GENERAL ASSEMBLY OF NORTH CAROLINA
HOUSE BILL 988
Short Title: WC/Fund for Misclassified Workers.
Representative L. Hall (Primary Sponsor).
For a complete list of Sponsors, refer to the North Carolina General Assembly Web Site.
April 18, 2013
A BILL TO BE ENTITLED
AN ACT establishing a reserve Fund FOR THE BENEFIT OF NORTH CAROLINA WORKERS INJURED ON THE JOB ELIGIBLE FOR WORKERS' COMPENSATION BENEFITS BUT DENIED THEM THROUGH MISCLASSIFICATION OF EMPLOYMENT STATUS OR FAILURE OF THE EMPLOYER TO MAINTAIN SUCH COVERAGE WHEN REQUIRED.
The General Assembly of North Carolina enacts:
SECTION 1. Article 1 of Chapter 97 of the General Statutes is amended by adding a new section to read:
"§ 97-40.2. Uninsured Employers' Fund; administration; maintenance; disbursement; penalties.
(a) There is established within the North Carolina Industrial Commission a fund in the General Fund to be known as the Uninsured Employers' Fund (Fund). Monies in the Fund shall provide for the payment of awards against uninsured defaulting employers who fail to provide compensation to employees or their beneficiaries in accordance with the provisions of this Chapter. The Fund shall be administered, maintained, and disbursed by the Chair of the North Carolina Industrial Commission (Chair) in accordance with the provisions of this section.
(b) For the purpose of administering and maintaining this Fund:
(1) The North Carolina Commissioner of Insurance (Commissioner) shall be responsible for administering the collection of surcharges and the payment of those funds received in accordance with the provisions of this section and all regulations adopted under this section. The annual surcharge imposed under this section shall apply to all workers' compensation and employers' liability insurance policies written or renewed or, in the case of self-insured employers, to coverage provided on or after January 1, 2014. However, the surcharge shall not apply to any reinsurance or retrocessional transaction; to the State or to any local political subdivision of the State that acts as a self-insured employer; or to any workers' compensation endorsement required pursuant to any other exclusions. If the Commissioner of Insurance determines, pursuant to subdivision (2) of this subsection, that the fund will have to its credit a sum in excess of five million dollars ($5,000,000) at the end of any calendar year, the annual surcharge shall be suspended for the next following year and its collection not resumed until the calendar year immediately following any calendar year in which the balance in the Fund is reduced below five million dollars ($5,000,000).
(2) For the calendar year 2014, the total amount of the surcharge levied by the Commissioner of Insurance shall be that necessary to yield a balance of the Fund of five million dollars ($5,000,000). Beginning September 1, 2013, and annually thereafter, the Commissioner of Insurance shall estimate the amount of benefits that have been paid and will be paid from the Fund during that calendar year and shall calculate in consultation with the Chair of the Industrial Commission the total amount of the annual surcharge for the Fund to be levied during the next following calendar year upon all workers' compensation and employers' liability insurance policyholders and self-insured employers pursuant to subdivision (1) of this subsection. The total amount of the annual surcharge shall equal one hundred fifty percent (150%) of the funds estimated by the Chair of the Industrial Commission to be payable from the Fund during the calendar year preceding the year during which the annual surcharge will be imposed.
(3) The total amount of the annual surcharge calculated pursuant to subdivision (2) of this subsection shall be added to the aggregate annual surcharge amount to be levied upon and apportioned among all workers' compensation and employers' liability policyholders and self-insured employers and be levied and apportioned in the same manner as the annual surcharge for the Second Injury Fund as provided in G.S. 97-40.1. The surcharge to be collected from policyholders and self-insured employers pursuant to this section shall, however, be stated separately on the policy or billing statement, and the amount of the surcharge as applied pursuant to this section shall not be subject to reduction for special adjustment and supplemental benefits paid or payable under this Chapter.
(4) All funds collected pursuant to this section shall be deposited in the Fund. Collection of the annual surcharge shall be under the authority of the North Carolina Commissioner of Insurance.
(5) In any fiscal year during which benefit payments are made from the Fund, the Chair of the Industrial Commission shall apply an amount equal to one hundred dollars ($100.00) for each employee to whom such benefits have been paid from the Fund toward the expenses of the Commission arising from the administration of those benefit payments and the Fund. However, the total amount withdrawn from the Fund to cover administrative expenses shall not exceed the sum of fifty thousand dollars ($50,000) during any fiscal year.
For the purposes of this subsection, the term "policyholder" means a holder of a workers' compensation and employers' liability insurance policy issued by an insurer that is a domestic, foreign, or alien mutual association or stock company writing workers' compensation or employers' liability insurance on risks located in this State and subject to premium taxes. The term "self-insured employer" means an employer that self-insures for workers' compensation or employers' liability insurance.
(c) The Chair, upon rendering a decision with respect to any claim for compensation that the employer is liable for but has failed to secure the payment of compensation with respect to a claim, shall impose a penalty of one thousand dollars ($1,000) against the employer and direct its payment into the Fund in connection with each such claim. The Chair shall also impose an additional assessment of fifteen percent (15%) of the award or awards made in each claim. This additional assessment shall not exceed, however, the sum of five thousand dollars ($5,000) on any one claim and shall be paid into the Fund. If the employer fails to pay these assessments into the Fund within 10 days after the date of mailing of notice to the employer, the failure shall constitute a default in payment of compensation due pursuant to the provisions of this Chapter, and judgment therefor shall be entered in accordance with this Chapter.
All sums collected from an uninsured defaulting employer with respect to any claim for compensation referred to in this section but not payable from the Fund, whether such collection is made prior or subsequent to entry of judgment against the employer, shall be deemed in payment of and applicable first in satisfaction of any compensation and benefits due from the employer with respect to the claim and security demand, if any, in connection therewith, and only when the obligations are satisfied in full shall the balance of said sums collected, if any, be deemed payment in satisfaction of and applicable to the assessments above prescribed in this section.
All sums recovered from uninsured defaulting employers on judgments entered for failure to pay assessments as hereinafter provided and for failure to pay compensation and benefits which were paid from the Fund shall upon recovery be paid into the Fund.
(d) In any case in which a claim for compensation is filed pursuant to the provisions of this Chapter, and the employer has failed to secure the payment of compensation and to make payment of compensation according to the terms of any award within 45 days thereafter and fails or refuses to deposit with the Chair within 10 days after demand, the commuted or estimated value of the compensation payable under the award as security for prompt and convenient payment of compensation periodically as it accrues, then, unless a notice of appeal has been timely filed, the award shall be payable out of the Fund.
(e) Benefit payments from the Fund may include compensation for reasonable medical expenses covered by this Chapter and compensation for temporary disability.
(f) Benefit payments from the Fund shall not include any compensation not included in the award or judgment upon which a claim against the Fund is made.
(g) Temporary disability benefits paid from the Fund shall be offset or reduced by an amount equal to the amount of disability benefits received by the claimant pursuant to the federal Old-Age, Survivors' and Disability Insurance Act, 42 U.S.C. § 401, et seq., amended.
(h) Benefits shall be paid to a claimant from the Fund only if the claimant (i) was, at the time of the injury or death, an employee performing service for an employer such that he or she would be eligible for benefits but for the absences of provision of insurance coverage by the employer and (ii) did not recover full compensation for reasonable medical expenses and temporary disability benefits from the uninsured defaulting employer.
(i) The Chair of the Commission, in any case in which an award of compensation payable by an uninsured employer or an assessment has been ordered, shall file the following with the clerk of the superior court:
(1) A statement containing the findings of fact, conclusions of law, and the award and judgment of the judge making the award, or
(2) A certified copy of the Commission's order imposing, and the demand for payment of, the assessment, and the filing of that statement or order, as the case may be, shall have the same effect and may be collected and docketed in the same manner as judgments rendered in causes tried in the superior court. The court shall vacate or modify the judgment to conform to any later award or decision by any authorized officer upon presentation of a statement thereof as provided for in this subsection.
The award may be compromised by the Chair of the Commission in that the Chair's discretion may best serve the interest of the persons entitled to receive the compensation or benefits.
(j) After an award has been entered against an employer for compensation under any provision of this Chapter, and if the Chair of the Commission has filed an order for payment of compensation and assessments with the clerk of the superior court as a result of the employer's failure to provide lawful compensation, the claimant may apply to the Chair of the Industrial Commission for compensation from the Fund in accordance with the procedures established by administrative rule.
(k) The Chair of the Commission is charged with the conservation of the assets of the Fund. Notwithstanding the provisions of any other section of this act, no payments shall be made from the Fund except upon application to and approval by the Chair. Review of any decision by the Commissioner shall be in accordance with the Administrative Procedures Act. The Chair may adopt rules for the review of claims against the Fund and hire and reimburse medical and other expert witnesses that are necessary to properly conserve and defend the Fund. In the event of the appeal of a decision made by the Chair regarding claims against the Fund, the Chair shall defend the Fund. The Chair may also employ such employees as may be required to maintain and conserve the Fund and may also employ legal counsel to represent the Fund and conduct investigations on behalf of the Fund.
(l) To the extent of the compensation and benefits paid or payable to an employee or the employee's dependents from the Uninsured Employers' Fund, the Fund, by subrogation, shall be entitled to all the rights, powers, and benefits of the employee or the employee's dependents against the employer arising under law and in any case shall have the same rights as the employer with respect to any rights to said claim.
(m) Payments to applicants from the Fund shall be authorized by the Chair of the Commission and approved by the State Treasurer.
(n) The Chair of the Industrial Commission may adopt rules necessary for the processing and payment of compensation out of the Fund in accordance with Chapter 150B of the General Statutes to establish and administer an application and review process for claims made against the Fund.
(o) The liability of the State with respect to payment from the Fund of any compensation, benefits, expenses, or fees for disbursements properly chargeable against the Fund shall be limited to the assets in the Fund as exceed fifty thousand dollars ($50,000), and the Fund and the State shall not otherwise in any way or manner be liable for the making of any such payment.
(p) If an employer fails to provide compensation to an employee or the employee's beneficiaries as required by this Chapter, the employee, who has sustained a compensable injury or died as a result of the employee's employment, the employee's beneficiaries may bring an action against the employer to recover all or part of any damages and costs sustained by the employee for any injury or death which has been deemed compensable under this Chapter and for which the employee or the employee's estate has not received compensation from the Fund.
(q) The Commission shall use every available administrative means to ensure that benefit payments from the Fund are paid only to individuals who meet the eligibility requirements of this Chapter and that persons who are required to make payments pursuant to this Chapter have provided lawful compensation and paid any penalty, fine, or assessment imposed by law.
(r) The burden is upon the claimant to immediately notify in writing the Chair of the Commission of any increase or decrease in the claimant's income that may affect the claimant's eligibility for benefits payable from the Fund. Within 10 days after notice has been given to the claimant and the Industrial Commission, the Chair may modify or terminate an award payable from the Fund as conditions may require. Any payment to a claimant that is later determined by the Chair of the Commission to have been procured by fraud, mistake, or an unreported change in condition shall be recovered from the claimant and deposited in the Fund.
(s) The Chair of the Industrial Commission shall, on behalf of the Fund, exhaust all remedies at law against the uninsured delinquent employer of the claimant to collect the amount of any award to the claimant paid by the Fund.
(t) Nothing in this section is intended, nor may be deemed, to affect the obligations of insurance carriers or self-insured employers imposed by any other section of this Chapter."
SECTION 2. There is appropriated from the General Fund to the North Carolina Industrial Commission Uninsured Employers' Fund created by this act the sum of two million five hundred thousand dollars ($2,500,000) for the 2013-2014 fiscal year to serve as the initial installment and corpus of the Fund.
SECTION 3. Beginning January 1, 2014, the Chair of the North Carolina Industrial Commission shall annually submit an accounting of the Fund to the State Treasurer and to the Joint Legislative Commission on Governmental Operations. The report to the Legislative Commission shall include the following information:
(1) An estimate of the total amount of benefits paid from the Fund in the preceding calendar year; an estimate of the benefits that may be paid from the Fund in the current calendar year; a determination of the average cost to employers in the State, on a per employee basis, of providing benefits through the Fund; and
(2) A determination of the amount of money drawn from the Fund during the preceding calendar year for administrative purposes.
SECTION 4. This act becomes effective July 1, 2013.