Download This Bill in Microsoft Word format

Bill 1144

                    Current Status

Bill Number:                      1144
Type of Legislation:              General Bill GB
Introducing Body:                 Senate
Introduced Date:                  20000210
Primary Sponsor:                  Courtney
All Sponsors:                     Courtney, Saleeby and Land
Drafted Document Number:          l:\s-jud\bills\courtney\jud0091.ctc.doc
Residing Body:                    Senate
Current Committee:                Judiciary Committee 11 SJ
Subject:                          Workers' Compensation Self-Insurance 
                                  Guaranty Fund Act


                        History

Body    Date      Action Description                     Com     Leg Involved
______  ________  ______________________________________ _______ ____________
Senate  20000210  Introduced, read first time,           11 SJ
                  referred to Committee


              Versions of This Bill

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 6 TO TITLE 42, SO AS TO ENACT THE "WORKERS' COMPENSATION SELF-INSURANCE GUARANTY FUND ACT".

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. The 1976 Code is amended by adding:

Section 42-6-10. This chapter is known and may be cited as the 'South Carolina Workers' Compensation Self-Insurance Guaranty Fund Act'.

Section 42-6-20. The purpose of this chapter is to create the South Carolina Workers' Compensation Self-Insurance Guaranty Fund, to provide for the payment of covered claims compensable under the Workers' Compensation Act, to avoid unnecessary delays in the payment of claims, and to avoid financial loss to claimants because of the insolvency of a self-insurer.

Section 42-6-30. As used in this chapter:

(1) 'benefits' means all benefits and amounts payable under the South Carolina Workers' Compensation Act as defined in this title;

(2) 'commission' means the South Carolina Workers' Compensation Commission;

(3) 'covered claim' means an unpaid claim against an insolvent self-insurer that relates to an injury that is compensable under this title, provided that the insolvency follows the effective date of the guaranty fund;

(4) 'guaranty fund' means the South Carolina Workers' Compensation Self-Insurance Guaranty Fund;

(5) 'insolvent self-insurer' means a self-insurer as defined by this chapter which has been determined to be insolvent by the commission or a court of competent jurisdiction;

(6) 'member self-insurer' means a member of the South Carolina Workers' Compensation Self-Insurance Guaranty Fund;

(7) 'self-insured fund' means two or more employers who have agreed and who have been approved by the commission to pool their liabilities and directly pay compensation in the amount and manner and when due as provided by this title; and

(8) 'self-insurer' is an individual employer who has been approved by the commission to directly pay compensation in the amount and manner and when due as provided by this title, or is two or more employers who have agreed and who have been approved by the commission to pool their liabilities and directly pay compensation in the amount and manner and when due as provided by this title.

Section 42-6-40. There is hereby created a nonprofit unincorporated legal entity to be known as the South Carolina Workers' Compensation Self-Insurance Guaranty Fund. All self-insurers, except those exempt under R67-1516 from providing a bond or other security, shall be and remain members of the guaranty fund as a condition of their authority under Section 42-5-20 to self-insure. The guaranty fund must perform its function under a plan of operation established and approved under Section 42-6-70, and shall exercise its powers through a board of directors established under Section 42-6-60.

Section 42-6-50. (A) The guaranty fund shall:

(1) be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within thirty days after the determination of insolvency. In no event shall the guaranty fund be obligated to pay a claim in an amount in excess of the obligation of the insolvent self-insurer;

(2) be considered the self-insurer to the extent of its obligations for covered claims, and to this extent shall have all the rights, duties, and obligations of the insolvent self-insurer had the self-insurer not become insolvent;

(3) assess member self-insurers amounts necessary to pay the obligations and expenses of the guaranty fund under this chapter. The assessments of each member self-insurer shall be one and one-quarter percent of the gross paid compensation and medical expenses of the member self-insurer during the member self-insurer's last fiscal year. The one and one-quarter percent assessment must be collected annually by the guaranty fund until the sum of five million dollars is collected. At that time, the assessment must be suspended except for subsequent initial assessments of new member self-insurers who must be assessed for a period and amount to be determined by the plan of operation. If the maximum assessment, together with the other assets of the guaranty fund, does not provide in any one year an amount sufficient to make all necessary payments, the funds available must be paid as directed by the commission, and any unpaid portion must be paid as soon thereafter as funds become available. When the guaranty fund balance reaches two million, five hundred thousand dollars, the security and bond requirement under Section 42-5-20 shall be waived for member self-insurers;

(4) reinstitute the assessment any time an insolvency occurs and funds are used to pay covered claims. In this case, if the insolvency was an individual self-insured employer, the assessment is reinstituted only for those member self-insurers who are individually self-insured. If the insolvency was that of a self-insured fund, the assessment is reinstituted only for those member self-insurers who are self-insured funds. The assessment shall not annually exceed one and one-quarter percent of the gross paid compensation and medical expenses of the member self-insurer during the member self-insurer's last fiscal year, and must continue until such time as the assessments collected equal the sum of claims paid and related expenses for that insolvency;

(5) notify each member self-insurer of the assessment no later than thirty days before it is due;

(6) refund to member self-insureds, upon the approval of the commission, that part of the fund balance which exceeds ten million dollars and exceeds the amount necessary to fund the liabilities of the guaranty fund;

(7) investigate claims brought against the guaranty fund; adjust, compromise, settle, and pay covered claims to the extent of the guaranty fund's obligations; deny all other claims; and may review settlements, releases, and judgments to which the insolvent self-insurer was a party to determine the extent to which these settlements, releases, and judgments may be properly contested;

(8) notify such persons as the commission directs under Section 42-6-80(2);

(9) handle claims through its employees or through one or more third party administrators; and

(10) reimburse each third party administrator for obligations of and expenses incurred on behalf of the guaranty fund.

(B) The guaranty fund may:

(1) employ or retain persons as are necessary to handle claims and perform other duties of the guaranty fund;

(2) sue or be sued;

(3) negotiate and become a party to such contracts as are necessary to carry out the purposes of this chapter;

(4) borrow funds necessary to effect the purposes of this chapter in accordance with the plan of operation;

(5) secure reinsurance; and

(6) perform other acts as are necessary or proper to achieve the purposes of this chapter.

Section 42-6-60. (A) The board of directors of the guaranty fund shall consist of not less than five nor more than nine persons who must be employees of member self-insurers and must serve terms as established in the plan of operation. Member self-insurers shall select the members of the board subject to the approval of the commission. Any vacancy of the board must be filled for the unexpired portion of the term in the same manner.

(B) The board of directors initially must be appointed by the commission. Two of the initial members of the board of directors must be appointed for terms of office which shall end on January 1, 2002, two of the initial members of the board of directors must be appointed for terms of office which shall end on January 1, 2003, and one member of the board of directors must be appointed for a term of office which shall end on January 1, 2004. In appointing and in approving selections to the board, the commission must consider, among other things, whether all member self-insurers are fairly represented.

(C) Members of the board may be reimbursed from the assets of the guaranty fund for reasonable and appropriate expenses incurred by them as members of the board of directors.

Section 42-6-70. (A) The guaranty fund must submit to the commission a plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the guaranty fund. The plan of operation and any amendments thereto become effective upon approval in writing by the commission.

(B) If at any time the guaranty fund fails to submit suitable amendments to the plan, the commission shall, after notice and hearings, adopt and promulgate reasonable rules as are necessary or advisable to fulfill the provisions of this chapter. These rules shall continue in force until modified by the commission or superseded by a plan submitted by the guaranty fund and approved by the commission.

(C) All member self-insurers must comply with the plan of operations. The plan of operation must:

(1) establish the procedures whereby all the powers and duties of the guaranty fund under Section 42-6-50 will be performed;

(2) establish procedures for handling and investing the assets of the guaranty fund;

(3) establish the amount and method of reimbursing members of the board of directors under Section 42-6-60;

(4) establish procedures by which claims may be filed with the guaranty fund, and establish acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent self-insurer must be considered notice to the guaranty fund or its agent, and a list of these claims must be periodically submitted to the guaranty fund by the receiver or liquidator;

(5) establish regular places and times for meetings of the board of directors;

(6) establish procedures for records to be kept of all financial transactions of the guaranty fund, its agents, and the board of directors;

(7) provide that any member self-insurer aggrieved by any final action or decision of the guaranty fund may appeal to the commission within thirty days after the action or decision;

(8) establish the procedures whereby selections for the board of directors will be submitted to the commission; and

(9) contain additional provisions necessary or proper for the execution of the powers and duties of the guaranty fund.

Section 42-6-80. (A) The commission must:

(1) notify the guaranty fund of the existence of an insolvent self-insurer not later than three days after the commission receives notice of the determination of the insolvency; and

(2) upon request of the board of directors, provide the guaranty fund with a statement of compensation payments of each member self-insurer.

(B) The commission may:

(1) require that the guaranty fund notify the self-insureds of the insolvent self-insurer and any other interested parties of the determination of insolvency and of their rights under this chapter. This notification must be by mail at their last known address, where available, but if sufficient information for notification is not available, notice by publication in a newspaper of general circulation is sufficient;

(2) suspend or revoke, after notice and hearing, the authority to self-insure granted under Section 42-5-20 to any member self-insurer who fails to pay an assessment when due, or fails to comply with the plan of operation. As an alternative, the commission may levy a fine on any member self-insurer who fails to pay an assessment when due. This fine must not exceed five percent (5%) of the unpaid assessment per month, except that no fine shall be less than one hundred dollars per month; and

(3) revoke the designation of any third party administrator if the commission finds claims are being handled unsatisfactorily.

(C) Any final action or order of the commission under this chapter is subject to judicial review in a court of competent jurisdiction.

Section 42-6-90. (A) Any person who recovers from the guaranty fund pursuant to this chapter is considered to have assigned his rights under the Workers' Compensation Act to the guaranty fund to the extent of his recovery from the guaranty fund. Any claimant who seeks the protection of this chapter must cooperate with the guaranty fund to the same extent as the person would have been required to cooperate with the insolvent self-insurer. The guaranty fund has no cause of action under the Workers' Compensation Act against the claimant of the insolvent self-insurer for any sums the fund has paid out except those causes of action as the insolvent self-insurer would have had if these sums had been paid by the insolvent self-insurer.

(B) The receiver, liquidator, or statutory successor of an insolvent self-insurer is bound by settlements of covered claims by the guaranty fund. The court having jurisdiction must grant these claims priority equal to that which the claimant would have been entitled in the absence of this chapter against the assets of the insolvent self-insurer. The expenses of the guaranty fund or similar organization in the handling of claims must be accorded the same priority as the liquidator's expenses.

(C) The guaranty fund must periodically file with the receiver or liquidator of the insolvent self-insurer statements of the covered claims paid by the guaranty fund and estimates of anticipated claims on the guaranty fund, which must preserve the rights of the guaranty fund against assets of the insolvent self-insurer.

Section 42-6-100. Any recovery under this chapter must be reduced by the amount of recovery from any other insurance guaranty fund or its equivalent.

Section 42-6-110. The guaranty fund is subject to examination and regulation by the commission. The board of directors must submit, not later than March 30th of each year, a financial report for the preceding calendar year in a form approved by the commission.

Section 42-6-120. The guaranty fund is exempt from payment of all fees and all taxes levied by this State or any of its political subdivisions, except taxes levied on real or personal property.

Section 42-6-130. There is no liability on the part of, and no cause of action of any nature may arise against, any member self-insurer, the guaranty fund, its agents or employees, the board of directors, or the commission or its representatives for any act or omission in the performance of their powers and duties under this chapter. This section does not relieve the guaranty fund of any of its liability under this title. The immunity established by this section does not extend to willful neglect or malfeasance that would otherwise be actionable.

Section 42-6-140. All proceedings in which the insolvent self-insurer is a party or is obligated to defend a party in any court in this State must be stayed sixty days from the date the insolvency is reported to the guaranty fund to permit proper defense by the guaranty fund of all pending causes of action. The guaranty fund, either on its own behalf or on behalf of the self-insurer, may apply to have the judgment, order, decision, verdict, or finding set aside by the same court or administrator that made the judgment, order, decision, verdict, or finding, and shall be permitted to defend against the claim on the matter."

SECTION 2. This act takes effect upon approval by the Governor.

This web page was last updated on Wednesday, December 9, 2009 at 9:10 A.M.