NY State Senate Bill 2009-S5234

Senate Bill S5234

2009-2010 Legislative Session

Provides that assessments of self-insurers for the special disability fund shall be based on 110%, rather than 150%, of total disbursements

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Archive: Last Bill Status - In Senate Committee Labor Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to labor
Apr 27, 2009	referred to labor

2009-S5234 (ACTIVE) - Details

Current Committee:: Senate Labor
Law Section:: Workers' Compensation Law
Laws Affected:: Amd §15, Work Comp L

2009-S5234 (ACTIVE) - Summary

Provides that assessments of self-insurers, the state insurance fund, and all insurance carriers for the workers' compensation special disability fund shall be based on 110%, rather than 150%, of total disbursements from the fund during the preceding calendar year, less the amount of the fund's net assets as of December 31st of such preceding calendar year.

2009-S5234 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5234

 TITLE OF BILL :
An act to amend the workers' compensation law, in relation to the
assessment upon self-insurers, the state insurance fund, and all
insurance carriers to fund the special disability fund


 PURPOSE OR GENERAL IDEA OF BILL :
To change the calculation of the assessment for the Second Injury Fund
from 150 percent of fund assets paid out in the prior year to 110
percent of fund assets paid in the prior year in order to utilize a
more appropriate fund assessment.

 CURRENT LAW :
The assessment for the Second Injury Fund is calculated by multiplying
total disbursements of the fund for the previous year by 150 percent
and subtracting the fund's net assets. As an example, if the Second
Injury Fund paid out $300 million in claims in 2004, the assessment on
employers in 2005 is designed to collect $450 million. This
legislation changes the percentage to 110 percent. This proposal will
save businesses approximately $150 million, more than 5 percent of
their total spending on workers' compensation.

 JUSTIFICATION :
Worker's compensation costs have two components: premiums, which are

rates employers pay to insure workers, and assessments, a surcharge on
the total premium or total indemnity paid out by each employer. Money
collected from the assessments supports the administrative costs of
the Worker's Compensation Board (WCB) and provides monies for a number
of special funds, including the Second Injury Fund.

The Second Injury Fund is the largest special fund supported by
corporate assessments. It assumes, in certain cases, part of the
permanent disability liability resulting from injuries to previously
injured workers. First passed to encourage employers to hire returning
veterans from World War II, the use of the fund has grown
dramatically.  In 2004, the assessment employers paid for this fund
totaled over $482 million.

The current assessment calculation assumes that total disbursements
from the Second Injury Fund will grow by 50 percent every year. This
assumption has ensured the fund a cushion ranging from $167 to $200
million in the past three years.

This legislation provides the assessment for the fund would be
calculated by multiplying the total disbursements of the fund for the
previous year by 110 percent. The change to 110 percent would ensure
the fund has enough money to meet all of its financial obligations
without undue burden to employers. Reducing the assessment to 110
percent would produce a one time savings to the business community of
$150 million and would not impinge on any benefits being collected by
injured workers.

 LEGISLATIVE HISTORY :
2005-2006:  A.6703-A - A.3536/S.1863 of 2007-2008 (Referred to Labor)

 EFFECTIVE DATE :
January 1, 2010.

2009-S5234 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5234

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             April 27, 2009
                               ___________

Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
  printed to be committed to the Committee on Labor

AN ACT to amend the  workers'  compensation  law,  in  relation  to  the
  assessment  upon  self-insurers,  the  state  insurance  fund, and all
  insurance carriers to fund the special disability fund

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subparagraph 4 of paragraph (h) of subdivision 8 of section
15  of  the  workers' compensation law, as amended by chapter 139 of the
laws of 2008, is amended to read as follows:
  (4) As soon as practicable  after  May  first  in  the  year  nineteen
hundred  fifty-eight,  and  annually  thereafter  as soon as practicable
after January first in each succeeding year,  the  chair  of  the  board
shall assess upon and collect from all self-insurers, except group self-
insurers,  the  state  insurance  fund, all insurance carriers and group
self-insurers, (A) a sum equal to one hundred [fifty] TEN per centum  of
the total disbursements made from the special disability fund during the
preceding calendar year (not including any disbursements made on account
of  anticipated liabilities or waiver agreements funded by bond proceeds
and related earnings), less the amount of the net assets in such fund as
of December thirty-first of said preceding calendar year, and (B) a  sum
sufficient  to  cover  debt  service,  and  associated  costs (the "debt
service assessment") to be paid during the calendar year by the dormito-
ry authority, as calculated in accordance with subparagraph five of this
paragraph. Such assessments shall  be  allocated  to  (i)  self-insurers
except  group  self-insurers and the state insurance fund based upon the
proportion that the total compensation payments made by all  self-insur-
ers  except group self-insurers and the state insurance fund bore to the
total compensation payments made by all self-insurers except group self-
insurers, the state insurance fund, all  insurance  carriers  and  group
self-insurers,  (ii)  insurance  carriers based upon the proportion that

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06968-01-9

S. 5234                             2

the total compensation payments made by all insurance carriers  bore  to
the  total compensation payments by all self-insurers except group self-
insurers, the state insurance fund and all insurance carriers and  group
self-insurers  during  the fiscal year which ended within said preceding
calendar year, and (iii) group self-insurers based upon  the  proportion
that  the  total  compensation  payments made by all group self-insurers
bore to the total compensation payments made by all  self-insurers,  the
state  insurance  fund and all insurance carriers during the fiscal year
which ended within said preceding calendar year.  Insurance carriers and
self-insurers shall be liable for all such assessments regardless of the
date on which they came into existence, or whether they  have  made  any
claim for reimbursement from the special disability fund. The portion of
such  sum  allocated to self-insurers except group self-insurers and the
state insurance fund that shall  be  collected  from  each  self-insurer
except  a group self-insurer and the state insurance fund shall be a sum
equal to the proportion of  the  amount  which  the  total  compensation
payments  of  each  such self-insurer except a group self-insurer or the
state insurance fund bore to the total compensation payments made by all
self-insurers except group self-insurers and the  state  insurance  fund
during  the fiscal year which ended within said preceding calendar year.
The portion of such sum allocated to insurance carriers  that  shall  be
collected  from  each  insurance  carrier  shall  be a sum equal to that
proportion of the amount which the total premiums written by  each  such
insurance  carrier  bore  to  the total written premiums reported by all
insurance carriers during  the  fiscal  year  which  ended  within  said
preceding  calendar  year.  The  portion  of such sum allocated to group
self-insurers that shall be collected from each group self-insurer shall
be a sum equal to that proportion of the amount which the  pure  premium
calculation  for  each  such  group  self-insurer bore to the total pure
premium calculation for all group self-insurers for  the  calendar  year
which  ended  within  the preceding state fiscal year. The payments from
the debt service assessment, unless otherwise set forth in  the  special
disability  fund  financing  agreement,  are hereby pledged therefor and
shall be deemed the first monies received on account of  assessments  in
each year. For the purposes of this paragraph, "direct premiums written"
means  gross premiums, including policy and membership fees, less return
premiums and premiums on policies not taken. For purposes of this  para-
graph "pure premium calculation" means the New York state annual payroll
as of December thirty-first of the preceding year by class code for each
employer  member  of  a  group self-insurer multiplied by the applicable
loss cost for each class code as determined by the workers' compensation
rating board in effect on December thirty-first of the  preceding  year,
and for a group or individual self-insurer who has ceased to self-insure
shall  be  based on payroll at the time the group or individual self-in-
surer ceased to self-insure reduced by a factor reflecting the reduction
in the group or  individual  self-insurer's  self-insurance  liabilities
since  ceasing  to self-insure. An employer who has ceased to be a self-
insurer or a group that ceases to be licensed as  a  group  self-insurer
shall  continue  to  be  liable  for  any  assessments into said fund on
account of any compensation payments made by him or her on  his  or  her
account  during  such  fiscal year, and the security fund, created under
the provisions of section one hundred seven of this chapter,  shall,  in
the  event of the insolvency of any insurance company, be liable for any
assessments that would have been made against such  company  except  for
its  insolvency. No assessment shall be payable from the aggregate trust
fund, created under the provisions of section twenty-seven of this arti-

S. 5234                             3

cle, but such fund shall continue to be liable for all compensation that
shall be payable under any award or order of  the  board,  the  commuted
value  of  which  has  been  paid  into such fund. Such assessments when
collected  shall  be  deposited  with  the  commissioner of taxation and
finance for the benefit of such fund. Unless  otherwise  provided,  such
assessments,  shall not constitute an element of loss for the purpose of
establishing rates for compensation insurance but shall for the  purpose
of  collection  be  treated as separate costs by carriers. All insurance
carriers and the state insurance fund, shall collect  such  assessments,
from  their  policyholders  through  a  surcharge  based  on premiums in
accordance with rules set forth by the New  York  workers'  compensation
rating  board,  as  approved  by  the  superintendent of insurance. Such
surcharge shall be considered as part of premium for purposes prescribed
by law including, but not limited to, computing premium  tax,  reporting
to  the  superintendent  of insurance pursuant to section ninety-nine of
this chapter and section three  hundred  seven  of  the  insurance  law,
determining the limitation of expenditures for the administration of the
state  insurance  fund  pursuant to section eighty-eight of this chapter
and the cancellation by an insurance carrier, including the state insur-
ance fund, of a policy for non-payment of  premium.  The  provisions  of
this  paragraph  shall  not  apply  with  respect to policies containing
coverage pursuant to subsection  (j)  of  section  three  thousand  four
hundred  twenty  of the insurance law relating to every policy providing
comprehensive personal liability insurance on a one, two, three or  four
family  owner-occupied  dwelling. The state insurance fund shall, notify
its insureds that such assessments, shall be, for the purpose of recoup-
ment, treated as separate costs, respectively for the purpose of  premi-
ums billed on or after October first, nineteen hundred ninety-four.
  For  the purposes of this paragraph, except as otherwise provided: the
term "insurance carrier" shall include only stock  corporations,  mutual
corporations and reciprocal insurers authorized to transact the business
of  workers' compensation insurance in this state; the term "self-insur-
er" shall include any employer or group of employers  permitted  to  pay
compensation directly under the provisions of subdivision three, three-a
or four of section fifty of this chapter;
  S 2. This act shall take effect January 1, 2010.

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