provisions of this section.
(b) Payments from the fund shall be governed by the following:
(1) Except as otherwise provided in this subsection, an
injured worker of any employer required to be covered under this
chapter who has failed to obtain coverage may receive compensation
from the uninsured employers' fund if:
(A) He or she meets all jurisdictional and entitlement
provisions of this chapter;
(B) He or she files a claim with the insurance commissioner;
and
(C) He or she makes an irrevocable assignment to the insurance
commissioner a right to be subrogated to the rights of the injured
employee.
(2) If the insurance commissioner receives a claim, it shall
immediately notify the employer of the claim. For the purposes of
this section, the employer has the burden of proving that it
provided mandatory workers' compensation insurance coverage for the
employee or that it was not required to maintain workers' compensation insurance for the employee. If the employer meets
this burden, benefits shall not be paid from the fund.
(3) Any employer who has failed to provide mandatory coverage
required by the provisions of chapter twenty-three of this code is
liable for all payments made on its behalf, including any benefits,
administrative costs and attorney's fees paid from the fund or
incurred by the insurance commissioner.
(4) The insurance commissioner:
(A) May recover from the employer the payments made by it, any
accrued interest and attorney fees and costs by bringing a civil
action in a court of competent jurisdiction.
(B) May enter into a contract with any person, including the
third party administrator of the uninsured employers' fund, to
assist in the collection of any liability of an uninsured employer.
(C) In lieu of a civil action, may enter into an agreement or
settlement regarding the collection of any liability of an
uninsured employer.
(5) The insurance commissioner shall:
(A) Determine whether the employer was insured within five
days after receiving notice of the claim from the employee.
(B) Assign the claim to the third party administrator of the
fund for administration and, if appropriate, payment of
compensation.
(6) Upon determining whether the claim is accepted or denied, the fund third party administrator shall notify the injured
employee and the named employer of its determination.
(7) Any party aggrieved by a determination made by the
insurance commissioner or the fund third party administrator
regarding the claims decisions made pursuant to this section may
appeal that determination by filing a protest with the office of
judges as set forth in article five of this chapter.
(8) An uninsured employer is liable for the interest on any
amount paid on his or her claims from the fund. The interest must
be calculated at a rate set in accordance with the provisions of
section thirteen, article two of this chapter, compounded monthly,
from the date the claim is paid from the account until payment is
received by the insurance commissioner or fund third party
administrator from the employer.
(9) Attorney's fees recoverable by the insurance commissioner
or third party administrator pursuant to this section must be paid
at the usual and customary rate for that attorney.
(10) In addition to any other liabilities provided in this
section, the insurance commissioner or the fund third party
administrator may impose an administrative fine of not more than
ten thousand dollars against an employer if the employer fails to
provide mandatory coverage required by this chapter. All fines and
other moneys collected pursuant to this section shall be deposited
into the uninsured employer fund.
(c) The company shall be the administrator of the uninsured
employers' fund from the fund's inception and thereafter for seven
years and shall be charged with all authority and responsibilities
incidental to the administration of the fund which are necessary to
accomplish the express provisions and the intent of this chapter.
The company shall be paid a monthly administrative fee of five
percent of claims paid each month for the administration of the
fund through the thirty-first day of December, two thousand ten,
and four percent of claims paid each month for the administration
of the fund thereafter through the thirty-first day of December,
two thousand twelve. The company's administrative duties shall
include, but not be limited to, receipt of all claims, processing
said claims, providing for the payment of said claims through the
state treasurer's office or other applicable state agency and
ensuring, through the selection and assignment of counsel, that
claims decisions are properly defended. The administration of the
fund after this seven year period shall be subject to the
procedures set forth in article three, chapter five-a of this code.
(d) Employees of self-insured employers who are injured while
employed by a self-insured employer are ineligible for benefits
from the West Virginia uninsured employer fund.
§ 23-2C-16 Administration of old fund, uninsured employer fund,
self-insured employer guaranty risk pool, self-
insured employer security risk pool, and private carrier guaranty fund.
(a) Notwithstanding any provision of this code to the
contrary, the company shall be the initial third party
administrator of the workers' compensation old fund, uninsured
employer fund, self-insured employer guaranty risk pool, self-
insured employer security risk pool, and private carrier guaranty
fund from inception of the company the termination of the
commission and thereafter for a term of at least six months and not
to exceed three years, with said terms to be determined by an
agreement to be entered into between the Insurance Commission and
the company prior to the first day of July, two thousand six. seven
years and shall be charged with all authority and responsibilities
incidental to the administration of the old fund which are
necessary to accomplish the express provisions and the intent of
this chapter. The company shall be paid a monthly administrative
fee of five percent of claims paid each month for the
administration of the old fund thirty-first day of December, two
thousand ten, and four percent of claims paid each month for the
administration of the old fund thereafter through the thirty-first
day of December, two thousand twelve said funds. The company's
administrative duties shall may include, but not be limited to,
receipt of all claims, processing said claims, providing for the
payment of said claims through the state treasurer's office or
other applicable state agency, and ensuring, through the selection and assignment of counsel, that claims decisions are properly
defended. The administration of the old fund said funds thereafter
after this seven-year period shall be subject to the procedures set
forth in article three, chapter five-a of this code.
(b) The insurance commissioner may contract or employ counsel
to perform legal services related solely to the collection of
moneys due the old fund, including the collection of moneys due the
old fund and enforcement of repayment agreements entered into for
the collection of moneys due on or before the thirtieth day of
June, two thousand five, in any administrative proceeding and in
any state or federal court.
(c) (b) The insurance commissioner shall review claims
determined to be payable from the old fund said funds and may
contest the determination pursuant to the provisions of article
five of this chapter.
(d) (c) The insurance commissioner may conduct or cause to be
conducted an annual audit to be performed on the old funds said
funds.
(d) The insurance commissioner may contract or employ counsel
to perform legal services related solely to the collection of
moneys due the old fund, including the collection of moneys due the
old fund and enforcement of repayment agreements entered into for
the collection of moneys due on or before the thirtieth day of
June, two thousand five, in any administrative proceeding and in any state or federal court.
§23-2C-20. Claims administration issues.
(a) A self-insured employer shall continue to comply with
rules promulgated by the board of managers governing the
self-administration of its claims and the successor to the
commission shall also comply with the rules promulgated by the
board of managers governing the self-administration of claims.
(b) The successor to the commission, any other private carrier
and any employer that self-insures its risk and self-administers
its claims shall exercise all authority and responsibility granted
to the commission in this chapter and provide notices of action
taken to effect the purposes of this chapter to provide benefits to
persons who have suffered injuries or diseases covered by this
chapter. The successor to the commission, private carriers and
self-insured employers shall at all times be bound and shall comply
fully with all of the provisions of this chapter. Furthermore, all
of the provisions contained in article four of this chapter
pertaining to disability and death benefits are binding on and
shall be strictly adhered to by the successor to the commission,
private carriers, and the self-insured employer in their
administration of claims presented by employees of the self-insured
employer.
(c) Upon termination of the commission, the occupational
pneumoconiosis board shall be transferred to the insurance commissioner and shall be administered by the insurance
commissioner. The company and other private carriers shall have
all authority and responsibility granted to the self-
insured
employers in the administration and processing of occupational
pneumoconiosis claims.
(d) Upon termination of the commission, all claims allocation
responsibilities shall transfer from the commission to the
insurance commissioner.
(e) Upon termination of the commission, the third
party administrator of the old fund shall have all administrative
and adjudicatory authority vested in the commission in
administering old law liabilities and otherwise processing and
deciding old law claims.
NOTE: This legislation relates to the administration of the
old fund, uninsured employer fund, self-insured employer guaranty
risk pool, self-insured employer security risk pool, and private
carrier guaranty fund.