State of Connecticut Workers' Compensation Commission, John A. Mastropietro, Chairman
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Sec. 31-354

Workers’ Compensation Act as amended to January 1, 2013

Second Injury Fund contributions. Duties and powers of State Treasurer.

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Sec. 31-354. Second Injury Fund contributions. Duties and powers of State Treasurer. (a) There shall be a fund to be known as the Second Injury Fund. Each employer, other than the state, shall, within thirty days after notice given by the State Treasurer, pay to the State Treasurer for the use of the state a sum in payment of his liability under this chapter which shall be calculated in accordance with the Second Injury Fund surcharge base, as defined in section 31-349g, and shall be assessed in accordance with subsection (f) of section 31-349, sections 31-349g, 31-349h and 31-349i, this section, section 31-354b and sections 8 and 9 of public act 96-242*. Such sum shall be an amount sufficient to (1) pay the debt service on state revenue bond obligations authorized to be issued under and for the purposes set forth in section 31-354b including reserve and covenant coverage requirements, (2) provide for costs and expenses of operating the Second Injury Fund, and (3) pay Second Injury Fund stipulations on claims settled by the custodian or other benefits payable out of the Second Injury Fund and not funded through state revenue bond obligations and shall be determined in accordance with the regulations adopted pursuant to the provisions of section 31-349g. The custodian shall establish a factor for the annual surcharge that caps such surcharge for the fiscal years ending June 30, 1996, 1997 and 1998. In determining such factor the custodian shall consider the funding mechanism authorized by subsection (f) of section 31-349, sections 31-349g, 31-349h and 31-349i, this section, section 31-354b and sections 8 and 9 of public act 96-242*, recognize that an acceptable level of employer assessment is important to the vitality of the economy of the state and nevertheless shall assure provision of services to injured workers that enhances their ability to return to work and improve their quality of life. In any event, such factor shall not exceed, with respect to insured employers, a rate of fifteen per cent on the Second Injury Fund surcharge base with respect to workers’ compensation and employers’ liability policies and, with respect to self-insured employers, a comparable percentage limitation representing their pro rata share of any assessment. Any employer or any insurance company acting as collection agent for the custodian of the Second Injury Fund who fails to pay in accordance with such regulations shall pay a penalty to the State Treasurer of fifteen per cent on the unpaid assessment or surcharge or fifty dollars, whichever is greater. Interest at the rate of six per cent per annum shall be charged on any amounts owed on assessment audits or surcharge audits. For self-insured employers interest shall accrue thirty days after notice from the Second Injury Fund of the unpaid audit assessment. For insurance companies, the interest shall accrue from the date of the notice of audit errors or deficiencies as determined by the date postmarked by the United States Postal Service. The State Treasurer shall notify each employer of the penalty or interest provision with the notice of assessment. Any partial payments made to the fund shall be first applied to any unpaid penalty, then to any unpaid interest and the remainder, if any, to the unpaid assessment or surcharge. Interest or penalties shall be applied if assessment or surcharge reports or payments are postmarked by the United States Postal Service after the designated due date. The sums received shall be accounted for separately and apart from all other state moneys and the faith and credit of the state of Connecticut is pledged for their safekeeping. The State Treasurer shall be the custodian of the fund and all disbursements from the fund shall be made by the Treasurer or the Treasurer’s deputies. The moneys of the fund shall be invested by the Treasurer in accordance with applicable law and section 8 of public act 96-242*. Interest, income and dividends from the investments shall be credited to the fund. Each employer, each private insurance carrier acting on behalf of any employer and each interlocal risk management agency acting on behalf of any employer shall annually, on or before April first, report to the State Treasurer, in the form prescribed by the State Treasurer, the amount of money expended by or on behalf of the employer in payments for the preceding calendar year. Each private insurance carrier, each self-insurance group and each interlocal risk management agency shall submit annually, on or before April first, to the State Treasurer, in the form prescribed by the State Treasurer, a report of the total Second Injury Fund surcharge base collected in the preceding calendar year and a report of the projected total Second Injury Fund surcharge base for the current calendar year. The fund shall be used to provide the benefits set forth in section 31-306 for adjustments in the compensation rate and payment of certain death benefits, in section 31-307b for adjustments where there are relapses after a return to work, in section 31-307c for totally disabled persons injured prior to October 1, 1953, in section 31-349 for disabled or handicapped employees and in section 31-355 for the payment of benefits due injured employees whose employers or insurance carriers have failed to pay the compensation, and medical expenses required by this chapter, or any other compensation payable from the fund as may be required by any provision contained in this chapter or any other statute and to reimburse employers or insurance carriers for payments made under subsection (b) of section 31-307a. The assessment required by this section is a condition of doing business in this state and failure to pay the assessment, when due, shall result in the denial of the privilege of doing business in this state or to self-insure under section 31-284. Any administrative or other costs or expenses incurred by the State Treasurer in connection with carrying out the provisions of this part, including the hiring of necessary employees, shall be paid from the fund. The State Treasurer may adopt regulations, in accordance with the provisions of chapter 54, prescribing the practices, policies and procedures to be followed in the administration of the Second Injury Fund.

(b) The State Treasurer shall establish within the Second Injury Fund three accounts to be known as the operating account, the settlement account and the finance account which accounts shall be held separate and apart from each other. The operating account shall cover the costs and expenses to the state of operating the Second Injury Fund. The settlement account shall cover actual disbursement of the settled claims whether by one-time full payments or by payments over a period of time. The finance account shall contain such funds and be operated in the manner provided in section 31-354b.

(1949 Rev., S. 7494; 1949, 1951, S. 3056d; 1958 Rev., S. 31-221; 1959, P.A. 580, S. 12; 1961, P.A. 491, S. 80; 1967, P.A. 842, S. 21; 1969, P.A. 696, S. 15; 1971, P.A. 351, S. 1; 1972, P.A. 136, S. 1; P.A. 77-119, S. 1; 77-554, S. 2; P.A. 79-376, S. 51; P.A. 81-469, S. 6, 8; P.A. 82-472, S. 110, 183; P.A. 85-189, S. 5; P.A. 86-21; 86-25; P.A. 87-277, S, 1, 4; 87-589, S. 58, 87; P.A. 88-29, S. 1, 2; P.A. 89-68, S. 2; P.A. 90-230, S. 54, 101; 90-311, S. 2, 3; P.A. 91-32, S. 37, 38, 41; 91-339, S. 38, 55; P.A. 93-228, S. 26, 35; 93-429, S. 3, 7; P.A. 95-277, S. 15, 16, 19; P.A. 96-242, S. 6, 10; P.A. 05-199, S. 10; P.A. 10-11, S. 1.)

*Note: Sections 8 and 9 of public act 96-242 are special in nature and therefore have not been codified but remain in full force and effect according to their terms.

History: 1959 act created second injury and compensation assurance fund and transferred assets of second injury fund to it on October 1, 1959; 1961 act entirely replaced previous provisions; 1967 act required that fund be maintained at $100,000 level rather than $50,000 level; 1969 act required self-insurers to pay 1.5% rather than 1% of their liability payments for preceding year, increased level at which to be maintained to $250,000, specified uses to which fund is to be put and required payment of assessment as a condition of doing business in state; 1971 act made provisions applicable to mutual insurance companies; 1972 act required payment of assessment within 30 days after notice by treasurer rather than “annually on or before July first”, increased payments to not more than 2% of preceding year’s liability payments and replaced requirements re $250,000 level to be maintained in fund with provision allowing treasurer to make assessments to cover expenditure and maintain fund at $500,000 level; P.A. 77-119 increased assessment rate to 3.5%; P.A. 77-554 specified that funds be used for adjustments in compensation rate; P.A. 79-376 replaced “workmen’s compensation” with “workers’ compensation”; P.A. 81-469 provided that the amount of money expended by a carrier in payment of the state’s liabilities under this chapter shall be exempted when calculating the payment due under section; P.A. 82-472 made a technical correction; P.A. 85-189 provided that each employer, other than the state and certain municipalities, is liable for assessments levied by the state treasurer to fund the second injury and compensation assurance fund; P.A. 86-21 provided that assessments shall be levied by the state treasurer against employers on whose behalf the second injury fund has made payments pursuant to Sec. 31-355; P.A. 86-25 increased the maximum assessment from 3.5% to 5% and increased the fund’s minimum reserve from $500,000 to $1,000,000; P.A. 87-277 added provision re payment from fund of costs or expenses incurred by treasurer in carrying out provisions of part E of chapter 568; P.A. 87-589 changed effective date of P.A. 87-277 from July 1, 1988, to July 1, 1987; P.A. 88-29 added an interest penalty to be imposed on any employer who fails to make payment of an assessment when due to the second injury fund under the Workers’ Compensation Act; P.A. 89-68 provided that the fund shall be used to provide the benefits set forth in Sec. 31-306(c); P.A. 90-230 corrected an omission; P.A. 90-311 removed the exemption from payment for municipalities participating in interlocal risk management agencies, effective July 1, 1991; P.A. 91-32 made technical changes; P.A. 91-339 added provisions re payments to the fund by the treasurer on behalf of the state and deleted reference to dependency allowance; P.A. 93-228 raised the amount of money to be contributed to the second injury fund by the state treasurer on behalf of the state from 5% of expenditures to the total amount of expenditures, effective July 1, 1993; P.A. 93-429 authorized the state treasurer to adopt regulations re administrative practices, policies and procedures for the second injury fund, effective July 1, 1993; P.A. 95-277 added a requirement that each private insurance carrier and each interlocal risk management agency annually submit to the Treasurer a report of the total standard earned premium collected in the preceding calendar year, effective June 29, 1995, and replaced provisions detailing funding of Second Injury Fund by employer contributions with provision authorizing Treasurer to develop such policies re determination of employers’ contributions through regulations, effective January 1, 1996; P.A. 96-242 made existing language Subsec. (a) and made technical change concerning the reference to the State Treasurer, added provisions on the special assessment premium surcharge, specified April first as annual report deadline and required report to include projected total standard earned premium and added Subsec. (b) requiring State Treasurer to establish three accounts within the Second Injury Fund, effective June 6, 1996; P.A. 05-199 amended Subsec. (a) by substituting “calculated in accordance with the Second Injury Fund surcharge base” for “the special assessment premium surcharge” and “Second Injury Fund surcharge base” for “standard premiums”, subjecting insurance companies acting as collection agents for fund to penalty for failure to pay assessment, changing penalty to 15% or minimum of $50 on unpaid assessment or surcharge, and interest at 6% per annum on amounts owed on assessment or surcharge audits, to accrue 30 days after notice of unpaid audit assessment from fund for self-insured employers and from date of notice of audit errors or deficiencies for insurance companies, requiring Treasurer to notify employers of interest provision with notice of assessment, deleting requirement that State Treasurer, upon levy of assessment, pay to fund sum not to exceed total amount of money expended on behalf of state employees during period following last assessment, providing for application of partial payments, requiring each self-insurance group to submit annual report to Treasurer of projected total Second Injury Fund surcharge base for current calendar year and making technical changes, effective July 1, 2006; P.A. 10-11 amended Subsec. (a) by deleting “or a minimum of fifty dollars” and adding “or fifty dollars, whichever is greater” re penalty for failure to pay in accordance with regulations, effective May 5, 2010.

See Sec. 31-289 re deposit of certain fines and penalties in Second Injury and Compensation Assurance Fund.

Cited. 150 C. 156; 159 C. 53. “Second injury fund”, legislative history and purpose discussed. 166 C. 352. Cited. 171 C. 577. Cited. 174 C. 181. Cited. 210 C. 626. Cited. 212 C. 427. Cited. 226 C. 569.

Cited. 37 CA 835. Cited. 46 CA 346.

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State of Connecticut Workers' Compensation Commission, John A. Mastropietro, Chairman
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