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ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 595
(Senator Minard, original sponsor)
____________
[Passed March 10, 2007; in effect from passage.]
AN ACT to amend and reenact
§23-1-1 and §23-1-1f of the Code of
West Virginia, 1931, as amended; to amend and reenact §23-2-9
of said code; to amend and reenact §23-2C-3, §23-2C-8, §23-2C-
15, §23-2C-18 and §23-2C-19 of said code; to amend said code
by adding thereto a new section, designated §23-2C-18a; and to
amend and reenact §23-5-9 of said code, all relating to the
transition to a private workers' compensation insurance
system; expressing legislative intent; permitting the
Insurance Commissioner to hire additional exempt employees;
exempting the Insurance Commissioner from purchasing rules in
some circumstances; changing requirements for approval of
self-insured status and for reports from self-insured
employers; making various technical changes necessitated by
the transition to a private workers' compensation insurance
system; reducing frequency of certain payments from self-
insured employers and private carriers; authorizing the Insurance Commissioner to assess self-insured employers for
certain funds; making certain assessments against self-insured
employers discretionary with the Insurance Commissioner;
clarifying how disputes related to claims against the
Uninsured Employer Fund are resolved; increasing time that
employers must report certain changes in coverage to the
Insurance Commissioner; authorizing the Insurance Commissioner
to promulgate exempt legislative rules; revising rate-making
process; defining terms; providing for the designation of a
single rating organization; deleting provisions regarding
private carrier premium collection; requiring agencies to
terminate or revoke licenses, permits or certifications of
employers in default to the state; clarifying persons subject
to certain liens; removing requirement that the record of
proceedings before the office of judges include certain
documents;
requiring the implementation of any benefit or
award granted by a decision of the Office of Judges, unless
stayed by explicit order; placing limitations on scope of
permitted stay; and regarding the handling of resulting
overpayments.
Be it enacted by the Legislature of West Virginia:
That §23-1-1 and §23-1-1f of the Code of West Virginia, 1931,
as amended, be amended and reenacted; that §23-2-9 of said code be
amended and reenacted; that §23-2C-3, §23-2C-8, §23-2C-15, §23-2C-
18 and §23-2C-19 of said code be amended and reenacted; that said
code be amended by adding thereto a new section, designated §23-2C-18a; and that §23-5-9 of said code be amended and reenacted, all to
read as follows:
ARTICLE 1. GENERAL ADMINISTRATIVE PROVISIONS.
§23-1-1. Workers' Compensation Commission created; findings.
(a) The Legislature finds that a deficit exists in the
Workers' Compensation Fund of such critical proportions that it
constitutes an imminent threat to the immediate and long-term
solvency of the fund and constitutes a substantial deterrent to the
economic development of this state. The Legislature further finds
that addressing the workers' compensation crisis requires the
efforts of all persons and entities involved and resolution of the
crisis is in the best interest of the public. Modification to the
rate system, alteration of the benefit structure, improvement of
current management practices and changes in perception must be
merged into a unified effort to make the workers' compensation
system viable and solvent through the mutualization of the system
and the opening of the market to private workers' compensation
insurance carriers. It was and remains the intent of the
Legislature that the amendments to this chapter enacted in the year
two thousand three be applied from the date upon which the
enactment was made effective by the Legislature. The Legislature
finds that an emergency exists as a result of the combined effect
of this deficit, other state budgetary deficits and liabilities and
other grave social and economic circumstances currently confronting
the state and that unless the changes provided by the enactment of
the amendments to this chapter, as well as other legislation designed to address the problem are made effective immediately, the
fiscal stability of this state will suffer irreparable harm.
Accordingly, the Legislature finds that the need of the citizens of
this state for the protection of the State Treasury and the
solvency of the Workers' Compensation Funds requires the
limitations on any expectations that may have arisen from prior
enactments of this chapter.
(b) It is the further intent of the Legislature that this
chapter be interpreted so as to assure the quick and efficient
delivery of indemnity and medical benefits to injured workers at a
reasonable cost to the employers who are subject to the provisions
of this chapter. It is the specific intent of the Legislature that
workers' compensation cases shall be decided on their merits and
that a rule of "liberal construction" based on any "remedial" basis
of workers' compensation legislation shall not affect the weighing
of evidence in resolving such cases. The workers' compensation
system in this state is based on a mutual renunciation of common
law rights and defenses by employers and employees alike.
Employees' rights to sue for damages over and above medical and
health care benefits and wage loss benefits are to a certain degree
limited by the provisions of this chapter and employers' rights to
raise common law defenses, such as lack of negligence, contributory
negligence on the part of the employee, and others, are curtailed
as well. Accordingly, the Legislature hereby declares that any
remedial component of the workers' compensation laws is not to
cause the workers' compensation laws to receive liberal construction that alters in any way the proper weighing of evidence
as required by section one-g, article four of this chapter.
(c) The "Workers' Compensation Division of the Bureau of
Employment Programs" is, on or after the first day of October, two
thousand three, reestablished, reconstituted and continued as the
Workers' Compensation Commission, an agency of the state. The
purpose of the commission is to ensure the fair, efficient and
financially stable administration of the workers' compensation
system of the State of West Virginia. The powers and duties
heretofore imposed upon the Workers' Compensation Division and the
Commissioner of the Bureau of Employment Programs as they relate to
workers' compensation are hereby transferred to and imposed upon
the Workers' Compensation Commission and its executive director in
the manner prescribed by this chapter.
(d) It is the intent of the Legislature that the transfer of
the administration of the workers' compensation system of this
state from the Workers' Compensation Division under the
Commissioner of the Bureau of Employment Programs to the Workers'
Compensation Commission under its executive director and the
workers' compensation board of managers is to become effective the
first day of October, two thousand three. Any provisions of the
enactment of Enrolled Senate Bill No. 2013 in the year two thousand
three relating to the transfer of the administration of the
workers' compensation system of this state that conflict with the
intent of the Legislature as described in this subsection shall, to
that extent, become operative on the first day of October, two thousand three, and until that date, prior enactments of this code
in effect on the effective date of Enrolled Senate Bill No. 2013
relating to the administration of the workers' compensation system
of this state, whether amended and reenacted or repealed by the
passage of Enrolled Senate Bill No. 2013, have full force and
effect. All provisions of the enactment of Enrolled Senate Bill
No. 2013 in the year two thousand three relating to matters other
than the transfer of the administration of the workers'
compensation system of this state shall become operative on the
effective date of that enactment, unless otherwise specifically
provided in that enactment.
(e) It is the intent of the Legislature, expressed through its
enactment of legislation, to transfer the regulation of the
workers' compensation system to the Insurance Commissioner. By
proclamation of the Governor, as authorized by article two-c of
this chapter, the Workers' Compensation Commission was terminated
on the thirty-first day of December, 2005. To further the
transition from the state-operated workers' compensation system to
a system of private insurance, the duties and responsibilities of
the Workers' Compensation Commission and the board of managers,
including, but not limited to, ratemaking and adjudication of
claims now reside with the Insurance Commissioner.
§23-1-1f. Authority of Insurance Commission to exempt employees
from classified service; exemption from purchasing
rules.
Notwithstanding any other provision of this code, upon
termination of the commission, the Insurance Commissioner may:
(1) Exempt no more than twenty positions of the offices of the
Insurance Commissioner from the classified service of the state,
the employees of which positions shall serve at the will and
pleasure of the commissioner: Provided, That such exempt positions
shall be in addition to those positions in classified-exempt
service under the classification plan adopted by the Division of
Personnel. The Insurance Commissioner shall report all exemptions
made under this section to the Director of the Division of
Personnel no later than the first day of July, two thousand seven,
and thereafter as the commissioner determines to be necessary; and
(2) Expend such sums for professional services as he or she
determines are necessary to perform those duties transferred to the
Insurance Commissioner upon the termination of the commission. The
provisions of article three, chapter five-a of this code relating
to the Purchasing Division of the Department of Administration
shall not apply to these contracts, and the Insurance Commissioner
shall award the contract or contracts on a competitive basis.
ARTICLE 2. EMPLOYERS AND EMPLOYEES SUBJECT TO CHAPTER;
EXTRATERRITORIAL COVERAGE.
§23-2-9. Election of employer or employers' group to be
self-insured and to provide own system of
compensation; exceptions; self administration; rules;
penalties; regulation of self-insurers.
(a) Notwithstanding any provisions of this chapter to the
contrary, the following types of employers or employers' groups may
apply for permission to self-insure their workers' compensation
risk.
(1) The types of employers are:
(A) Any employer who is of sufficient capability and financial
responsibility to ensure the payment to injured employees and the
dependents of fatally injured employees of benefits provided for in
this chapter at least equal in value to the compensation provided
for in this chapter;
(B) Any employer or group of employers as provided in
paragraph (A) of this subdivision of such capability and financial
responsibility that maintains its own benefit fund or system of
compensation to which its employees are not required or permitted
to contribute and whose benefits are at least equal in value to
those provided in this chapter; or
(C) Any employer who is signatory to a collective bargaining
agreement that allows for participation in a group workers'
compensation insurance program may join with any other employer or
employers that are signatory to a collective bargaining agreement
or agreements that allow for participation in a group workers'
compensation program and jointly apply to the Insurance
Commissioner to collectively self-insure their obligations under
this chapter. The employers must collectively meet the conditions
set forth in paragraph (A) or (B) of this subdivision. There shall
be joint and several liability for all employers who choose to jointly self-insure under the provisions of this article.
(2) In order to be approved for self-insurance status, the
employer shall:
(A) Submit all information requested by the Insurance
Commissioner;
(B) Provide security or bond, in an amount and form determined
by the Insurance Commissioner, which shall balance the employer's
financial condition based upon an analysis of its audited financial
statements and the full accrued value of current liability for
future claim payments based upon generally accepted actuarial and
accounting principles of the employer's existing and expected
liability;
(C) Meet the financial responsibility requirements set forth
in rules promulgated by the board of managers or industrial
council;
(D) Obtain and maintain a policy of excess insurance if
required to do so by the Insurance Commissioner; and
(E) Have an effective health and safety program at its
workplaces.
(3) Upon a finding that the employer has met all of the
requirements of this section and any rules promulgated thereunder,
the employer may be permitted self-insurance status. An annual
review of each self-insurer's continuing ability to meet its
obligations and the requirements of this section shall be made by
the Insurance Commissioner. At the time of such review, the
Insurance Commissioner may require that the self-insured employer post a bond or security or obtain and maintain an excess insurance
policy. This review shall also include a recalculation of the
amount of any security, bond or policy of excess insurance
previously required to be posted or obtained under any provision of
this chapter or any rules promulgated thereunder. Failure to
provide the required amount or form of security or bond or to
obtain or maintain the required excess insurance policy may cause
the employer's self-insurance status to be terminated by the
Insurance Commissioner.
(4) Whenever a self-insured employer furnishes security or
bond, including replacement and amended bonds and other securities,
as surety to ensure the employer's or guarantor's payment of all
obligations under this chapter for which the security or bond was
furnished, the security or bond shall be in the most current form
or forms approved and authorized by the commission or Insurance
Commissioner for use by the employer or its guarantors, surety
companies, banks, financial institutions or others in its behalf
for that purpose.
(b) (1) Notwithstanding any provision in this chapter to the
contrary, self-insured employers shall, effective the first day of
July, two thousand four, administer their own claims. The
Insurance Commissioner shall, pursuant to rules promulgated by the
board of managers or industrial council, regulate the
administration of claims by employers granted permission to self-
insure their obligations under this chapter. A self-insured
employer shall comply with rules promulgated by the board of managers or industrial council governing the self-administration of
its claims.
(2) An employer or employers' group that self-insures its risk
and self-administers its claims shall exercise all authority and
responsibility granted to the Insurance Commissioner or private
carriers 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. An
employer or employers' group granted permission to self-insure and
self-administer its obligations under this chapter 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
self-insured employer in its administration of claims presented by
employees of the self-insured employer. Violations of the
provisions of this chapter and such rules relating to this chapter
as may be approved by the board of managers or industrial council
may constitute sufficient grounds for the termination of the
authority for any employer to self-insure its obligations under
this chapter.
(c) Each self-insured employer shall, on or before the last
day of the first month of each quarter or other assigned reporting
period, file with the Insurance Commissioner a certified statement
of the total gross wages and earnings of all of the employer's
employees subject to this chapter for the preceding quarter or other assigned reporting period.
(d) (1) If a self-insured employer defaults in the payment of
any portion of surcharges or assessments required under this
chapter or rules promulgated thereunder, or in any payment required
to be made as benefits provided by this chapter to the employer's
injured employees or dependants of fatally injured employees, the
Insurance Commissioner shall, in an appropriate case, determine the
full accrued value based upon generally accepted actuarial and
accounting principles of the employer's liability, including the
costs of all awarded claims and of all incurred but not reported
claims. The amount determined may, in an appropriate case, be
assessed against the employer. The Insurance Commissioner may
demand and collect the present value of the defaulted liability.
Interest shall accrue upon the demanded amount as provided in
section thirteen of this article until the liability is fully paid.
Payment of all amounts then due to the Insurance Commissioner and
to the employer's employees is a sufficient basis for reinstating
the employer to good standing with Insurance Commissioner and
removing the employer from default status.
(2) The assessments and surcharges required to be paid by
self-insured employers pursuant to the provisions of this chapter
and the rules promulgated thereunder are special revenue taxes
under and according to the provisions of state workers'
compensation law and are considered to be tax claims, as priority
claims or administrative expense claims according to those
provisions under the law provided in the United States bankruptcy code, Title 11 of the United States Code. In addition, as the same
was previously intended by the prior provisions of this section,
this amendment and reenactment is for the purpose of clarification
of the taxing authority of the Insurance Commissioner.
(e) The commission may create, implement, establish and
administer a perpetual self-insurance security risk pool of funds,
sureties, securities, insurance provided by private insurance
carriers or other states' programs, and other property, of both
real and personal properties, to secure the payment of obligations
of self-insured employers. If a pool is created, the board of
managers shall adopt rules for the organizational plan,
participation, contributions and other payments which may be
required of self-insured employers under this section. The board
of managers may adopt a rule authorizing the commission to assess
each self-insured employer in proportion according to each
employer's portion of the unsecured obligation and liability or to
assess according to some other method provided by rule which shall
properly create and fund the risk pool to serve the needs of
employees, employers and the Workers' Compensation Fund by
providing adequate security. The board of managers establishing a
security risk pool may authorize the executive director to use any
assessments, premium taxes and revenues and appropriations as may
be made available to the commission. Effective upon termination of
the commission, all statutory and regulatory authority provided to
the commission and board of managers over pools created pursuant to
this section, as such pools are defined in section two, article two-c of this chapter, shall transfer to the Insurance
Commissioner.
(f) Any self-insured employer which has had a period of
inactivity due to the nonemployment of employees which results in
its reporting of no wages on reports to the Insurance Commissioner
for a period of four or more consecutive quarters may have its
status inactivated and shall apply for reactivation to status as a
self-insured employer prior to its reemployment of employees.
Despite the inactivation, the self-insured employer shall continue
to make payments on all awards for which it is responsible. Upon
application for reactivation of its status as an operating self-
insured employer, the employer shall document that it meets the
eligibility requirements needed to maintain self-insured employer
status under this section and any rules adopted to implement it.
If the employer is unable to requalify and obtain approval for
reactivation, the employer shall, effective with the date of
employment of any employee, purchase workers' compensation
insurance as provided in article two-c of this chapter, but shall
continue to be a self-insurer as to the prior period of active
status and to furnish security or bond and meet its prior
self-insurance obligations.
(g) In any case under the provisions of this section that
requires 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 commission
may, in its discretion, at any time compute and permit to be paid into the Workers' Compensation Fund an amount equal to the present
value of all unpaid future payments on the award or awards for
which liability exists in trust. Thereafter, the employer shall be
discharged from any further portion of premium tax liability upon
the award or awards and payment of the award or awards shall be
assumed by the commission. Upon termination of the commission, the
process herein described will no longer be permitted. Self-insured
employers may thereafter withdraw from self-insured status and
purchase workers' compensation insurance as provided in article
two-c of this chapter, but said self-insured employers shall remain
liable for their self-insured employer claims liabilities for each
claim with a date of injury or last exposure prior to the effective
date of insurance coverage.
(h) Any employer subject to this chapter, who elects to carry
the employer's own risk by being a self-insured employer and who
has complied with the requirements of this section and of any
applicable rules, 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 the election's approval and during the
period that the employer is allowed to carry the employer's own
risk.
(i) An employer may not hire any person or group to self-
administer claims under this chapter as a third-party administrator
unless the person or group has been determined to be qualified to
be a third-party administrator by the Insurance Commissioner
pursuant to rules adopted by the board of managers or industrial council. Any person or group whose status as a third-party
administrator has been revoked, suspended or terminated by the
Insurance Commissioner shall immediately cease administration of
claims and shall not administer claims unless subsequently
authorized by the Insurance Commissioner.
(j) All regulatory, oversight and document-gathering authority
provided to the commission under this section shall transfer to the
Insurance Commissioner and the industrial council upon termination
of the commission.
ARTICLE 2C. EMPLOYERS' MUTUAL INSURANCE COMPANY.
§23-2C-3. Creation of employer mutual as successor organization of
the West Virginia Workers' Compensation Commission.
(a) On or before the first day of June, two thousand five, the
executive director may take such actions as are necessary to
establish an employers' mutual insurance company as a domestic,
private, nonstock, corporation to:
(1) Insure employers against liability for injuries and
occupational diseases for which their employees may be entitled to
receive compensation pursuant to chapter twenty-three of this code
and federal Longshore and Harbor Workers' Compensation Act, 33 U.
S. C. §901, et seq.;
(2) Provide employer's liability insurance incidental to and
provided in connection with the insurance specified in subdivision
(1) of this subdivision, including coal-workers' pneumoconiosis
coverage and employer excess liability coverage as provided in this chapter; and
(3) Transact such other kinds of property and casualty
insurance for which the company is otherwise qualified under the
provisions of this code.
(4) The company shall not sell, assign or transfer substantial
assets or ownership of the company.
(b) If the executive director establishes a domestic mutual
insurance company pursuant to subsection (a) of this section:
(1) As soon as practical, the company established pursuant to
the provisions of this article shall, through a vote of a majority
of its provisional board, file its corporate charter and bylaws
with the Insurance Commissioner and apply for a license with the
Insurance Commissioner to transact insurance in this state.
Notwithstanding any other provision of this code, the Insurance
Commissioner shall act on the documents within fifteen days of the
filing by the company.
(2) In recognition of the workers' compensation insurance
liability insurance crisis in this state at the time of enactment
of this article and the critical need to expedite the initial
operation of the company, the Legislature hereby authorizes the
Insurance Commissioner to review the documentation submitted by the
company and to determine the initial capital and surplus
requirements of the company, notwithstanding the provisions of
section five-b, article three, chapter thirty-three of this code.
The company shall furnish the Insurance Commissioner with all
information and cooperate in all respects necessary for the Insurance Commissioner to perform the duties set forth in this
section and in other provisions of this chapter and chapter thirty-
three of this code. The Insurance Commissioner shall monitor the
economic viability of the company during its initial operation on
not less than a monthly basis, until such time as the commissioner,
in his or her discretion, determines that monthly reporting is not
necessary. In all other respects the company shall be subject to
comply with the applicable provisions of chapter thirty-three of
this code.
(3) Subject to the provisions of subdivision (4) of this
subsection, the Insurance Commissioner may waive other requirements
imposed on mutual insurance companies by the provisions of chapter
thirty-three of this code as the Insurance Commissioner determines
is necessary to enable the company to begin insuring employers in
this state at the earliest possible date.
(4) Within forty months of the date of the issuance of its
license to transact insurance, the company shall comply with the
capital and surplus requirements set forth in subsection (a),
section five-b, article three, chapter thirty-three of this code in
effect on the effective date of this enactment, unless said
deadline is extended by the Insurance Commissioner.
(c) For the duration of its existence, the company is not and
shall not be considered a department, unit, agency or
instrumentality of the state for any purpose. All debts, claims,
obligations and liabilities of the company, whenever incurred,
shall be the debts, claims, obligations and liabilities of the company only and not of the state or of any department, unit,
agency, instrumentality, officer or employee of the state.
(d) The moneys of the company are not and shall not be
considered part of the General Revenue Fund of the state. The
debts, claims, obligations and liabilities of the company are not
and shall not be considered a debt of the state or a pledge of the
credit of the state.
(e) The company is not subject to provisions of article
nine-a, chapter six of this code; the provisions of chapter
twenty-nine-b of this code; the provisions of article three,
chapter five-a of this code; the provisions of article six, chapter
twenty-nine of this code; the provisions of article six-a of said
chapter; or the provisions of chapter twelve of this code.
(f) If the commission has been terminated, effective upon said
termination, private carriers, including the company, shall not be
subject to payment of premium taxes, surcharges and credits
contained in article three, chapter thirty-three of this code on
premiums received for coverage under this chapter. In lieu
thereof, the workers' compensation insurance market shall be
subject to the following:
(1) Each fiscal year, the Insurance Commissioner shall
calculate a percentage surcharge to be collected by each private
carrier from its policyholders. The surcharge percentage shall be
calculated by dividing the previous fiscal year's total premiums
collected plus deductible payments by all employers into the
portion of the Insurance Commissioner's budget amount attributable to regulation of the private carrier market. This resulting
percentage shall be applied to each policyholder's premium payment
and deductible payments as a surcharge and remitted to the
Insurance Commissioner. Said surcharge shall be remitted within
ninety (90) days of receipt of premium payments;
(2) Each fiscal year, the Insurance Commissioner shall
calculate a percentage surcharge to be remitted on a quarterly
basis by self-insured employers and said percentage shall be
calculated by dividing previous year's self-insured payroll in the
state into the portion of the Insurance Commissioner's budget
amount attributable to regulation of the self-insured employer
market. This resulting percentage shall be applied to each
self-insured employer's payroll and the resulting amount shall be
remitted as a regulatory surcharge by each self-insured employer.
The Workers' Compensation Board of Managers or industrial council
may promulgate a rule for implementation of this section. The
company, all other private carriers and all self-insured employers
shall furnish the Insurance Commissioner with all required
information and cooperate in all respects necessary for the
Insurance Commissioner to perform the duties set forth in this
section and in other provisions of this chapter and chapter thirty-
three of this code. The surcharge shall be calculated so as to
only defray the costs associated with the administration of this
chapter and the funds raised shall not be used for any other
purpose;
(3) Upon termination of the commission, the company and all other private carriers shall collect a premiums surcharge from
their policyholders equal to ten percent, or such higher or lower
rate as annually determined, by the first day of May of each year,
by the Insurance Commissioner to produce forty-five million dollars
annually, of each policyholder's periodic premium amount for
workers' compensation insurance. Additionally, by the first day of
May each year, the self-insured employer community shall be
assessed a cumulative total of nine million dollars. The
methodology for the assessment shall be fair and equitable and
determined by exempt legislative rule issued by the workers'
compensation board of managers or industrial council. The amount
collected shall be remitted to the Insurance Commissioner for
deposit in the Workers' Compensation Debt Reduction Fund created in
section five, article two-d of this chapter.
(g) The new premiums surcharge imposed by subdivision (2) (3),
subsection (f) of this section shall sunset and not be collectible
with respect to workers' compensation insurance premiums paid when
the policy is renewed on or after the first day of the month
following the month in which the Governor certifies to the
Legislature that the revenue bonds issued pursuant to article
two-d, chapter twenty-three of this code have been retired and that
the unfunded liability of the old fund has been paid or has been
provided for in its entirety, whichever occurs last.
§23-2C-8. Workers' Compensation Uninsured Employer Fund.
(a) The Workers' Compensation Uninsured Employer 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.
(3) Assessments. -- The Insurance Commissioner shall assess
each private carrier and may assess self-insured employers an
amount to be deposited in the fund. The assessment may be
collected by each private carrier from its policyholders 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 each of the groups subject to the assessment. After
allocating the amounts payable by each group, the Insurance
Commissioner shall apply an assessment rate to:
(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, if assessed, 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 groups assessed 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 or industrial
council may adopt rules for the establishment and administration of
the assessment methodologies, rates, payments and any penalties
that it determines are necessary to carry out the provisions of
this section.
(b) Payments from the fund. --
(1) Except as otherwise provided in this subsection, an
injured employee 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 such employee meets all
jurisdictional and entitlement provisions of this chapter, files a
claim with the Insurance Commissioner and makes an irrevocable
assignment to the Insurance Commissioner of a right to be
subrogated to the rights of the injured employee.
(2) Employees who are injured while employed by a self-insured
employer are ineligible for benefits from the Workers' Compensation
Uninsured Employer Fund.
(c) Initial determination upon receipt of a claim. --
(1) If the Insurance Commissioner determines that the
claimant's employer maintained a policy of workers' compensation
insurance pursuant to this chapter on the date of injury or last
exposure or that the employer was not required to maintain such a
policy on such date, then the claim shall not be accepted into the
fund; if the commissioner determines that the employer was required
to maintain such a policy but failed to do so, the claim will be
accepted into the fund and the Insurance Commissioner may assign such a claim to the third-party administrator of the fund for
administration.
(2) The Insurance Commissioner shall notify the injured
employee and the named employer of the determination made pursuant
to subdivision (1) of this subsection and any party aggrieved
thereby shall be entitled to protest such determination in a
hearing before the Insurance Commissioner: Provided, That in any
such proceeding, the employer has the burden of proving that it
either provided mandatory workers' compensation insurance coverage
or that it was not required to maintain workers' compensation
insurance.
(d) Employer liability. --
(1) Any employer who has failed to provide mandatory coverage
required by the provisions of this chapter is liable for all
payments made and to be made on its behalf, including any benefits,
administrative costs and attorney's fees paid from the fund or
incurred by the Insurance Commissioner, plus interest calculated in
accordance with the provisions of section thirteen, article two of
this chapter.
(2) The Insurance Commissioner:
(A) May bring a civil action in a court of competent
jurisdiction to recover from the employer the amounts set forth in
subdivision (1) of this subsection. In any such action, the
Insurance Commissioner may also recover the present value of the
estimated future payments to be made on the employer's behalf and
the costs and attorney's fees attributable to such claim: Provided, That the failure of the Insurance Commissioner to include
a claim for future payments shall not preclude one or more
subsequent actions for such amounts;
(B) May enter into a contract with any person, including the
third-party administrator of the uninsured employer fund, to assist
in the collection of any liability of an uninsured employer; and
(C) In lieu of a civil action, may enter into an agreement or
settlement regarding the collection of any liability of an
uninsured employer.
(3) In addition to any other liabilities provided in this
section, the Insurance Commissioner may impose an administrative
penalty of not more than ten thousand dollars against an employer
if the employer fails to provide mandatory coverage required by
this chapter. All penalties and other moneys collected pursuant to
this section shall be deposited into the Workers' Compensation
Uninsured Employer Fund.
(e) Protests to claims decisions. -- Any party aggrieved by
a claims decision made by the Insurance Commissioner or the third-
party administrator in a claim that has been accepted into the fund
may object to that decision by filing a protest with the office of
judges as set forth in article five of this chapter.
§23-2C-15. Mandatory coverage; changing of coverage.
(a) Effective upon termination of the commission, all
subscriber policies with the commission shall novate to the company
and all employers otherwise shall purchase workers' compensation
insurance from the company unless permitted to self-insure their obligations. The company shall assume responsibility for all new
fund obligations of the subscriber policies which novate to the
company or which are issued thereafter. Each subscriber whose
policy novates to the company shall also have its advanced deposit
credited to its account with the company. Employers purchasing
workers' compensation insurance from the company shall have the
right to designate a representative or agent to act on its behalf
in any and all matters relevant to coverage and claims as
administered by the company.
(b) Effective the first day of July, two thousand eight, an
employer may elect to: (1) Continue to purchase workers'
compensation insurance from the company; (2) purchase workers'
compensation insurance from another private carrier licensed and
otherwise authorized to transact workers' compensation insurance in
this state; or (3) self-insure its obligations if it satisfies all
requirements of this code to so self-insure and is permitted to do
so: Provided, That all state and local governmental bodies,
including, but not limited to, all counties and municipalities and
their subdivisions and including all boards, colleges, universities
and schools, shall continue to purchase workers' compensation
insurance from the company through the thirtieth day of June, two
thousand twelve. The company and other private carriers shall be
permitted to sell workers' compensation insurance through licensed
agents in the state. To the extent that a private carrier markets
workers' compensation insurance through a licensed agent, it shall
be subject to all applicable provisions of chapter thirty-three of this code.
(c) Every employer shall post a notice upon its premises in a
conspicuous place identifying its workers' compensation insurer.
The notice must include the insurer's name, business address and
telephone number and the name, business address and telephone
number of its nearest adjuster in this state. The employer shall
at all times maintain the notice provided for the information of
his or her employees. Release of employer policy information and
status by the industrial council and the Insurance Commissioner
shall be governed by section four, article one of this chapter.
The Insurance Commissioner shall collect and maintain information
related to officers, directors and ten percent or more owners of
each carrier's policyholders, and each private carrier shall
provide said information to the Insurance Commissioner within sixty
days of the issuance of a policy and any changes to the information
shall thereafter be reported within sixty days of such change.
(d) Any rule promulgated by the board of managers or
industrial council empowering agencies of this state to revoke or
refuse to grant, issue or renew any contract, license, permit,
certificate or other authority to conduct a trade, profession or
business to or with any employer whose account is in default with
regard to any liability under this chapter shall be fully
enforceable by the Insurance Commissioner against any such
employer.
(e) Effective the first day of January, two thousand nine, the
company may decline to offer coverage to any applicant. Effective the first day of January, two thousand nine, the company and
private carriers may cancel a policy or decline to renew a policy
upon the issuance of sixty days' written advance notice to the
policyholder: Provided, That cancellation of the policy by the
carrier for failure of consideration to be paid by the policyholder
is effective after fifteen days advance written notice of
cancellation to the policyholder.
(f) Every private carrier shall notify the Insurance
Commissioner or his or her designee of: (i) The issuance or
renewal of insurance coverage, within ten calendar days of the
effective date of coverage; and (ii) a termination of coverage due
to lapse, refusal to renew or cancellation, within three business
days of the effective date of the termination; such notifications
shall be on forms developed by the Insurance Commissioner.
§23-2C-18. Ratemaking; Insurance Commissioner.
(a) (1) The rate-making provisions and premium provisions
contained in article two of this chapter shall not be applicable to
the company or other private carriers. Rates for workers'
compensation insurance are subject to the provisions of this
section, section eighteen-a of this article and article twenty,
chapter thirty-three of this code.
(2) In the event of any conflict, the provisions of this
article shall have paramount effect, but the provisions in this
chapter and chapter thirty-three of this code shall be construed as
complementary and harmonious unless so clearly in conflict that
they cannot reasonably be reconciled.
(b) An insurer shall file its rates by filing a multiplier or
multipliers to be applied to prospective loss costs that have been
filed by the designated advisory organization on behalf of the
insurer in accordance with section eighteen-a of this article and
may also file carrier specific rating plans.
(c) Rates must not be excessive, inadequate or unfairly
discriminatory, nor may an insurer charge any rate which if
continued will have or tend to have the effect of destroying
competition or creating a monopoly.
(d) The Insurance Commissioner may disapprove rates if there
is not a reasonable degree of price competition at the consumer
level with respect to the class of business to which they apply.
In determining whether a reasonable degree of price competition
exists, the Insurance Commissioner shall consider all relevant
tests, including:
(1) The number of insurers actively engaged in the class of
business and their shares of the market;
(2) The existence of differentials in rates in that class of
business;
(3) Whether long-run profitability for private carriers
generally of the class of business is unreasonably high in relation
to its risk;
(4) Consumers' knowledge in regard to the market in question;
and
(5) Whether price competition is a result of the market or is
artificial. If competition does not exist, rates are excessive if they are likely to produce a long-run profit that is unreasonably
high in relation to the risk of the class of business, or if
expenses are unreasonably high in relation to the services
rendered.
(e) Rates are inadequate if they are clearly insufficient,
together with the income from investments attributable to them, to
sustain projected losses and expenses in the class of business to
which they apply.
(f) One rate is unfairly discriminatory in relation to another
in the same class if it clearly fails to reflect equitably the
differences in expected losses and expenses. Rates are not
unfairly discriminatory because different premiums result for
policyholders with similar exposure to loss but different expense
factors, or similar expense factors but different exposure to loss,
so long as the rates reflect the differences with reasonable
accuracy. Rates are not unfairly discriminatory if they are
averaged broadly among persons insured under a group, franchise or
blanket policy.
§23-2C-18a. Designation of rating organization.
(a) For the purposes of this section:
(1) "Classification system" or "classification" means the
plan, system or arrangement for grouping risks with similar
characteristics or a specified class of risk by recognizing
differences in exposure to hazards.
(2) "Experience rating" means a statistical procedure
utilizing past risk experience to produce a prospective premium credit, debit or unity modification.
(3) "Prospective loss costs" means historical aggregate losses
and loss adjustment expenses projected through development to their
ultimate value and through trending to a future point in time.
Prospective loss costs do not include provisions for profit or
expenses other than loss adjustment expenses.
(4) "Statistical plan" means the plan, system or arrangement
used in collecting data for ratemaking or other purposes.
(b) The Insurance Commissioner shall designate one rating
organization to:
(1) Assist the commissioner in gathering, compiling and
reporting relevant statistical information on an aggregate basis;
(2) Develop and administer, subject to approval by the
commissioner, the uniform statistical plan, uniform classification
plan and uniform experience rating plan;
(3) Develop and file manual rules, subject to the approval of
the commissioner, that are reasonably related to the recording and
reporting of data pursuant to the uniform statistical plan, uniform
experience rating plan and the uniform classification plan; and
(4) File with the commissioner for approval all prospective
loss costs, provisions for special assessments, all supplementary
rating information and any changes, amendments or modification of
the forgoing proposed in this state.
(c) Each workers' compensation insurer shall:
(1) Record and report its workers' compensation experience to
the designated rating organization as set forth in the uniform statistical plan approved by the commissioner; and
(2) Adhere to the uniform classification plan and uniform
experience rating plan developed by the designated rating
organization and approved by the commissioner.
(d) The commissioner may promulgate exempt legislative rules
to implement the provisions of this section, including a rule
providing for the equitable sharing and recovery of the expense of
the designated rating organization in performing the functions set
forth in subsection (b) of this section.
§23-2C-19. Premium payment; employer default; special provisions
as to employer default collection.
(a) Each employer who is required to purchase and maintain
workers' compensation insurance or who elects to purchase workers'
compensation insurance shall pay a premium to a private carrier.
Each carrier shall notify its policyholders of the mandated premium
payment methodology and under what circumstances a policyholder
will be found to be in policy default.
(b) An employer who is required to purchase and maintain
workers' compensation insurance but fails to do so or otherwise
enters policy default shall be deprived of the benefits and
protection afforded by this chapter, including section six, article
two of this chapter, and the employer is liable as provided in
section eight of said article. The policy defaulted employer's
liability under these sections is retroactive to the day the policy
default occurs. The private carrier shall notify the policy
defaulted employer of the method by which the employer may be reinstated with the private carrier.
(c) In addition to any other liabilities provided in this
section, the Insurance Commissioner 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.
(d) The company and the Insurance Commissioner shall be
provided extraordinary powers to collect any premium amounts
payable to the workers' compensation fund or the new fund and due
from the first day of July, two thousand five, through the
thirtieth day of June, two thousand eight. Those powers shall
include: (1) Withholding of coverage effective the first day of
January, two thousand six. Employers without coverage shall
immediately be deprived of the benefits and protection afforded by
this chapter, including section six, article two of this chapter
and the employer is liable as provided in section eight of said
article; (2) the right to maintain a civil action against all
officers and directors of the employer individually for collection
of the premium owed; and (3) the right to immediately report the
employers to the State Tax Department and other state agencies to
secure suspension of any and all licenses, certificates, permits,
registrations and other similar approval documents necessary for
the employer to conduct business in this state.
(e) Every agency shall, upon notification of employer default
by the Insurance Commissioner, immediately begin the process to
revoke or terminate any contract, license, permit, certificate or other authority to conduct a trade, profession or business in this
state and shall refuse to issue, grant or renew any such contract,
license, permit, certificate or authority.
(1) The term "employer default" means having an outstanding
balance or liability to the old fund or to the uninsured employers'
fund or being in policy default, as defined in section two of this
article, or failure to maintain mandatory workers' compensation
coverage. An employer is not in default if it has entered into a
repayment agreement with the Insurance Commissioner and remains in
compliance with the obligations under the repayment agreement.
(2) The term "agency" includes any unit of state government
such as officers, agencies, divisions, departments, boards,
commissions, authorities or public corporations.
(
f
)
Any amounts owed by an employer to the state as a result
of an employer default is a personal liability of the employer, its
officers, owners, partners and directors and is immediately due and
owing and shall, in addition, be a lien enforceable against all the
property of the employer, its officers, owners, partners and
directors: Provided, That the lien shall not be enforceable as
against a purchaser, including a lien creditor, of real estate or
personal property for a valuable consideration without notice,
unless docketed as provided in section one, article ten-c, chapter
thirty-eight of this code: Provided, however, That the lien may be
enforced as other judgment liens are enforced through the
provisions of said chapter and the same is considered by the
circuit court to be a judgment lien for this purpose.
(g) The Insurance Commissioner shall propose rules for
adoption by the industrial council to effectuate the purposes of
this section including the conditions under which agencies shall
comply with the provisions of subsection (e) of this section and
specifying how notice of default shall be given by the
commissioner.
ARTICLE 5. REVIEW.
§23-5-9. Hearings on objections to Insurance Commissioner;
private carrier or self-insured employer decisions;
mediation; remand.
a) Objections to a decision of the Insurance Commissioner,
private carrier or self-insured employer, whichever is applicable,
made pursuant to the provisions of section one of this article
shall be filed with the office of judges. Upon receipt of an
objection, the office of judges shall notify the Insurance
Commissioner, private carrier or self-insured employer, whichever
is applicable, and all other parties of the filing of the
objection. The office of judges shall establish by rule
promulgated in accordance with the provisions of subsection (e),
section eight of this article an adjudicatory process that enables
parties to present evidence in support of their positions and
provides an expeditious resolution of the objection. The employer,
the claimant, the Insurance Commissioner, private carrier or self-
insured employer, whichever are applicable, shall be notified of
any hearing at least ten days in advance. The office of judges shall review and amend, or modify, as necessary, its procedural
rules by the first day of July, two thousand seven.
(b) The office of judges shall establish a program for
mediation to be conducted in accordance with the requirements of
rule twenty-five of the West Virginia Trial Court Rules. The
parties may agree that the result of the mediation is binding. A
case may be referred to mediation by the administrative law judge
on his or her own motion, on motion of a party or by agreement of
the parties. Upon issuance of an order for mediation, the office
of judges shall assign a mediator from a list of qualified
mediators maintained by the West Virginia State Bar.
(c) The office of judges shall keep full and complete records
of all proceedings concerning a disputed claim. Subject to the
rules of practice and procedure promulgated pursuant to section
eight of this article, the record upon which the matter shall be
decided shall include any evidence submitted by a party to the
office of judges and evidence taken at hearings conducted by the
office of judges. The record may include evidence or documents
submitted in electronic form or other appropriate medium in
accordance with the rules of practice and procedure. The office of
judges is not bound by the usual common law or statutory rules of
evidence.
(d) All hearings shall be conducted as determined by the chief
administrative law judge pursuant to the rules of practice and
procedure promulgated pursuant to section eight of this article.
Upon consideration of the designated record, the chief administrative law judge or other authorized adjudicator within the
office of judges shall, based on the determination of the facts of
the case and applicable law, render a decision affirming, reversing
or modifying the action protested. The decision shall contain
findings of fact and conclusions of law and shall be mailed to all
parties.
(e) The office of judges may remand a claim to the Insurance
Commissioner, private carrier or self-insured employer, whichever
is applicable, for further development of the facts or
administrative matters as, in the opinion of the administrative law
judge, may be necessary for a full and complete disposition of the
case. The administrative law judge shall establish a time within
which the Insurance Commissioner, private carrier or self-insured
employer, whichever is applicable, must report back to the
administrative law judge.
(f) The decision of the office of judges regarding any
objections to a decision of the Insurance Commissioner, private
carrier or self-insured employer, whichever is applicable, is final
and benefits shall be paid or denied in accordance with the
decision, unless an order staying the payment of benefits is
specifically entered by the Workers' Compensation Board of Review
created in section eleven of this article or by the administrative
law judge who granted the benefits. No stay with respect to any
medical treatment or rehabilitation authorized by the office of
judges may be granted. If the decision is subsequently appealed and
reversed in accordance with the procedures set forth in this article, and any overpayment of benefits occurs as a result of such
reversal, any such overpayment may be recovered pursuant to the
provisions of subsection (h), section one-c, article four of this
chapter or subsection (d), section one-d of said article, as
applicable.