Senate Bill 2084e1

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    SB 2084                                        First Engrossed



  1                      A bill to be entitled

  2         An act relating to rulemaking authority of the

  3         Division of Workers' Compensation of the

  4         Department of Labor and Employment Security

  5         (RAB); amending s. 440.38, F.S.; authorizing

  6         the division to specify by rule the amount of

  7         the security deposit and net worth required for

  8         an employer to obtain authorization to

  9         self-insure; requiring that the division

10         provide by rule for suspending or revoking an

11         employer's authorization to self-insure;

12         providing an effective date.

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14  Be It Enacted by the Legislature of the State of Florida:

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16         Section 1.  Subsection (1) and paragraph (b) of

17  subsection (3) of section 440.38, Florida Statutes, are

18  amended to read:

19         440.38  Security for compensation; insurance carriers

20  and self-insurers.--

21         (1)  Every employer shall secure the payment of

22  compensation under this chapter:

23         (a)  By insuring and keeping insured the payment of

24  such compensation with any stock company or mutual company or

25  association or exchange, authorized to do business in the

26  state;

27         (b)  By furnishing satisfactory proof to the division

28  of her or his financial ability to pay such compensation and

29  receiving an authorization from the division to pay such

30  compensation directly in accordance with the following

31  provisions:


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    SB 2084                                        First Engrossed



  1         1.  The division may, as a condition to such

  2  authorization, require such employer to deposit in a

  3  depository designated by the division either an indemnity bond

  4  or securities, at the option of the employer, of a kind and in

  5  an amount determined by the division and subject to such

  6  conditions as the division may prescribe, which shall include

  7  authorization to the division in the case of default to sell

  8  any such securities sufficient to pay compensation awards or

  9  to bring suit upon such bonds, to procure prompt payment of

10  compensation under this chapter.  In addition, the division

11  shall require, as a condition to authorization to self-insure,

12  proof that the employer has provided for competent personnel

13  with whom to deliver benefits and to provide a safe working

14  environment.  Further, the division shall require such

15  employer to carry reinsurance at levels that will ensure the

16  actuarial soundness of such employer in accordance with rules

17  promulgated by the division.  The division may by rule require

18  that, in the event of an individual self-insurer's insolvency,

19  such indemnity bonds, securities, and reinsurance policies

20  shall be payable to the Florida Self-Insurers Guaranty

21  Association, Incorporated, created pursuant to s. 440.385.

22  Any employer securing compensation in accordance with the

23  provisions of this paragraph shall be known as a self-insurer

24  and shall be classed as a carrier of her or his own insurance.

25         2.  If the employer fails to maintain the foregoing

26  requirements, the division shall revoke the employer's

27  authority to self-insure, unless the employer provides to the

28  division the certified opinion of an independent actuary who

29  is a member of the American Society of Actuaries as to the

30  actuarial present value of the employer's determined and

31  estimated future compensation payments based on cash reserves,


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    SB 2084                                        First Engrossed



  1  using a 4-percent discount rate, and a qualifying security

  2  deposit equal to 1.5 times the value so certified. The

  3  employer shall thereafter annually provide such a certified

  4  opinion until such time as the employer meets the requirements

  5  of subparagraph 1.  The qualifying security deposit shall be

  6  adjusted at the time of each such annual report.  Upon the

  7  failure of the employer to timely provide such opinion or to

  8  timely provide a security deposit in an amount equal to 1.5

  9  times the value certified in the latest opinion, the division

10  shall then revoke such employer's authorization to

11  self-insure, and such failure shall be deemed to constitute an

12  immediate serious danger to the public health, safety, or

13  welfare sufficient to justify the summary suspension of the

14  employer's authorization to self-insure pursuant to s. 120.68.

15         3.  Upon the suspension or revocation of the employer's

16  authorization to self-insure, the employer shall provide to

17  the division and to the Florida Self-Insurers Guaranty

18  Association, Incorporated, created pursuant to s. 440.385 the

19  certified opinion of an independent actuary who is a member of

20  the American Society of Actuaries of the actuarial present

21  value of the determined and estimated future compensation

22  payments of the employer for claims incurred while the member

23  exercised the privilege of self-insurance, using a discount

24  rate of 4 percent. The employer shall provide such an opinion

25  at 6-month intervals thereafter until such time as the latest

26  opinion shows no remaining value of claims.  With each such

27  opinion, the employer shall deposit with the division a

28  qualifying security deposit in an amount equal to the value

29  certified by the actuary.  The association has a cause of

30  action against an employer, and against any successor of the

31  employer, who fails to timely provide such opinion or who


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    SB 2084                                        First Engrossed



  1  fails to timely maintain the required security deposit with

  2  the division. The association shall recover a judgment in the

  3  amount of the actuarial present value of the determined and

  4  estimated future compensation payments of the employer for

  5  claims incurred while the employer exercised the privilege of

  6  self-insurance, together with attorney's fees.  For purposes

  7  of this section, the successor of an employer means any

  8  person, business entity, or group of persons or business

  9  entities, which holds or acquires legal or beneficial title to

10  the majority of the assets or the majority of the shares of

11  the employer.

12         4.  A qualifying security deposit shall consist, at the

13  option of the employer, of:

14         a.  Surety bonds, in a form and containing such terms

15  as prescribed by the division, issued by a corporation surety

16  authorized to transact surety business by the Department of

17  Insurance, and whose policyholders' and financial ratings, as

18  reported in A.M. Best's Insurance Reports, Property-Liability,

19  are not less than "A" and "V", respectively.

20         b.  Certificates of deposit with financial

21  institutions, the deposits of which are insured through the

22  Federal Deposit Insurance Corporation or the Federal Savings

23  and Loan Insurance Corporation.

24         c.  Irrevocable letters of credit in favor of the

25  division issued by financial institutions described in

26  sub-subparagraph b.

27         d.  Direct obligations of the United States Treasury

28  backed by the full faith and credit of the United States.

29         e.  Securities issued by this state and backed by the

30  full faith and credit of this state.

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    SB 2084                                        First Engrossed



  1         5.  The qualifying security deposit shall be held by

  2  the division, or by a depository authorized by the division,

  3  exclusively for the benefit of workers' compensation

  4  claimants. The security shall not be subject to assignment,

  5  execution, attachment, or any legal process whatsoever, except

  6  as necessary to guarantee the payment of compensation under

  7  this chapter.  No surety bond may be terminated, and no other

  8  qualifying security may be allowed to lapse, without 90 days'

  9  prior notice to the division and deposit by the self-insuring

10  employer of other qualifying security of equal value within 10

11  business days after such notice. Failure to provide such

12  notice or failure to timely provide qualifying replacement

13  security after such notice shall constitute grounds for the

14  division to call or sue upon the surety bond, or to act with

15  respect to other pledged security in any manner necessary to

16  preserve its value for the purposes intended by this section,

17  including the exercise of rights under a letter of credit, the

18  sale of any security at then prevailing market rates, or the

19  withdrawal of any funds represented by any certificate of

20  deposit forming part of the qualifying security deposit. The

21  division may specify by rule the amount of the qualifying

22  security deposit required prior to authorizing an employer to

23  self-insure and the amount of net worth required for an

24  employer to qualify for authorization to self-insure;

25         (c)  By entering into a contract with a public utility

26  under an approved utility-provided self-insurance program as

27  set forth in s. 440.571 in effect as of July 1, 1983.  The

28  division shall adopt rules to implement this paragraph;

29         (d)  By entering into an interlocal agreement with

30  other local governmental entities to create a local government

31  pool pursuant to s. 440.575;


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    SB 2084                                        First Engrossed



  1         (e)  In accordance with s. 440.135, an employer, other

  2  than a local government unit, may elect coverage under the

  3  Workers' Compensation Law and retain the benefit of the

  4  exclusiveness of liability provided in s. 440.11 by obtaining

  5  a 24-hour health insurance policy from an authorized property

  6  and casualty insurance carrier or an authorized life and

  7  health insurance carrier, or by participating in a fully or

  8  partially self-insured 24-hour health plan that is established

  9  or maintained by or for two or more employers, so long as the

10  law of this state is not preempted by the Employee Retirement

11  Income Security Act of 1974, Pub. L. No. 93-406, or any

12  amendment to that law, which policy or plan must provide, for

13  at least occupational injuries and illnesses, medical benefits

14  that are comparable to those required by this chapter. A local

15  government unit, as a single employer, in accordance with s.

16  440.135, may participate in the 24-hour health insurance

17  coverage plan referenced in this paragraph. Disputes and

18  remedies arising under policies issued under this section are

19  governed by the terms and conditions of the policies and under

20  the applicable provisions of the Florida Insurance Code and

21  rules adopted under the insurance code and other applicable

22  laws of this state. The 24-hour health insurance policy may

23  provide for health care by a health maintenance organization

24  or a preferred provider organization. The premium for such

25  24-hour health insurance policy shall be paid entirely by the

26  employer. The 24-hour health insurance policy may use

27  deductibles and coinsurance provisions that require the

28  employee to pay a portion of the actual medical care received

29  by the employee. If an employer obtains a 24-hour health

30  insurance policy or self-insured plan to secure payment of

31  compensation as to medical benefits, the employer must also


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    SB 2084                                        First Engrossed



  1  obtain an insurance policy or policies that provide indemnity

  2  benefits as follows:

  3         1.  If indemnity benefits are provided only for

  4  occupational-related disability, such benefits must be

  5  comparable to those required by this chapter.

  6         2.  If indemnity benefits are provided for both

  7  occupational-related and nonoccupational-related disability,

  8  such benefits must be comparable to those required by this

  9  chapter, except that they must be based on 60 percent of the

10  average weekly wages.

11         3.  The employer shall provide for each of its

12  employees life insurance with a death benefit of $100,000.

13         4.  Policies providing coverage under this subsection

14  must use prescribed and acceptable underwriting standards,

15  forms, and policies approved by the Department of Insurance.

16  If any insurance policy that provides coverage under this

17  section is canceled, terminated, or nonrenewed for any reason,

18  the cancellation, termination, or nonrenewal is ineffective

19  until the self-insured employer or insurance carrier or

20  carriers notify the division and the Department of Insurance

21  of the cancellation, termination, or nonrenewal, and until the

22  division has actually received the notification. The division

23  must be notified of replacement coverage under a workers'

24  compensation and employer's liability insurance policy or plan

25  by the employer prior to the effective date of the

26  cancellation, termination, or nonrenewal; or

27         (f)  By entering into a contract with an individual

28  self-insurer under an approved individual

29  self-insurer-provided self-insurance program as set forth in

30  s. 440.571.  The division may adopt rules to implement this

31  subsection.


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    SB 2084                                        First Engrossed



  1         (3)

  2         (b)  The division shall suspend or revoke any

  3  authorization to a self-insurer for good cause, as defined by

  4  rule of the division.  No suspension or revocation shall

  5  affect the liability of any self-insurer already incurred.

  6         Section 2.  This act shall take effect upon becoming a

  7  law.

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