Senate Bill S9023

                                
 
BILL NUMBER: S9023

SPONSOR: AKSHAR
 
TITLE OF BILL:  An act to amend the workers' compensation law, in
relation to reimbursing certain self-insured groups for which the chair
of the workers' compensation board has approved a deficit assessment
plan

 
PURPOSE OF THE BILL:

TO REIMBURSE CERTAIN SELF-INSURED GROUPS FOR WHICH THE CHAIR OF THE
WORKERS' COMPENSATION BOARD HAD APPROVED A DEFICIT ASSESSMENT PLAN.

 
SUMMARY OF PROVISIONS:

SECTION 1 OF THIS BILL AMENDS PARAGRAPH F OF SUBDIVISION 5 OF SECTION 50
WORKERS' COMPENSATION LAW BY ADDING: PROVIDED THAT THE CHAIR SHALL REIM-
BURSE TO ANY INACTIVE SELF-INSURED GROUP FOR WHICH THE CHAIR HAS
APPROVED A DEFICIT ASSESSMENT PLAN THE FULL AMOUNT OF ASSESSMENTS
IMPOSED ON SUCH INACTIVE SELF-INSURED GROUP RELATED TO THE BOARD'S
ADMINISTRATIVE EXPENSES INCURRED PURSUANT TO THIS PARAGRAPH IN ACCORD-
              

ANCE WITH A REIMBURSEMENT PLAN APPROVED BY THE CHAIR, WITH SUCH
REIMBURSEMENT TO BE MADE BY JANUARY FIRST, TWO THOUSAND NINETEEN FOR ANY
SUCH GROUP WITH A DEFICIT ASSESSMENT PLAN APPROVED PRIOR TO JANUARY
FIRST, TWO THOUSAND EIGHTEEN, AND WITHIN ONE YEAR OF THE BOARD'S
APPROVAL FOR A GROUP WHOSE DEFICIT ASSESSMENT PLAN WAS APPROVED ON OR
AFTER JANUARY FIRST, TWO THOUSAND EIGHTEEN.

SECTION 2 OF THIS BILL STATES THE EFFECTIVE DATE.

 
JUSTIFICATION:

IN 2008, THE STATE WORKERS' COMPENSATION BOARD MADE THE DECISION TO USE
ITS WCL § 50-5 ASSESSMENT AUTHORITY TO CHARGE SOLVENT SELF-INSURED ENTI-
TIES (BOTH EMPLOYERS AND TRUSTS) FOR THE COST OF CLAIMS RELATED TO
DEFAULTED TRUSTS.

IMPOSITION OF THIS SIGNIFICANT BUT AT THE TIME UNKNOWN LIABILITY ON
SELF-INSURED TRUSTS HAD THE RESULT OF DRIVING THEIR MEMBERS TO OTHER
SOURCES OF WC COVERAGE (CARRIERS OR SIF), AND A MAJORITY OF TRUSTS
STOPPED WRITING COVERAGE AFTER THE 2008 POLICY YEAR.

THE WCB THEN SOUGHT, AND THE LEGISLATURE PASSED, STATUTORY CLARIFICATION
OF THE WCB'S ABILITY TO USE § 50-5 IN THIS MANNER. THAT LEGISLATION ALSO
REQUIRED THAT THESE EXTRA § 50-5 ASSESSMENTS WOULD BE CREDITED AGAINST
FUTURE § 50-5 PAYMENTS, ONCE AND IF THE WCB WAS SUCCESSFUL IN GENERATING
REVENUES FROM THE MEMBERS OF DEFAULTED TRUSTS. NOW THAT THIS IS HAPPEN-
ING, SELF-INSURED ENTITIES ARE SLOWLY BEING "REIMBURSED," BUT ONLY IN
PROPORTION TO THEIR CURRENT § 50-5 ASSESSMENTS, NOT IN PROPORTION TO THE
EXCESS ASSESSMENTS PAID IN PRIOR YEARS.

THESE TRUSTS, REGARDLESS OF THEIR FINANCIAL STATUS OR RESERVE LEVELS IN
DECEMBER 2008, ALL FACE POTENTIAL DEFAULTS, AS THEY REMAINED SUBJECT TO
OPERATING COSTS AND SIGNIFICANT STATE ASSESSMENTS (SINCE REPEALED)
DURING THE LONG PERIOD OF CLAIMS RUN-OFF, WHILE GENERATING NO ADDITIONAL
PREMIUM REVENUE.

SEVERAL THOUSAND MOSTLY SMALL BUSINESSES REMAIN SADDLED WITH POTENTIAL
FUTURE LIABILITIES RELATED TO THESE TRUSTS - LIABILITY THAT CAN BE
ADDRESSED ONCE THEIR FORMER TRUSTS ACHIEVE FULL FUNDING AND CLOSE EXIST-
ING OPEN CLAIMS.

TO ADDRESS THESE CIRCUMSTANCES, A NUMBER OF TRUSTS HAVE IMPLEMENTED
DEFICIT ASSESSMENT PLANS, APPROVED BY THE WCB, BY WHICH THEY ARE SEEKING
ADDITIONAL PAYMENTS FROM BUSINESSES THAT HAD FORMERLY PURCHASED COVERAGE
FROM THE TRUST.

AS THESE TRUSTS ARE WORKING TO RE-ESTABLISH "FULL FUNDING" OF FUTURE
LIABILITIES, THIS LEGISLATION WOULD EXPEDITE FULL REIMBURSEMENT OF THESE
EXCESS § 50-5 ASSESSMENTS TO TRUSTS THAT ARE IMPLEMENTING WCB APPROVED
DEFICIT ASSESSMENT PLANS.

THIS LEGISLATION CAN BE FUNDED USING A SHARE OF WCB EXCESS FUNDS OR
OTHER WCB FUNDING MECHANISMS.

 
PRIOR LEGISLATIVE HISTORY:

NONE.

 
FISCAL IMPLICATIONS:

TO BE DETERMINED.

 
EFFECTIVE DATE:
THE BILL WOULD TAKE EFFECT IMMEDIATELY.