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Introduced Version House Bill 504 History

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Key: Green = existing Code. Red = new code to be enacted
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.
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