S T A T E O F N E W Y O R K
________________________________________________________________________
7864--A
Cal. No. 1309
I N S E N A T E
May 18, 2016
___________
Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and
when printed to be committed to the Committee on Local Government --
reported favorably from said committee, ordered to first report,
amended on first report, ordered to a second report and ordered
reprinted, retaining its place in the order of second report
AN ACT to amend the general municipal law, the workers' compensation law
and the insurance law, in relation to participation in a public group
self-insurer
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph b of subdivision 2 of section 119-o of the gener-
al municipal law, as amended by chapter 681 of the laws of 1961, is
amended to read as follows:
b. The manner of employing, engaging, compensating, transferring or
discharging necessary personnel, subject, however, to the provisions of
the civil service law where applicable; the making of employer's
contributions for retirement, social security, health insurance, work-
men's compensation, INCLUDING PARTICIPATION IN A PUBLIC GROUP SELF-IN-
SURER, and other similar benefits; the approval of attendances at
conventions, conferences and schools for public officials and the
approval and payment of travel and other expenses incurred in the
performance of official duties; the bonding of designated officers and
employees; the filing of oaths of office and resignations consistent
with general laws applicable thereto; provisions that for specific
purposes designated officers or employees of the joint service or a
joint water, sewage or drainage project shall be deemed those of a spec-
ified participating corporation or district; and provisions that person-
nel assigned to a joint service or a joint water, sewage or drainage
project shall possess the same powers, duties, immunities and privileges
they would ordinarily possess (1) if they performed their duties only in
the corporation or district by which they are employed or (2) if they
were employed by the corporation or district in which they are required
to perform their duties.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15236-05-6
S. 7864--A 2
S 2. Paragraph 1, subparagraphs (a), (b) and (h) of paragraph 2,
subparagraph (a) and item e of subparagraph (d) of paragraph 5 and
subparagraph (a) of paragraph 6 of subdivision 3-a of section 50 of the
workers' compensation law, paragraph 1, subparagraph (a) and item e of
subparagraph (d) of paragraph 5 and subparagraph (a) of paragraph 6 as
amended by chapter 139 of the laws of 2008 and subparagraphs (a), (b)
and (h) of paragraph 2 as amended by section 4 of part G of chapter 57
of the laws of 2011, are amended to read as follows:
(1) Definitions. As used in this chapter the term "employers" shall
include: (a) employers with related activity in a given industry [which
shall include municipal corporations as that term is defined in sections
two and six-n of the general municipal law,] employing persons who
perform work in connection with the given industry, (b) an incorporated
or unincorporated association or associations consisting exclusively of
such employers provided they employ persons who perform such related
work in the given industry, and (c) a combination of employers as
described in subparagraph (a) hereof and an association or associations
of employers as described in subparagraph (b) hereof.
(a) Any group consisting exclusively of such employers may adopt a
plan for self-insurance, as a group, for the payment of compensation
under this chapter to their employees, except that no new groups may
adopt such a plan, and no group not composed solely of public entities
set forth in [paragraph a of] subdivision [four] THREE-F of this section
may insure any liabilities for any employers on and after January first,
two thousand twelve, except as provided for in paragraph ten of this
subdivision. Under such plan the group shall assume the liability of all
the employers within the group and pay all compensation for which the
said employers are liable under this chapter[, except that in the case
of municipal corporations as herein defined no proof of financial abili-
ty or deposit of securities or cash need be made in compliance with this
subdivision]. The group qualifying under this subdivision shall be known
as a group self-insurer and the employers participating therein and
covered thereby shall be known as members.
(b) Where such plan is adopted the group self-insurer, EXCEPT A GROUP
COMPOSED SOLELY OF PUBLIC ENTITIES SET FORTH IN SUBDIVISION THREE-F OF
THIS SECTION, shall furnish satisfactory proof to the chair of its
financial ability to pay such compensation for the members in the indus-
try covered by it, its revenues, their source and assurance of contin-
uance. The chair shall require the deposit with the chair of such secu-
rities as may be deemed necessary of the kind prescribed in subdivisions
one, two, three, four and five, and subparagraph (a) of paragraph three
of subdivision seven of section two hundred thirty-five of the banking
law or the deposit of cash or the filing of irrevocable letters of cred-
it issued by a qualified banking institution as defined by rules promul-
gated by the chair or the filing of a bond of a surety company author-
ized to transact business in this state, in an amount to be determined
to secure its liability to pay the compensation of each employer as
above provided. Such surety bond must be approved as to form by the
chair. The chair shall require each group self-insurer to provide regu-
lar reports no less than annually, which shall include but not be limit-
ed to audited financial statements, actuarial opinions and payroll
information containing proof that it is fully funded. Such reports shall
also include a contribution year analysis detailing contributions and
expenses associated with each specific contribution year. For purposes
of this paragraph, proof that a group self-insurer is fully funded shall
at a minimum include proof of unrestricted cash and investments permit-
S. 7864--A 3
ted by regulation of the chair of at least one hundred percent of the
total liabilities, including the estimate presented in the actuarial
opinion submitted by the group self-insurer in accordance with this
chapter. The chair by regulation, may set further financial standards
for group self-insurers. Any group self-insurer that fails to show that
it is fully funded shall be deemed underfunded, and must submit a plan
for achieving fully funded status which may include a deficit assessment
on members of such group self-insurer which shall be subject to approval
or modification by the chair.
(h) Any member terminating membership in a PRIVATE group self-insurer
after less than four years in such PRIVATE group self-insurer, and any
member in a group self-insurer that has defaulted, shall be precluded
from obtaining prospective coverage from any PRIVATE group self-insurer
for a period of at least three years from the effective date of termi-
nation.
(a) Each PRIVATE group self-insurer shall, AND EACH GROUP SELF-INSURER
MAY, secure the services of a group administrator to be responsible for
assisting the group self-insurer in complying with the provisions of
this section and the rules and regulations promulgated hereunder, and
for coordinating services including but not limited to claims process-
ing, loss control, legal, accounting and actuarial services. No person,
firm or corporation shall coordinate such services or otherwise carry
out the tasks of a group administrator as provided in this subdivision
or in the regulations issued pursuant thereto on behalf of a group self-
insurer unless such person shall have obtained from the chair a license
authorizing it to act as a group self-insurer administrator, which
license may be revoked for good cause. The chair shall promulgate regu-
lations setting forth any additional qualifications for such license,
governing the conduct and compensation of group self-insurer administra-
tors, and setting a license fee in an amount not less than five thousand
dollars per year for such license for each group self-insurer the admin-
istrator administers. Each administrator shall post a bond in the amount
of five hundred thousand dollars for each group self-insurer adminis-
tered or such other amount as may be set by the chair based on the cost
and availability of such bond, from which the chair may recover any
recoveries or penalties against the administrator under this section.
Nothing in this section shall relieve the trustees of a group self-in-
surer of any fiduciary obligation they hold to the other members of such
group self-insurer.
e. the number and amount of rate deviations provided to members during
the prior year and whether the recipient of any such deviation was a
trustee, PROVIDED THAT THE APPLICATION OF RATING FACTORS IN A MANNER
CONSISTENT WITH THE FILED RATING PLAN IS NOT A DEVIATION WHICH MUST BE
REPORTED UNDER THIS SUBDIVISION; and
(a) Group self-insurers must file with the board, as soon as practica-
ble but no later than sixty days prior to the start of the fund year a
rating plan which is supported by an actuarial rate study prepared by an
independent, qualified actuary that is a fellow or associate of the
casualty actuarial society, that clearly identifies the actuary's indi-
cated rate assumptions therein. The rating plan must apply consistently
to all members, and must provide for a common renewal date for all
PRIVATE group self-insurer members. The rates filed can be adjusted
based on an experience modification calculated for every member in
accordance with the experience rating plan promulgated by the workers'
compensation rating board. Experience modification formulas must be
applied identically to all members. Other rate deviations may be permis-
S. 7864--A 4
sible provided a plan has been approved by the board. Such deviations
shall not be in excess of ten percent of the actuary's indicated rate
unless otherwise approved by the board for a fully funded group self-in-
surer, and shall in no event result in amounts less than the actuary's
overall indicated rate. The chair by regulation may set further rate
plan and actuarial reporting standards.
S 3. Paragraph (g) of subdivision 3-e of section 50 of the workers'
compensation law, as added by chapter 729 of the laws of 1993, is
amended and a new subdivision 3-f is added to read as follows:
(g) The state insurance fund, any other insurer or any group self-in-
surer for municipal corporations as defined in subdivision [three-a]
THREE-F of this section may, at its option, offer a deductible in an
amount specified in paragraph (c) of this subdivision to any policyhold-
er who is not otherwise eligible for a deductible under this subdivi-
sion.
3-F. (1) ANY GROUP CONSISTING EXCLUSIVELY OF MUNICIPAL CORPORATIONS
AND PUBLIC CORPORATIONS AS SUCH TERMS ARE DEFINED IN SECTION SIXTY-SIX
OF THE GENERAL CONSTRUCTION LAW, COUNTY SELF-INSURANCE PLANS ESTABLISHED
UNDER ARTICLE FIVE OF THIS CHAPTER, BOARDS OF COOPERATIVE EDUCATIONAL
SERVICES AND CONSORTIA ESTABLISHED BY BOARDS OF COOPERATIVE EDUCATIONAL
SERVICES MAY ADOPT A PLAN FOR SELF-INSURANCE, AS A GROUP, FOR THE
PAYMENT OF COMPENSATION UNDER THIS CHAPTER TO THEIR EMPLOYEES. SUCH
GROUP SHALL BE KNOWN AS A "PUBLIC GROUP SELF-INSURER". ALL OTHER GROUPS
ESTABLISHED UNDER THIS SECTION ARE "PRIVATE GROUP SELF-INSURERS". A
COUNTY SELF-INSURANCE PLAN ESTABLISHED UNDER ARTICLE FIVE OF THIS CHAP-
TER IS NOT ITSELF A PUBLIC GROUP SELF-INSURER, AND IS NOT ITSELF SUBJECT
TO THE REQUIREMENTS OF THIS SECTION, BUT MAY JOIN A PUBLIC GROUP
SELF-INSURER AND, IF IT DOES SO, SHALL ASSUME ALL OF THE OBLIGATIONS OF
ITS PARTICIPANTS TO THE PUBLIC GROUP SELF-INSURER. NO ENTITY WHICH IS
NOT A MUNICIPAL CORPORATION AS DEFINED IN SECTION SIXTY-SIX OF THE
GENERAL CONSTRUCTION LAW, A COUNTY SELF-INSURANCE PLAN ESTABLISHED UNDER
ARTICLE FIVE OF THIS CHAPTER, OR A CONSORTIUM ESTABLISHED BY A BOARD OF
COOPERATIVE EDUCATIONAL SERVICES, MAY JOIN A PUBLIC GROUP SELF-INSURER
UNLESS IT MAY LEVY TAXES OR IS OTHERWISE DIRECTLY CAPABLE OF GENERATING
REVENUE IN THE EVENT OF A FUNDING DEFICIENCY WITHIN THE PUBLIC GROUP
SELF-INSURER, OR ITS OBLIGATIONS ARE GUARANTEED BY ANOTHER MEMBER WHICH
IS SUCH A MUNICIPAL CORPORATION. A PUBLIC GROUP SELF-INSURER SHALL
COMPLY WITH ALL OF THE REQUIREMENTS OF SUBDIVISION THREE-A OF THIS
SECTION; PROVIDED HOWEVER THAT NO PROOF OF FINANCIAL ABILITY TO PAY THE
COMPENSATION PROVIDED FOR BY THIS CHAPTER OR DEPOSIT OF SECURITIES SHALL
BE REQUIRED AND, IN LIEU THEREOF, THE LIABILITY OF THE PUBLIC GROUP
SELF-INSURER'S MEMBERS SHALL SERVE AS THE SECURITY REQUIRED UNDER PARA-
GRAPH TWO OF SUBDIVISION THREE-A OF THIS SECTION. THE CHAIR SHALL IMPLE-
MENT THE PROVISIONS OF THIS SUBDIVISION BY PROMULGATING RULES AND REGU-
LATIONS, WHICH SHALL INCLUDE PROVISIONS ESTABLISHING AN AGGREGATE
SECURITY REQUIREMENT, GUARANTEE FUND, OR OTHER MECHANISM TO PROVIDE
INTERIM FUNDING WHENEVER THE CHAIR SHALL DETERMINE THAT THE COMPENSATION
AND BENEFITS PROVIDED BY THIS CHAPTER MAY BE UNPAID BY REASON OF THE
DEFAULT OF THE PUBLIC GROUP SELF-INSURER, BUT NO SUCH RULES AND REGU-
LATIONS SHALL BE NECESSARY FOR ANY PROVISIONS OF THIS SUBDIVISION TO BE
EFFECTIVE.
(2) A PUBLIC GROUP SELF-INSURER AS DEFINED IN PARAGRAPH ONE OF THIS
SUBDIVISION MAY OFFER, AS PART OF THE AGREEMENT OR BY ENDORSEMENT,
DEDUCTIBLES OPTIONAL TO THE MEMBER FOR BENEFITS PAYABLE UNDER THE AGREE-
MENT, UPON A DETERMINATION BY THE CHAIR THAT THE PLAN IS SUPPORTED BY AN
ACTUARIAL ANALYSIS PREPARED BY AN INDEPENDENT, QUALIFIED ACTUARY WHO IS
S. 7864--A 5
A MEMBER OF THE CASUALTY ACTUARIAL SOCIETY THAT CLEARLY IDENTIFIES THE
ACTUARY'S INDICATED DEDUCTIBLE CREDIT AND RATE ASSUMPTIONS, AND SUBJECT
TO UNDERWRITING BY THE PUBLIC GROUP SELF-INSURER, CONSISTENT WITH THE
FOLLOWING STANDARDS OR FACTORS:
(A) CLAIMANTS' RIGHTS ARE PROPERLY PROTECTED AND CLAIMANTS' BENEFITS
ARE PAID WITHOUT REGARD TO ANY SUCH DEDUCTIBLE;
(B) APPROPRIATE PREMIUM REDUCTIONS REFLECT THE TYPE AND LEVEL OF ANY
DEDUCTIBLE APPROVED BY THE CHAIRMAN AND SELECTED BY THE MEMBER;
(C) PREMIUM REDUCTIONS FOR DEDUCTIBLES ARE DETERMINED BEFORE APPLICA-
TION OF ANY EXPERIENCE MODIFICATION, PREMIUM SURCHARGE, OR PREMIUM
DISCOUNT;
(D) RECOGNITION IS GIVEN TO MEMBER CHARACTERISTICS, INCLUDING SIZE,
FINANCIAL CAPABILITIES, NATURE OF ACTIVITIES, AND NUMBER OF EMPLOYEES;
(E) IF THE MEMBER SELECTS A DEDUCTIBLE, THE MEMBER IS LIABLE TO THE
PUBLIC GROUP SELF-INSURER FOR THE DEDUCTIBLE AMOUNT IN REGARD TO BENE-
FITS PAID FOR COMPENSABLE CLAIMS;
(F) THE PUBLIC GROUP SELF-INSURER PAYS ALL OF THE DEDUCTIBLE AMOUNT,
APPLICABLE TO A COMPENSABLE CLAIM, TO THE PERSON OR PROVIDER ENTITLED TO
BENEFITS AND REQUIRES THE MEMBER TO PAY TO IT IN ADVANCE AN AMOUNT ACTU-
ARIALLY DETERMINED TO BE SUFFICIENT TO PAY THE PORTION OF THE COMPEN-
SATION CLAIM THAT IS WITHIN THE DEDUCTIBLE AMOUNT AS THOSE PAYMENTS
BECOME DUE; PROVIDED THAT SUCH PERIODIC PAYMENTS SHALL BE PAID TO THE
PUBLIC GROUP SELF-INSURER IN INTERVALS OF NO GREATER OF SIX MONTHS; AND
(G) FAILURE TO REIMBURSE DEDUCTIBLE AMOUNTS BY THE MEMBER TO THE
PUBLIC GROUP SELF-INSURER IS TREATED UNDER THE COVERAGE AGREEMENT IN THE
SAME MANNER AS NONPAYMENT OF CONTRIBUTIONS.
(3) IF, IN THE DETERMINATION OF THE CHAIR, A PUBLIC GROUP SELF-INSURER
BECOMES INSOLVENT OR OTHERWISE DEFAULTS ON ITS OBLIGATIONS, THE INSOL-
VENT GROUP WILL REQUIRE EACH MEMBER AND EACH FORMER MEMBER TO PAY A
SUPPLEMENTAL ASSESSMENT IN AN AMOUNT SUFFICIENT TO MAKE THE PUBLIC GROUP
SELF-INSURER SOLVENT BASED UPON A FORMULA TO BE ESTABLISHED BY THE CHAIR
IN REGULATIONS WHICH CONSIDERS THE MEMBERS' ANNUAL CONTRIBUTIONS AND
LOSS EXPERIENCE; PROVIDED HOWEVER, NOTHING HEREIN SHALL PRECLUDE THE
CHAIR FROM DIRECTING THAT AN UNDERFUNDED PUBLIC GROUP SELF-INSURER LEVY
AN ASSESSMENT ON ITS MEMBERS AS PART OF A PLAN IMPLEMENTED PURSUANT TO
SUBPARAGRAPH (B) OF PARAGRAPH TWO OF SUBDIVISION THREE-A OF THIS
SECTION. AS USED IN THIS PARAGRAPH, INSOLVENT MEANS THE SUM OF THE
PUBLIC GROUP SELF-INSURERS' ASSETS BEING LESS THAN THE TOTAL COST OF ALL
OF THE PUBLIC GROUP SELF-INSURER'S ANTICIPATED WORKERS' COMPENSATION
LIABILITIES THAT WILL ACCRUE WITHIN THE SUCCEEDING SIX MONTHS. IF AN
ASSESSMENT IS NOT SUFFICIENT TO CURE THE INSOLVENCY OR DEFAULT, (I) EACH
MEMBER AND ANY FORMER MEMBER WILL BE LIABLE FOR THE REMAINING DEFICIT
BASED UPON A SUPPLEMENTAL ASSESSMENT FORMULA DETERMINED BY THE CHAIR;
AND (II) WHENEVER THE CHAIR SHALL DETERMINE THAT THE COMPENSATION AND
BENEFITS PROVIDED BY THIS CHAPTER MAY BE UNPAID BY REASON OF THE DEFAULT
OF A PUBLIC GROUP SELF-INSURER, THE CHAIR SHALL PAY SUCH COMPENSATION
AND BENEFITS FROM ADMINISTRATION EXPENSES AS PROVIDED IN SECTION ONE
HUNDRED FIFTY-ONE OF THIS CHAPTER UPON AUDIT AND WARRANT OF THE COMP-
TROLLER UPON VOUCHERS APPROVED BY THE CHAIR. SUCH PAYMENTS SHALL BE
CONSIDERED EXPENSES OF ADMINISTRATION. THE CHAIR SHALL BE REIMBURSED
THEREFOR FROM ANY MEMBER OF THE PUBLIC GROUP SELF-INSURER, FIRST PURSU-
ANT TO THE SUPPLEMENTAL ASSESSMENT FORMULA DETERMINED BY THE CHAIR.
S 4. The opening paragraph of section 3443 of the insurance law, as
added by chapter 924 of the laws of 1990, is amended to read as follows:
An insurer issuing a workers' compensation and employers' liability
insurance policy, [and a group self-insurer for municipal corporations
S. 7864--A 6
as defined in subdivision three-a of section fifty of the workers'
compensation law,] may offer, as part of the policy or by endorsement,
deductibles optional to the policyholder for benefits payable under the
policy, subject to approval by the superintendent and subject to under-
writing by the insurer, consistent with the following standards or
factors:
S 5. This act shall take effect immediately.
