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