Senate Bill 0746
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Florida Senate - 2000 SB 746
By Senator Clary
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1 A bill to be entitled
2 An act relating to workers' compensation;
3 amending s. 440.05, F.S.; removing the
4 requirement that sole proprietors, partners,
5 and corporate officers active in the
6 construction industry provide the Division of
7 Workers' Compensation with contractors'
8 licenses when seeking an exemption; amending s.
9 440.38, F.S.; providing for the type of
10 qualifying security deposit necessary to become
11 a self-insured employer; authorizing the
12 Division of Workers' Compensation to set by
13 rule the amount of security deposit and net
14 worth necessary for authorization to
15 self-insure; conforming statutory
16 cross-references; providing an effective date.
17
18 Be It Enacted by the Legislature of the State of Florida:
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20 Section 1. Subsection (3) of section 440.05, Florida
21 Statutes, is amended to read:
22 440.05 Election of exemption; revocation of election;
23 notice; certification.--
24 (3) Each sole proprietor, partner, or officer of a
25 corporation who is actively engaged in the construction
26 industry and who elects an exemption from this chapter or who,
27 after electing such exemption, revokes that exemption, must
28 mail a written notice to such effect to the division on a form
29 prescribed by the division. The notice of election to be
30 exempt from the provisions of this chapter must be notarized
31 and under oath. The notice of election to be exempt which is
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1 submitted to the division by the sole proprietor, partner, or
2 officer of a corporation must list the name, federal tax
3 identification number, social security number, all certified
4 or registered licenses issued pursuant to chapter 489 held by
5 the person seeking the exemption, a copy of relevant
6 documentation as to employment status filed with the Internal
7 Revenue Service as specified by the division, a copy of the
8 relevant occupational license in the primary jurisdiction of
9 the business, and, for corporate officers and partners, the
10 registration number of the corporation or partnership filed
11 with the Division of Corporations of the Department of State.
12 The notice of election to be exempt must identify each sole
13 proprietorship, partnership, or corporation that employs the
14 person electing the exemption and must list the social
15 security number or federal tax identification number of each
16 such employer and the additional documentation required by
17 this section. In addition, the notice of election to be exempt
18 must provide that the sole proprietor, partner, or officer
19 electing an exemption is not entitled to benefits under this
20 chapter, must provide that the election does not exceed
21 exemption limits for officers and partnerships provided in s.
22 440.02, and must certify that any employees of the sole
23 proprietor, partner, or officer electing an exemption are
24 covered by workers' compensation insurance. Upon receipt of
25 the notice of the election to be exempt, receipt of all
26 application fees, and a determination by the division that the
27 notice meets the requirements of this subsection, the division
28 shall issue a certification of the election to the sole
29 proprietor, partner, or officer, unless the division
30 determines that the information contained in the notice is
31 invalid. The division shall revoke a certificate of election
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1 to be exempt from coverage upon a determination by the
2 division that the person does not meet the requirements for
3 exemption or that the information contained in the notice of
4 election to be exempt is invalid. The certificate of election
5 must list the names of the sole proprietorship, partnership,
6 or corporation listed in the request for exemption. A new
7 certificate of election must be obtained each time the person
8 is employed by a new sole proprietorship, partnership, or
9 corporation that is not listed on the certificate of election.
10 A copy of the certificate of election must be sent to each
11 workers' compensation carrier identified in the request for
12 exemption. Upon filing a notice of revocation of election, a
13 sole proprietor, partner, or officer who is a subcontractor
14 must notify her or his contractor. Upon revocation of a
15 certificate of election of exemption by the division, the
16 division shall notify the workers' compensation carriers
17 identified in the request for exemption.
18 Section 2. Subsection (1) of section 440.38, Florida
19 Statutes, is amended to read:
20 440.38 Security for compensation; insurance carriers
21 and self-insurers.--
22 (1) Every employer shall secure the payment of
23 compensation under this chapter:
24 (a) By insuring and keeping insured the payment of
25 such compensation with any stock company or mutual company or
26 association or exchange, authorized to do business in the
27 state;
28 (b) By furnishing satisfactory proof to the division
29 of her or his financial ability to pay such compensation and
30 receiving an authorization from the division to pay such
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1 compensation directly in accordance with the following
2 provisions:
3 1. The division may, as a condition to such
4 authorization, require such employer to deposit with in a
5 depository designated by the division a qualifying security
6 deposit either an indemnity bond or securities, at the option
7 of the employer, of a kind and in an amount determined by the
8 division and subject to such conditions as the division
9 prescribes may prescribe, which must shall include
10 authorization to the division in the case of default or in the
11 case of the individual self-insured employer ceasing or
12 suspending the payment of compensation to its employees as
13 required in this chapter to call the qualifying security
14 deposit sell any such securities sufficient to pay
15 compensation awards or to bring suit upon such bonds, to
16 ensure procure prompt payment of compensation under this
17 chapter. In addition, the division shall require, as a
18 condition to authorization to self-insure, proof that the
19 employer has provided for competent personnel with whom to
20 deliver benefits and to provide a safe working environment.
21 Further, the division shall require such employer to carry
22 reinsurance at levels that will ensure the actuarial soundness
23 of such employer in accordance with rules promulgated by the
24 division. The division may by rule require that, in the event
25 of an individual self-insurer's insolvency, such qualifying
26 security deposit indemnity bonds, securities, and reinsurance
27 policies are shall be payable to the Florida Self-Insurers
28 Guaranty Association, Incorporated, created pursuant to s.
29 440.385. Any employer securing compensation in accordance
30 with the provisions of this paragraph shall be known as a
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1 self-insurer and shall be classed as a carrier of her or his
2 own insurance.
3 2. If the employer fails to maintain the foregoing
4 requirements, the division shall revoke the employer's
5 authority to self-insure, unless the employer provides to the
6 division the certified opinion of an independent actuary who
7 is a member of the American Society of Actuaries as to the
8 actuarial present value of the employer's determined and
9 estimated future compensation payments based on cash reserves,
10 using a 4-percent discount rate, and a qualifying security
11 deposit equal to 1.5 times the value so certified. The
12 employer shall thereafter annually provide such a certified
13 opinion until such time as the employer meets the requirements
14 of subparagraph 1. The qualifying security deposit shall be
15 adjusted at the time of each such annual report. Upon the
16 failure of the employer to timely provide such opinion or to
17 timely provide a security deposit in an amount equal to 1.5
18 times the value certified in the latest opinion, the division
19 shall then revoke such employer's authorization to
20 self-insure, and such failure shall be deemed to constitute an
21 immediate serious danger to the public health, safety, or
22 welfare sufficient to justify the summary suspension of the
23 employer's authorization to self-insure pursuant to s. 120.68.
24 3. Upon the suspension or revocation of the employer's
25 authorization to self-insure, the employer shall provide to
26 the division and to the Florida Self-Insurers Guaranty
27 Association, Incorporated, created pursuant to s. 440.385 the
28 certified opinion of an independent actuary who is a member of
29 the American Society of Actuaries of the actuarial present
30 value of the determined and estimated future compensation
31 payments of the employer for claims incurred while the member
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1 exercised the privilege of self-insurance, using a discount
2 rate of 4 percent. The employer shall provide such an opinion
3 at 6-month intervals thereafter until such time as the latest
4 opinion shows no remaining value of claims. With each such
5 opinion, the employer shall deposit with the division a
6 qualifying security deposit in an amount equal to the value
7 certified by the actuary. The association has a cause of
8 action against an employer, and against any successor of the
9 employer, who fails to timely provide such opinion or who
10 fails to timely maintain the required security deposit with
11 the division. The association shall recover a judgment in the
12 amount of the actuarial present value of the determined and
13 estimated future compensation payments of the employer for
14 claims incurred while the employer exercised the privilege of
15 self-insurance, together with attorney's fees. For purposes
16 of this section, the successor of an employer means any
17 person, business entity, or group of persons or business
18 entities, which holds or acquires legal or beneficial title to
19 the majority of the assets or the majority of the shares of
20 the employer.
21 4. A qualifying security deposit shall consist, at the
22 option of the employer, of:
23 a. Surety bonds, in a form and containing such terms
24 as prescribed by the division, issued by a corporation surety
25 authorized to transact surety business by the Department of
26 Insurance, and whose policyholders' and financial ratings, as
27 reported in A.M. Best's Insurance Reports, Property-Liability,
28 are not less than "A" and "V", respectively.
29 b. Certificates of deposit with financial
30 institutions, the deposits of which are insured through the
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1 Federal Deposit Insurance Corporation or the Federal Savings
2 and Loan Insurance Corporation.
3 b.c. Irrevocable letters of credit in favor of the
4 division issued by financial institutions located within this
5 state, the deposits of which are insured through the Federal
6 Deposit Insurance Corporation described in sub-subparagraph b.
7 d. Direct obligations of the United States Treasury
8 backed by the full faith and credit of the United States.
9 e. Securities issued by this state and backed by the
10 full faith and credit of this state.
11 5. The qualifying security deposit shall be held by
12 the division, or by a depository authorized by the division,
13 exclusively for the benefit of workers' compensation
14 claimants. The security shall not be subject to assignment,
15 execution, attachment, or any legal process whatsoever, except
16 as necessary to guarantee the payment of compensation under
17 this chapter. No surety bond may be terminated, and no letter
18 of credit other qualifying security may be allowed to expire
19 lapse, without 90 days' prior notice to the division and
20 deposit by the self-insuring employer of some other qualifying
21 security deposit of equal value within 10 business days after
22 such notice. Failure to provide such notice or failure to
23 timely provide qualifying replacement security after such
24 notice shall constitute grounds for the division to call or
25 sue upon the surety bond, or to act with respect to other
26 pledged security in any manner necessary to preserve its value
27 for the purposes intended by this section, including the
28 exercise its of rights under a letter of credit. Current
29 self-insured employers must comply with this section on or
30 before December 21, 2000, or upon maturity of existing
31 security deposits, whichever occurs later;, the sale of any
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1 security at then prevailing market rates, or the withdrawal of
2 any funds represented by any certificate of deposit forming
3 part of the qualifying security deposit;
4 6. The division may specify by rule the amount of
5 qualifying security deposit necessary for deposit by
6 self-insured employers before the division grants
7 authorization to self-insure. The division may also specify by
8 rule the amount of net worth required for self-insured
9 employers to qualify for authorization to self-insure;
10 (c) By entering into a contract with a public utility
11 under an approved utility-provided self-insurance program as
12 set forth in s. 624.46225 s. 440.571 in effect as of July 1,
13 1983. The division shall adopt rules to implement this
14 paragraph;
15 (d) By entering into an interlocal agreement with
16 other local governmental entities to create a local government
17 pool pursuant to s. 624.4622 s. 440.575;
18 (e) In accordance with s. 440.135, an employer, other
19 than a local government unit, may elect coverage under the
20 Workers' Compensation Law and retain the benefit of the
21 exclusiveness of liability provided in s. 440.11 by obtaining
22 a 24-hour health insurance policy from an authorized property
23 and casualty insurance carrier or an authorized life and
24 health insurance carrier, or by participating in a fully or
25 partially self-insured 24-hour health plan that is established
26 or maintained by or for two or more employers, so long as the
27 law of this state is not preempted by the Employee Retirement
28 Income Security Act of 1974, Pub. L. No. 93-406, or any
29 amendment to that law, which policy or plan must provide, for
30 at least occupational injuries and illnesses, medical benefits
31 that are comparable to those required by this chapter. A local
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1 government unit, as a single employer, in accordance with s.
2 440.135, may participate in the 24-hour health insurance
3 coverage plan referenced in this paragraph. Disputes and
4 remedies arising under policies issued under this section are
5 governed by the terms and conditions of the policies and under
6 the applicable provisions of the Florida Insurance Code and
7 rules adopted under the insurance code and other applicable
8 laws of this state. The 24-hour health insurance policy may
9 provide for health care by a health maintenance organization
10 or a preferred provider organization. The premium for such
11 24-hour health insurance policy shall be paid entirely by the
12 employer. The 24-hour health insurance policy may use
13 deductibles and coinsurance provisions that require the
14 employee to pay a portion of the actual medical care received
15 by the employee. If an employer obtains a 24-hour health
16 insurance policy or self-insured plan to secure payment of
17 compensation as to medical benefits, the employer must also
18 obtain an insurance policy or policies that provide indemnity
19 benefits as follows:
20 1. If indemnity benefits are provided only for
21 occupational-related disability, such benefits must be
22 comparable to those required by this chapter.
23 2. If indemnity benefits are provided for both
24 occupational-related and nonoccupational-related disability,
25 such benefits must be comparable to those required by this
26 chapter, except that they must be based on 60 percent of the
27 average weekly wages.
28 3. The employer shall provide for each of its
29 employees life insurance with a death benefit of $100,000.
30 4. Policies providing coverage under this subsection
31 must use prescribed and acceptable underwriting standards,
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1 forms, and policies approved by the Department of Insurance.
2 If any insurance policy that provides coverage under this
3 section is canceled, terminated, or nonrenewed for any reason,
4 the cancellation, termination, or nonrenewal is ineffective
5 until the self-insured employer or insurance carrier or
6 carriers notify the division and the Department of Insurance
7 of the cancellation, termination, or nonrenewal, and until the
8 division has actually received the notification. The division
9 must be notified of replacement coverage under a workers'
10 compensation and employer's liability insurance policy or plan
11 by the employer prior to the effective date of the
12 cancellation, termination, or nonrenewal; or
13 (f) By entering into a contract with an individual
14 self-insurer under an approved individual
15 self-insurer-provided self-insurance program as set forth in
16 s. 624.46225 s. 440.571. The division may adopt rules to
17 implement this subsection.
18 Section 3. This act shall take effect upon becoming a
19 law.
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22 SENATE SUMMARY
23 Removes the requirement that persons active in the
construction industry provide certified or registered
24 contractors' licenses when electing an exemption from the
Division of Workers' Compensation. Provides for the type
25 of security deposit required of a self-insured employer.
Authorizes the Division of Workers' Compensation to set
26 by rule the amount of security deposit and net worth
necessary for authorization to become a self-insured
27 employer.
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