Sec. 31-349g. Method of assessing all employers for liabilities of Second Injury Fund. Reporting. Audits. Insurance companies deemed collection agents. (a) For purposes of this section:
(1) "Insured employer" means an employer who insures its risks incurred under this chapter with an insurance company authorized to issue workers' compensation policies in this state by the Insurance Department, and includes any member of a workers' compensation pool administered by an interlocal risk management agency, and on and after January 1, 2005, an employer mutual association organized prior to June 6, 1996, with a membership composed exclusively of health care providers and whose premium base is derived entirely from health care organizations.
(2) "Self-insured employer" means an employer who is approved to self-insure its liabilities under this chapter by the chairman of the Workers' Compensation Commission. For the period commencing October 1, 2004, and ending December 31, 2004, "self-insured employer" includes an employer mutual association organized prior to June 6, 1996, with a membership composed exclusively of health care providers and whose premium base is derived entirely from health care organizations.
(3) "Paid losses" means the total indemnity, medical and any other expenses, prior to any credits or deductions being taken, paid on or after January 1, 2006, by or on behalf of an employer to or on behalf of an injured employee. Paid losses includes all legal expenses paid for the benefit of an injured worker in accordance with this chapter and any loss payments within deductible limits on workers' compensation policies.
(4) "Second Injury Fund surcharge base" means direct written premium on policies prior to application of any deductible policy premium credits.
(5) "Direct written premium" includes all endorsements, retrospective adjustments, audits and minimum premium and shall be determined without regard to when or whether the premium on the policy is paid.
(6) "Second Injury Fund surcharge" for insurance companies, interlocal risk management agencies and self-insurance groups means the rate set by the custodian multiplied by the Second Injury Fund surcharge base.
(7) "Self-insurance group" means a not-for-profit association consisting of fifteen or more employers who are engaged in the same or similar type of business, who are members of the same bona fide trade or professional association which has been in existence for not less than five years, and who enter into agreements to pool their liabilities for workers' compensation benefits and employers' liability.
(b) The State Treasurer, in consultation with the Insurance Commissioner, may adopt regulations, in accordance with the provisions of chapter 54, regarding the method of assessing all employers for the liabilities of the Second Injury Fund. The liabilities shall be allocated between self-insured employers and insured employers based on a percentage of paid losses for the preceding calendar year for each group. No credits shall be taken against paid losses, except voided checks in connection with expenses paid under this chapter previously reported as a paid loss, recoveries from third party tortfeasors, reimbursement granted pursuant to section 31-299b and Second Injury Fund reimbursements. The method of assessment for self-insured employers shall be based on paid losses. The method of assessment for insured employers, for policies with effective dates before July 1, 2006, shall be based on the standard premium, and for policies with effective dates on or after July 1, 2006, shall be based on the Second Injury Fund surcharge base. In adopting regulations under this section, the State Treasurer shall consider their effect upon (1) the cost of doing business in this state, (2) the overall cost of the workers' compensation system, (3) the effect of the regulations on insurers, insureds and self-insured employers, and (4) the financial condition and liabilities of the fund.
(c) An employer mutual association organized prior to June 6, 1996, with a membership composed exclusively of health care providers and whose premium base is derived entirely from health care organizations may make payments without penalty or interest over a five-year period for any outstanding assessment due from the association for the period commencing January 1, 1996, and ending December 31, 2004.
(d) (1) For insured employers and self-insurance groups, the Second Injury Fund surcharge base shall initially be reported to the fund in the quarter of the effective date of the policy, regardless of when the policy is billed by the insurance carrier or self-insurance group or paid by the policyholder or member of a self-insurance group. All endorsements, retrospective adjustments and audits shall be reported in the quarter processed by the insurance carrier or group self-insured employer.
(2) The custodian of the fund shall conduct an audit or periodic audits of any self-insured employer, group self-insured employer, insured employer or insurance company acting as collection agent of the Second Injury Fund relative to any information or payment required by the custodian. The employer and insurer shall provide all necessary documents and information in relation to an audit by the custodian in a manner prescribed by the Treasurer. The period of review of an audit shall be not more than three years, except that when the date of the previous audit is less than three years prior to such audit, the period of review shall be to the date of such prior audit. If the audit determines repeated errors or underreporting by an employer or an insurer acting as collection agent of the Second Injury Fund, the fund reserves the right to audit an additional two-year review period. Upon the determination of the Treasurer or the Treasurer’s agents, as a result of an audit, that an employer or an insurer acting as collection agent of the Second Injury Fund has not properly reported to the Second Injury Fund and, as a result, has underpaid the assessment or surcharge, the employer or the insurer acting as collection agent of the Second Injury Fund, upon notice from the Treasurer or the Treasurer’s agent, shall pay the full amount of the underpaid assessment or surcharge, along with interest and any penalty due not later than thirty days after such notice.
(e) For purposes of collection of the Second Injury Fund surcharge from insureds and payment of such surcharge to the Second Injury Fund, insurance companies shall be deemed to be collection agents of the Second Injury Fund. The insured employer is liable for payment of the surcharge, and the insurance company shall collect such payment and remit it to the Second Injury Fund in accordance with section 31-354. Insurance companies shall be subject to the audit provisions of this section and shall be subject to the penalty and interest provisions of this section for failure to remit the surcharge to the Second Injury Fund.
(P.A. 95-277, S. 14, 19; P.A. 96-242, S. 5, 10; P.A. 04-229, S. 1; P.A. 05-199, S. 8.)
History: P.A. 95-277 effective July 1, 1995; P.A. 96-242 made technical change correcting the references to the State Treasurer and included certain employer mutual associations in the definition of "self-insured employers" after January 1, 1996, effective June 6, 1996; P.A. 04-229 designated existing provisions as Subsecs. (a) and (c), making technical and conforming changes therein, added Subsec. (b) re certain employer mutual associations organized prior to June 6, 1996, and added provision re such associations in Subsec. (c); P.A. 05-199 amended Subsec. (a) to redefine "insured employer" and "self-insured employer" and to define "paid losses", "Second Injury Fund surcharge base", "direct written premium", "Second Injury Fund surcharge" and "self-insurance group", redesignated existing provisions of Subsec. (a) as new Subsec. (b) and amended same by making adoption of regulations permissive, specifying credits to be taken against paid losses, and basing fund assessments for self-insured employers on percentage of paid losses and assessment for insured employers for policies with effective dates before July 1, 2006, on standard premium and for policies with effective dates on or after July 1, 2006, on Second Injury Fund surcharge base, redesignated existing Subsec. (b) as new Subsec. (c), deleted former Subsec. (c) re definitions, added Subsec. (d) re reporting of Second Injury Fund surcharge base, auditing of employers and insurance companies by fund custodian, and payment of interest and penalties for underpaid assessment and added Subsec. (e) re insurance companies to be deemed collection agents of fund, effective July 1, 2006.