Senate Bill sb2270e1
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1 A bill to be entitled
2 An act relating to workers' compensation;
3 amending s. 440.107, F.S.; authorizing the
4 department to issue an order of conditional
5 release from a stop-work order if an employer
6 complies with coverage requirements and a
7 penalty payment agreement; amending s. 627.311,
8 F.S.; establishing three tiers of employers
9 eligible for coverage under the plan; providing
10 for criteria and rates for each tier; deleting
11 references to subplans; providing for
12 assessments to cover deficits in tiers one and
13 two; providing procedures to collect the
14 assessment; exempting the plan from specified
15 premium tax and assessments; amending s.
16 627.0915, F.S., relating to drug-free workplace
17 discounts; providing for notice by insurers to
18 employers of the availability of premium
19 discounts where certain drug-free workplace
20 programs are used; appropriating moneys from
21 the Workers' Compensation Administration Trust
22 Fund to fund plan deficits; providing
23 transitional provisions to subplan "D"
24 policies; providing legislative intent to
25 create a state workers' compensation mutual
26 fund under certain conditions; establishing the
27 Workers' Compensation Insurance Market
28 Evaluation Committee; providing for appointment
29 of members; requiring the committee to monitor
30 and report; requiring the Office of Insurance
31 Regulation and workers' compensation insurers
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1 to report certain information; specifying
2 meeting dates and interim reports for the
3 committee; providing for reimbursement for
4 travel and per diem; providing legislative
5 intent as to the type of mutual fund it intends
6 to create; prohibiting insurers from providing
7 coverage to any person who is an affiliated
8 person of a person who is delinquent in the
9 payment of premiums, assessments, penalties, or
10 surcharges owed to the plan; amending s.
11 440.16(7), F.S., which limits workers'
12 compensation benefits to a nonresident alien
13 for the death of the worker; providing
14 effective dates.
15
16 Be It Enacted by the Legislature of the State of Florida:
17
18 Section 1. Paragraph (a) of subsection (7) of section
19 440.107, Florida Statutes, is amended to read:
20 440.107 Department powers to enforce employer
21 compliance with coverage requirements.--
22 (7)(a) Whenever the department determines that an
23 employer who is required to secure the payment to his or her
24 employees of the compensation provided for by this chapter has
25 failed to secure the payment of workers' compensation required
26 by this chapter or to produce the required business records
27 under subsection (5) within 5 business days after receipt of
28 the written request of the department, such failure shall be
29 deemed an immediate serious danger to public health, safety,
30 or welfare sufficient to justify service by the department of
31 a stop-work order on the employer, requiring the cessation of
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1 all business operations. If the department makes such a
2 determination, the department shall issue a stop-work order
3 within 72 hours. The order shall take effect when served upon
4 the employer or, for a particular employer work site, when
5 served at that work site. In addition to serving a stop-work
6 order at a particular work site which shall be effective
7 immediately, the department shall immediately proceed with
8 service upon the employer which shall be effective upon all
9 employer work sites in the state for which the employer is not
10 in compliance. A stop-work order may be served with regard to
11 an employer's work site by posting a copy of the stop-work
12 order in a conspicuous location at the work site. The order
13 shall remain in effect until the department issues an order
14 releasing the stop-work order upon a finding that the employer
15 has come into compliance with the coverage requirements of
16 this chapter and has paid any penalty assessed under this
17 section. The department may issue an order of conditional
18 release from a stop-work order to an employer upon a finding
19 that the employer has complied with coverage requirements of
20 this chapter and has agreed to remit periodic payments of the
21 penalty pursuant to a payment agreement schedule with the
22 department. If an order of conditional release is issued,
23 failure by the employer to meet any term or condition of such
24 penalty payment agreement shall result in the immediate
25 reinstatement of the stop-work order and the entire unpaid
26 balance of the penalty shall become immediately due. The
27 department may require an employer who is found to have failed
28 to comply with the coverage requirements of s. 440.38 to file
29 with the department, as a condition of release from a
30 stop-work order, periodic reports for a probationary period
31 that shall not exceed 2 years that demonstrate the employer's
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1 continued compliance with this chapter. The department shall
2 by rule specify the reports required and the time for filing
3 under this subsection.
4 Section 2. Subsection (5) of section 627.311, Florida
5 Statutes, is amended to read:
6 627.311 Joint underwriters and joint reinsurers;
7 public records and public meetings exemptions.--
8 (5)(a) The office shall, after consultation with
9 insurers, approve a joint underwriting plan of insurers which
10 shall operate as a nonprofit entity. For the purposes of this
11 subsection, the term "insurer" includes group self-insurance
12 funds authorized by s. 624.4621, commercial self-insurance
13 funds authorized by s. 624.462, assessable mutual insurers
14 authorized under s. 628.6011, and insurers licensed to write
15 workers' compensation and employer's liability insurance in
16 this state. The purpose of the plan is to provide workers'
17 compensation and employer's liability insurance to applicants
18 who are required by law to maintain workers' compensation and
19 employer's liability insurance and who are in good faith
20 entitled to but who are unable to procure purchase such
21 insurance through the voluntary market. The plan must have
22 actuarially sound rates that are not competitive with approved
23 voluntary market rates so that the plan functions as a
24 residual market mechanism assure that the plan is
25 self-supporting.
26 (b) The operation of the plan is subject to the
27 supervision of a 9-member board of governors. The board of
28 governors shall be comprised of:
29 1. Three members appointed by the Financial Services
30 Commission. Each member appointed by the commission shall
31 serve at the pleasure of the commission;
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1 2. Two of the 20 domestic insurers, as defined in s.
2 624.06(1), having the largest voluntary direct premiums
3 written in this state for workers' compensation and employer's
4 liability insurance, which shall be elected by those 20
5 domestic insurers;
6 3. Two of the 20 foreign insurers as defined in s.
7 624.06(2) having the largest voluntary direct premiums written
8 in this state for workers' compensation and employer's
9 liability insurance, which shall be elected by those 20
10 foreign insurers;
11 4. One person appointed by the largest property and
12 casualty insurance agents' association in this state; and
13 5. The consumer advocate appointed under s. 627.0613
14 or the consumer advocate's designee.
15
16 Each board member shall serve a 4-year term and may serve
17 consecutive terms. A vacancy on the board shall be filled in
18 the same manner as the original appointment for the unexpired
19 portion of the term. The Financial Services Commission shall
20 designate a member of the board to serve as chair. No board
21 member shall be an insurer which provides services to the plan
22 or which has an affiliate which provides services to the plan
23 or which is serviced by a service company or third-party
24 administrator which provides services to the plan or which has
25 an affiliate which provides services to the plan. The minutes,
26 audits, and procedures of the board of governors are subject
27 to chapter 119.
28 (c) The operation of the plan shall be governed by a
29 plan of operation that is prepared at the direction of the
30 board of governors. The plan of operation may be changed at
31 any time by the board of governors or upon request of the
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1 office. The plan of operation and all changes thereto are
2 subject to the approval of the office. The plan of operation
3 shall:
4 1. Authorize the board to engage in the activities
5 necessary to implement this subsection, including, but not
6 limited to, borrowing money.
7 2. Develop criteria for eligibility for coverage by
8 the plan, including, but not limited to, documented rejection
9 by at least two insurers which reasonably assures that
10 insureds covered under the plan are unable to acquire coverage
11 in the voluntary market. Any insured may voluntarily elect to
12 accept coverage from an insurer for a premium equal to or
13 greater than the plan premium if the insurer writing the
14 coverage adheres to the provisions of s. 627.171.
15 3. Require notice from the agent to the insured at the
16 time of the application for coverage that the application is
17 for coverage with the plan and that coverage may be available
18 through an insurer, group self-insurers' fund, commercial
19 self-insurance fund, or assessable mutual insurer through
20 another agent at a lower cost.
21 4. Establish programs to encourage insurers to provide
22 coverage to applicants of the plan in the voluntary market and
23 to insureds of the plan, including, but not limited to:
24 a. Establishing procedures for an insurer to use in
25 notifying the plan of the insurer's desire to provide coverage
26 to applicants to the plan or existing insureds of the plan and
27 in describing the types of risks in which the insurer is
28 interested. The description of the desired risks must be on a
29 form developed by the plan.
30 b. Developing forms and procedures that provide an
31 insurer with the information necessary to determine whether
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1 the insurer wants to write particular applicants to the plan
2 or insureds of the plan.
3 c. Developing procedures for notice to the plan and
4 the applicant to the plan or insured of the plan that an
5 insurer will insure the applicant or the insured of the plan,
6 and notice of the cost of the coverage offered; and developing
7 procedures for the selection of an insuring entity by the
8 applicant or insured of the plan.
9 d. Provide for a market-assistance plan to assist in
10 the placement of employers. All applications for coverage in
11 the plan received 45 days before the effective date for
12 coverage shall be processed through the market-assistance
13 plan. A market-assistance plan specifically designed to serve
14 the needs of small, good policyholders as defined by the board
15 must be finalized by January 1, 1994.
16 5. Provide for policy and claims services to the
17 insureds of the plan of the nature and quality provided for
18 insureds in the voluntary market.
19 6. Provide for the review of applications for coverage
20 with the plan for reasonableness and accuracy, using any
21 available historic information regarding the insured.
22 7. Provide for procedures for auditing insureds of the
23 plan which are based on reasonable business judgment and are
24 designed to maximize the likelihood that the plan will collect
25 the appropriate premiums.
26 8. Authorize the plan to terminate the coverage of and
27 refuse future coverage for any insured that submits a
28 fraudulent application to the plan or provides fraudulent or
29 grossly erroneous records to the plan or to any service
30 provider of the plan in conjunction with the activities of the
31 plan.
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1 9. Establish service standards for agents who submit
2 business to the plan.
3 10. Establish criteria and procedures to prohibit any
4 agent who does not adhere to the established service standards
5 from placing business with the plan or receiving, directly or
6 indirectly, any commissions for business placed with the plan.
7 11. Provide for the establishment of reasonable safety
8 programs for all insureds in the plan. All insureds of the
9 plan must participate in the safety program.
10 12. Authorize the plan to terminate the coverage of
11 and refuse future coverage to any insured who fails to pay
12 premiums or surcharges when due; who, at the time of
13 application, is delinquent in payments of workers'
14 compensation or employer's liability insurance premiums or
15 surcharges owed to an insurer, group self-insurers' fund,
16 commercial self-insurance fund, or assessable mutual insurer
17 licensed to write such coverage in this state; or who refuses
18 to substantially comply with any safety programs recommended
19 by the plan.
20 13. Authorize the board of governors to provide the
21 services required by the plan through staff employed by the
22 plan, through reasonably compensated service providers who
23 contract with the plan to provide services as specified by the
24 board of governors, or through a combination of employees and
25 service providers.
26 14. Provide for service standards for service
27 providers, methods of determining adherence to those service
28 standards, incentives and disincentives for service, and
29 procedures for terminating contracts for service providers
30 that fail to adhere to service standards.
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1 15. Provide procedures for selecting service providers
2 and standards for qualification as a service provider that
3 reasonably assure that any service provider selected will
4 continue to operate as an ongoing concern and is capable of
5 providing the specified services in the manner required.
6 16. Provide for reasonable accounting and
7 data-reporting practices.
8 17. Provide for annual review of costs associated with
9 the administration and servicing of the policies issued by the
10 plan to determine alternatives by which costs can be reduced.
11 18. Authorize the acquisition of such excess insurance
12 or reinsurance as is consistent with the purposes of the plan.
13 19. Provide for an annual report to the office on a
14 date specified by the office and containing such information
15 as the office reasonably requires.
16 20. Establish multiple rating plans for various
17 classifications of risk which reflect risk of loss, hazard
18 grade, actual losses, size of premium, and compliance with
19 loss control. At least one of such plans must be a
20 preferred-rating plan to accommodate small-premium
21 policyholders with good experience as defined in
22 sub-subparagraph 22.a.
23 21. Establish agent commission schedules.
24 22. For employers otherwise eligible for coverage
25 under the plan, establish three tiers of employers meeting the
26 criteria and subject to the rate limitations specified in this
27 subparagraph.
28 a. Tier One.--
29 (I) Criteria, rated employers.--An employer that has
30 an experience modification rating shall be included in Tier
31 One if it meets all of the following:
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1 (A) The experience modification is below 1.00;
2 (B) The employer had no lost-time claims subsequent to
3 the applicable experience modification rating period; and
4 (C) The total of the employer's medical-only claims
5 subsequent to the applicable experience modification rating
6 period did not exceed 20 percent of premium.
7 (II) Criteria, nonrated employers.--An employer that
8 does not have an experience modification rating shall be
9 included in Tier One if it meets all of the following:
10 (A) The employer had no lost-time claims for the
11 3-year period immediately preceding the inception date or
12 renewal date of its coverage under the plan;
13 (B) The total of the employer's medical-only claims
14 for the 3-year period immediately preceding the inception date
15 or renewal date of its coverage under the plan did not exceed
16 20 percent of premium;
17 (C) It has secured workers' compensation coverage for
18 the entire three-year period immediately preceding the
19 inception date or renewal date of its coverage under the plan;
20 (D) It is able to provide the plan with a loss history
21 generated by its prior workers' compensation insurer, except
22 that if the employer is not able to produce a loss history due
23 to the insolvency of an insurer, the employer may, in lieu of
24 the loss history, submit an affidavit from the employer and
25 the employer's insurance agent setting forth the loss history;
26 and
27 (E) It is not a new business.
28 (III) Premiums.--The premiums for Tier One insureds
29 shall be set at a premium level 25 percent above the
30 comparable voluntary market premiums until the plan has
31 sufficient, credible experience as determined by the board to
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1 establish an actuarially sound rate for Tier One, at which
2 point the board shall, subject to paragraph (e), adjust the
3 rate, if necessary, to produce actuarially sound rates;
4 provided the rate adjustment does not take effect until
5 January 1, 2007.
6 b. Tier Two.--
7 (I) Criteria, rated employers.--An employer that has
8 an experience modification rating shall be included in Tier
9 Two if it meets all of the following:
10 (A) The experience modification is equal to or greater
11 than 1.00 but not greater than 1.10;
12 (B) The employer had no lost-time claims subsequent to
13 the applicable experience modification rating period; and
14 (C) The total of the employer's medical-only claims
15 subsequent to the applicable experience modification rating
16 period did not exceed 20 percent of premium.
17 (II) Criteria, non-rated employers.--An employer that
18 does not have any experience modification rating shall be
19 included in Tier Two if it is a new business. An employer
20 shall be included in Tier Two if it has less than 3 years of
21 loss experience in the 3-year period immediately preceding the
22 inception date or renewal date of its coverage under the plan
23 and it meets all of the following:
24 (A) The employer had no lost-time claims for the
25 3-year period immediately preceding the inception date or
26 renewal date of its coverage under the plan;
27 (B) The total of the employer's medical-only claims
28 for the 3-year period immediately preceding the inception date
29 or renewal date of its coverage under the plan did not exceed
30 20 percent of premium; and
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1 (C) It is able to provide the plan with a loss history
2 generated by the workers' compensation insurer that provided
3 coverage for the portion or portions of such period during
4 which the employer had secured workers' compensation coverage.
5 If the employer is not able to produce a loss history due to
6 the insolvency of an insurer, the employer may, in lieu of the
7 loss history, submit an affidavit from the employer and the
8 employer's insurance agent setting forth the loss history.
9 (IV) Premiums.--The premiums for Tier Two insureds
10 shall be set at a premium level 50 percent above the
11 comparable voluntary market premiums until the plan has
12 sufficient, credible experience as determined by the board to
13 establish an actuarially sound rate for Tier Two, at which
14 point the board shall, subject to paragraph (e), adjust the
15 rate, if necessary, to produce actuarially sound rates;
16 provided the rate adjustment does not take effect until
17 January 1, 2007.
18 c. Tier Three.--
19 (I) Eligibility.--An employer shall be included in
20 Tier Three if it does not meet the criteria for Tier One or
21 Tier Two.
22 (II) Rates.--The board shall establish, subject to
23 paragraph (e), and the plan shall charge actuarially sound
24 rates for the Tier Three insureds. Establish four subplans as
25 follows:
26 a. Subplan "A" must include those insureds whose
27 annual premium does not exceed $2,500 and who have neither
28 incurred any lost-time claims nor incurred medical-only claims
29 exceeding 50 percent of their premium for the immediate 2
30 years.
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1 b. Subplan "B" must include insureds that are
2 employers identified by the board of governors as high-risk
3 employers due solely to the nature of the operations being
4 performed by those insureds and for whom no market exists in
5 the voluntary market, and whose experience modifications are
6 less than 1.00.
7 c. Subplan "C" must include all insureds within the
8 plan that are not eligible for subplan "A," subplan "B," or
9 subplan "D."
10 d. Subplan "D" must include any employer, regardless
11 of the length of time for which it has conducted business
12 operations, which has an experience modification factor of
13 1.10 or less and either employs 15 or fewer employees or is an
14 organization that is exempt from federal income tax pursuant
15 to s. 501(c)(3) of the Internal Revenue Code and receives more
16 than 50 percent of its funding from gifts, grants, endowments,
17 or federal or state contracts. The rate plan for subplan "D"
18 shall be the same rate plan as the plan approved under ss.
19 627.091-627.151, and each participant in subplan "D" shall pay
20 the premium determined under such rate plan, plus a surcharge
21 determined by the board to be sufficient to ensure that the
22 plan does not compete with the voluntary market rate for any
23 participant, but not to exceed 25 percent. However, the
24 surcharge shall not exceed 10 percent for an organization that
25 is exempt from federal income tax pursuant to s. 501(c)(3) of
26 the Internal Revenue Code.
27 23. For Tier One or Tier Two employers which employ no
28 nonexempt employees or which report payroll which is less than
29 the minimum wage hourly rate for one full-time employee for
30 one year at 40 hours per week, the plan shall establish
31 actuarially sound premiums, provided, however, that the
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1 premiums may not exceed $2,500. These premiums shall be in
2 addition to the fee specified in subparagraph 26. When the
3 plan establishes actuarially sound rates for all employers in
4 Tier One and Tier Two, the premiums for employers referred to
5 in this paragraph are no longer subject to the $2,500 cap.
6 24.23. Provide for a depopulation program to reduce
7 the number of insureds in the plan. subplan "D." If an
8 employer insured through the plan subplan "D" is offered
9 coverage from a voluntary market carrier:
10 a. During the first 30 days of coverage under the plan
11 subplan;
12 b. Before a policy is issued under the plan subplan;
13 c. By issuance of a policy upon expiration or
14 cancellation of the policy under the plan subplan; or
15 d. By assumption of the plan's subplan's obligation
16 with respect to an in-force policy,
17
18 that employer is no longer eligible for coverage through the
19 plan. The premium for risks assumed by the voluntary market
20 carrier must be no greater than the same premium the insured
21 would have paid under the plan, and shall be adjusted upon
22 renewal to reflect changes in the plan rates and the tier for
23 which the insured would qualify as of the time of renewal. The
24 insured may be charged such premiums only for the first 2
25 years of coverage in the voluntary market plus, for the first
26 2 years, the surcharge as determined in sub-subparagraph 22.d.
27 A premium under this subparagraph, including surcharge, is
28 deemed approved and is not an excess premium for purposes of
29 s. 627.171.
30 25.24. Require that policies issued under subplan "D"
31 and applications for such policies must include a notice that
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1 the policy issued under subplan "D" could be replaced by a
2 policy issued from a voluntary market carrier and that, if an
3 offer of coverage is obtained from a voluntary market carrier,
4 the policyholder is no longer eligible for coverage through
5 the plan. subplan "D." The notice must also specify that
6 acceptance of coverage under the plan subplan "D" creates a
7 conclusive presumption that the applicant or policyholder is
8 aware of this potential.
9 26. Require that each application for coverage and
10 each renewal premium be accompanied by a nonrefundable fee of
11 $475 to cover costs of administration and fraud prevention.
12 The board may, with the approval of the office, increase the
13 amount of the fee pursuant to a rate filing to reflect
14 increased costs of administration and fraud prevention. The
15 fee is not subject to commission and is fully earned upon
16 commencement of coverage.
17 (d)1. The funding of the plan shall include premiums
18 as provided in subparagraph (c)22. and assessments as provided
19 in this paragraph.
20 2.a. If the board determines that a deficit exists in
21 Tier One or Tier Two or that there is any deficit remaining
22 attributable to the former subplan "D" and that the deficit
23 cannot reasonably be funded without the use of deficit
24 assessments, the board shall request the Office of Insurance
25 Regulation to levy, by order, a deficit assessment against
26 premiums charged to insureds for workers' compensation
27 insurance by insurers as defined in s. 631.904(5). The office
28 shall issue the order after verifying the amount of the
29 deficit. The assessment shall be specified as a percentage of
30 future premium collections, as recommended by the board and
31 approved by the office. The same percentage shall apply to
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1 premiums on all workers' compensation policies issued or
2 renewed during the 12-month period beginning on the effective
3 date of the assessment, as specified in the order.
4 b. With respect to each insurer collecting premiums
5 that are subject to the assessment, the insurer shall collect
6 the assessment at the same time as it collects the premium
7 payment for each policy and shall remit the assessments
8 collected to the plan as provided in the order issued by the
9 Office of Insurance Regulation. The office shall verify the
10 accurate and timely collection and remittance of deficit
11 assessments and shall report the information to the board.
12 Each insurer collecting assessments shall provide the
13 information with respect to premiums and collections as may be
14 required by the office to enable the office to monitor and
15 audit compliance with this paragraph.
16 c. Deficit assessments are not considered a part of an
17 insurer's rate, are not premium and are not subject to the
18 premium tax, to the assessments under ss. 440.49 and 440.51,
19 to the surplus lines tax, to any fees, or to any commissions.
20 The deficit assessment imposed becomes plan funds at the
21 moment of collection and does not constitute income for any
22 purpose, including financial reporting on the insurer's income
23 statement. An insurer is liable for all assessments that it
24 collects and must treat the failure of an insured to pay an
25 assessment as a failure to pay premium. An insurer is not
26 liable for uncollectible assessments.
27 d. When an insurer is required to return unearned
28 premium, it shall also return any collected assessments
29 attributable to the unearned premium.
30 3.a. All policies issued to Tier Three insureds shall
31 be assessable. All Tier Three assessable policies must be
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1 clearly identified as assessable by containing, in contrasting
2 color and in not less than 10-point type, the following
3 statements: "This is an assessable policy. If the plan is
4 unable to pay its obligations, policyholders will be required
5 to contribute on a pro rata earned premium basis the money
6 necessary to meet any assessment levied."
7 b. The board may from time to time assess Tier Three
8 insureds to whom the plan has issued assessable policies for
9 the purpose of funding plan deficits. Any assessment shall be
10 based upon a reasonable actuarial estimate of the amount of
11 the deficit, taking into account the amount needed to fund
12 medical and indemnity reserves and reserves for incurred but
13 not reported claims, and allowing for general administrative
14 expenses, the cost of levying and collecting the assessment, a
15 reasonable allowance for estimated uncollectible assessments,
16 and both allocated and unallocated loss adjustment expenses.
17 c. Each Tier Three insured's share of a deficit shall
18 be computed by applying to the premium earned on the insured's
19 policy or policies during the period to be covered by the
20 assessment the ratio of the total deficit to the total
21 premiums earned during the period upon all policies subject to
22 the assessment. In the event one or more Tier Three insureds
23 fail to pay an assessment, the other Tier Three insureds shall
24 be liable on a proportionate basis for additional assessments
25 to fund the deficit. The plan may compromise and settle
26 individual assessment claims without affecting the validity of
27 or amounts due on assessments levied against other insureds.
28 The plan may offer and accept discounted payments for
29 assessments which are promptly paid. The plan may offset the
30 amount of any unpaid assessment against unearned premiums
31 which may otherwise be due to an insured. The plan shall
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1 institute legal action when necessary and appropriate to
2 collect the assessment from any insured who fails to pay an
3 assessment when due.
4 d. The venue of a proceeding to enforce or collect an
5 assessment or to contest the validity or amount of an
6 assessment shall be in the Circuit Court of Leon County.
7 e. If the board finds that a deficit in Tier Three
8 exists for any period and that an assessment is necessary, it
9 shall certify to the office the need for an assessment. No
10 sooner than 30 days after the date of the certification, the
11 board shall notify in writing each insured who is to be
12 assessed that an assessment is being levied against the
13 insured, and informing the insured of the amount of the
14 assessment, the period for which the assessment is being
15 levied, and the date by which payment of the assessment is
16 due. The board shall establish a date by which payment of the
17 assessment is due, which may not be sooner than 30 days or
18 later than 120 days after the date on which notice of the
19 assessment is mailed to the insured. The plan must be funded
20 through actuarially sound premiums charged to insureds of the
21 plan.
22 2. The plan may issue assessable policies only to
23 those insureds in subplans "C" and "D." Subject to
24 verification by the department, the board may levy assessments
25 against insureds in subplan "C" or subplan "D," on a pro rata
26 earned premium basis, to fund any deficits that exist in those
27 subplans. Assessments levied against subplan "C" participants
28 shall cover only the deficits attributable to subplan "C," and
29 assessments levied against subplan "D" participants shall
30 cover only the deficits attributable to subplan "D." In no
31 event may the plan levy assessments against any person or
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1 entity, except as authorized by this paragraph. Those
2 assessable policies must be clearly identified as assessable
3 by containing, in contrasting color and in not less than
4 10-point type, the following statements: "This is an
5 assessable policy. If the plan is unable to pay its
6 obligations, policyholders will be required to contribute on a
7 pro rata earned premium basis the money necessary to meet any
8 assessment levied."
9 3. The plan may issue assessable policies with
10 differing terms and conditions to different groups within
11 subplans "C" and "D" when a reasonable basis exists for the
12 differentiation.
13 4. The plan may offer rating, dividend plans, and
14 other plans to encourage loss prevention programs.
15 (e) The plan shall establish and use its rates and
16 rating plans, and the plan may establish and use changes in
17 rating plans at any time, but no more frequently than two
18 times per any rating class for any calendar year. By December
19 1, 1993, and December 1 of each year thereafter, the board
20 shall, except as provided in subparagraph (c)22., establish
21 and use actuarially sound rates for use by the plan to assure
22 that the plan is self-funding while those rates are in effect.
23 Such rates and rating plans must be filed with the office
24 within 30 calendar days after their effective dates, and shall
25 be considered a "use and file" filing. Any disapproval by the
26 office must have an effective date that is at least 60 days
27 from the date of disapproval of the rates and rating plan and
28 must have prospective effect only. The plan may not be subject
29 to any order by the office to return to policyholders any
30 portion of the rates disapproved by the office. The office may
31 not disapprove any rates or rating plans unless it
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CS for CS for SB 2270 First Engrossed
1 demonstrates that such rates and rating plans are excessive,
2 inadequate, or unfairly discriminatory.
3 (f) No later than June 1 of each year, the plan shall
4 obtain an independent actuarial certification of the results
5 of the operations of the plan for prior years, and shall
6 furnish a copy of the certification to the office. If, after
7 the effective date of the plan, the projected ultimate
8 incurred losses and expenses and dividends for prior years
9 exceed collected premiums, accrued net investment income, and
10 prior assessments for prior years, the certification is
11 subject to review and approval by the office before it becomes
12 final.
13 (g) Whenever a deficit exists, the plan shall, within
14 90 days, provide the office with a program to eliminate the
15 deficit within a reasonable time. The deficit may be funded
16 through increased premiums charged to insureds of the plan for
17 subsequent years, through the use of policyholder surplus
18 attributable to any year, through the use of assessments as
19 provided in subparagraph (d)2., and through assessments on
20 insureds in the plan if the plan uses assessable policies as
21 provided in subparagraph (d)3.
22 (h) Any premium or assessments collected by the plan
23 in excess of the amount necessary to fund projected ultimate
24 incurred losses and expenses of the plan and not paid to
25 insureds of the plan in conjunction with loss prevention or
26 dividend programs shall be retained by the plan for future
27 use.
28 (i) The decisions of the board of governors do not
29 constitute final agency action and are not subject to chapter
30 120.
31 (j) Policies for insureds shall be issued by the plan.
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1 (k) The plan created under this subsection is liable
2 only for payment for losses arising under policies issued by
3 the plan with dates of accidents occurring on or after January
4 1, 1994.
5 (l) Plan losses are the sole and exclusive
6 responsibility of the plan, and payment for such losses must
7 be funded in accordance with this subsection and must not
8 come, directly or indirectly, from insurers or any guaranty
9 association for such insurers.
10 (m) Each joint underwriting plan or association
11 created under this section is not a state agency, board, or
12 commission. However, for the purposes of s. 199.183(1) only,
13 the joint underwriting plan is a political subdivision of the
14 state and is exempt from the corporate income tax.
15 (n) Each joint underwriting plan or association may
16 elect to pay premium taxes on the premiums received on its
17 behalf or may elect to have the member insurers to whom the
18 premiums are allocated pay the premium taxes if the member
19 insurer had written the policy. The joint underwriting plan or
20 association shall notify the member insurers and the
21 Department of Revenue by January 15 of each year of its
22 election for the same year. As used in this paragraph, the
23 term "premiums received" means the consideration for
24 insurance, by whatever name called, but does not include any
25 policy assessment or surcharge received by the joint
26 underwriting association as a result of apportioning losses or
27 deficits of the association pursuant to this section.
28 (o) Neither the plan nor any member of the board of
29 governors is liable for monetary damages to any person for any
30 statement, vote, decision, or failure to act, regarding the
31 management or policies of the plan, unless:
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1 1. The member breached or failed to perform her or his
2 duties as a member; and
3 2. The member's breach of, or failure to perform,
4 duties constitutes:
5 a. A violation of the criminal law, unless the member
6 had reasonable cause to believe her or his conduct was not
7 unlawful. A judgment or other final adjudication against a
8 member in any criminal proceeding for violation of the
9 criminal law estops that member from contesting the fact that
10 her or his breach, or failure to perform, constitutes a
11 violation of the criminal law; but does not estop the member
12 from establishing that she or he had reasonable cause to
13 believe that her or his conduct was lawful or had no
14 reasonable cause to believe that her or his conduct was
15 unlawful;
16 b. A transaction from which the member derived an
17 improper personal benefit, either directly or indirectly; or
18 c. Recklessness or any act or omission that was
19 committed in bad faith or with malicious purpose or in a
20 manner exhibiting wanton and willful disregard of human
21 rights, safety, or property. For purposes of this
22 sub-subparagraph, the term "recklessness" means the acting, or
23 omission to act, in conscious disregard of a risk:
24 (I) Known, or so obvious that it should have been
25 known, to the member; and
26 (II) Known to the member, or so obvious that it should
27 have been known, to be so great as to make it highly probable
28 that harm would follow from such act or omission.
29 (p) No insurer shall provide workers' compensation and
30 employer's liability insurance to any person who is delinquent
31 in the payment of premiums, assessments, penalties, or
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1 surcharges owed to the plan or to any person who is an
2 affiliated person of a person who is delinquent in the payment
3 of premiums, assessments, penalties, or surcharges owed to the
4 plan. For the purposes of this paragraph, the term "affiliated
5 person" of another person means:
6 1. The spouse of such other natural person;
7 2. Any person who directly or indirectly owns or
8 controls, or holds with the power to vote, 5 percent or more
9 of the outstanding voting securities of such other person;
10 3. Any person who directly or indirectly owns 5
11 percent or more of the outstanding voting securities that are
12 directly or indirectly owned or controlled, or held with the
13 power to vote, by such other person;
14 4. Any person or group of persons who directly or
15 indirectly control, are controlled by, or are under common
16 control with such other person;
17 5. Any officer, director, trustee, partner, owner,
18 manager, joint venturer, or employee, or other person
19 performing duties similar to persons in those positions, of
20 such other person; or
21 6. Any person who has an officer, director, trustee,
22 partner, or joint venturer in common with such other person.
23 (q) Effective July 1, 2004, the plan is exempt from
24 the premium tax under s. 624.509 and any assessments under ss.
25 440.49 and 440.51.
26 Section 3. Section 627.0915, Florida Statutes, is
27 amended to read:
28 627.0915 Rate filings; workers' compensation,
29 drug-free workplace, and safe employers.--
30 (1) The office shall approve rating plans for workers'
31 compensation and employer's liability insurance that give
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1 specific identifiable consideration in the setting of rates to
2 employers that either implement a drug-free workplace program
3 pursuant to s. 440.102 and rules adopted thereunder by the
4 commission or implement a safety program pursuant to
5 provisions of the rating plan or implement both a drug-free
6 workplace program and a safety program. The plans must be
7 actuarially sound and must state the savings anticipated to
8 result from such drug-testing and safety programs.
9 (2) An insurer offering a rate plan approved under
10 this section shall notify the employer at the time of a
11 written offer of insurance and at the time of each renewal of
12 the policy of the availability of the premium discount where a
13 drug-free workplace plan is used by the employer pursuant to
14 s. 440.102 and related rules. The commission shall adopt rules
15 to implement this section.
16 Section 4. Notwithstanding the provisions of sections
17 440.50 and 440.51, Florida Statutes, for the 2004-2005 fiscal
18 year:
19 (1) The sum of $10 million is appropriated from the
20 Workers' Compensation Administration Trust Fund in the
21 Department of Financial Services for transfer to the workers'
22 compensation joint underwriting plan provided in section
23 627.311(5), Florida Statutes, as a capital contribution to
24 fund any deficit in the plan. The Chief Financial Officer
25 shall transfer the funds to the plan no later than July 31,
26 2004.
27 (2) The workers' compensation joint underwriting plan
28 set forth in section 627.311(5), Florida Statutes, may request
29 the Department of Financial Services to transfer an amount not
30 to exceed $25 million from the Workers' Compensation
31 Administration Trust Fund to the plan subject to the approval
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1 of the Legislative Budget Commission under sections 216.181
2 and 216.292, Florida Statutes. The workers' compensation joint
3 underwriting plan board of governors and the Office of
4 Insurance Regulation must first certify to the Department of
5 Financial Services that a deficit exists in the workers'
6 compensation joint underwriting plan. The amount requested for
7 transfer to the plan may not exceed the deficit amount jointly
8 certified by the board of governors and the Office of
9 Insurance Regulation to exist in Tier One or Tier Two or for
10 any deficit remaining attributable to the former subplan "D"
11 which cannot be funded without the use of deficit assessments
12 as authorized by section 627.351(5)(d), Florida Statutes.
13 Section 5. Transitional provisions.--Effective upon
14 this act becoming a law:
15 (1) Notwithstanding section 627.311(5), Florida
16 Statutes, to the contrary, no policy in subplan "D" of the
17 Florida Workers' Compensation Joint Underwriting Association
18 is subject to an assessment for the purpose of funding a
19 deficit.
20 (2) Any policy issued by the Florida Workers'
21 Compensation Joint Underwriting Association with an effective
22 date between the date on which this act becomes a law and June
23 30, 2004, shall be rerated and placed in the appropriate tier
24 provided in section 627.311(5), Florida Statues, as amended
25 effective July 1, 2004, and shall be subject to the premiums
26 and charges provided for in that section as amended.
27 Section 6. Effective upon this act becoming a law:
28 (1) The Legislature intends to create a state workers'
29 compensation mutual fund if workers' compensation coverage is
30 not generally available and affordable to small employers and
31 organizations that are exempt from federal income tax under s.
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1 501(c)(3) of the Internal Revenue Code in Florida by October
2 1, 2005. In order to make this determination, there is
3 established the Workers' Compensation Insurance Market
4 Evaluation Committee which shall consist of one member
5 appointed by the Governor, who shall serve as chair; two
6 members appointed by the President of the Senate; and two
7 members appointed by the Speaker of the House of
8 Representatives. The committee shall monitor and report on the
9 number of insurers actively writing workers' compensation
10 insurance in this state for small employers and organizations
11 that are exempt from federal income tax under s. 501(c)(3) of
12 the Internal Revenue Code, the number of policies issued,
13 premium volume written, types of underwriting restrictions
14 utilized, and the extent to which actual premiums charged vary
15 from standard rates, such as the use of excess rates pursuant
16 to section 627.171, Florida Statutes, and rate deviations
17 pursuant to section 627.211, Florida Statutes. The Office of
18 Insurance Regulation shall provide such related information to
19 the committee as is requested, and workers' compensation
20 insurers shall report such information to the office in the
21 manner and format specified by the office.
22 (2) The committee shall meet once each month,
23 beginning in August 2004, and shall provide interim reports to
24 the appointing officers on October 1, 2004, December 1, 2004,
25 and March 1, 2005, and at such additional times as the
26 President of the Senate and the Speaker of the House of
27 Representatives jointly require. Members of the committee
28 shall be entitled to reimbursement for travel and per diem
29 pursuant to section 112.061, Florida Statutes.
30 (3) If the Legislature determines that workers'
31 compensation coverage is not generally available and
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1 affordable to small employers and organizations that are
2 exempt from federal income tax under s. 501(c)(3) of the
3 Internal Revenue Code in Florida, the Legislature intends to
4 create a state mutual fund as a nonprofit entity for the
5 benefit of its policyholders that are a small employer or an
6 organization that is exempt from the federal income tax under
7 s. 501(c)(3) of the Internal Revenue Code. The state mutual
8 fund would compete with private carriers and would be charged
9 with the public mission of customer service, quality loss
10 prevention, timely claims management, active fighting of
11 fraud, and compassionate care for injured workers, at the
12 lowest cost consistent with actuarial sound rates. The fund
13 should primarily rely on an in-house staff of professional
14 employees, rather than contracting with servicing carriers. It
15 is further intended that the state appropriate adequate
16 initial capitalization for the fund and that the fund be
17 subject to the same financial and other requirements as apply
18 to an authorized insurer.
19 Section 7. Subsection (7) of section 440.16, Florida
20 Statutes, is amended to read:
21 440.16 Compensation for death.--
22 (7) Compensation under this chapter to aliens not
23 residents (or about to become nonresidents) of the United
24 States or Canada shall be the same in amount as provided for
25 residents, except that dependents in any foreign country shall
26 be limited to surviving spouse and child or children, or if
27 there be no surviving spouse or child or children, to
28 surviving father or mother whom the employee has supported,
29 either wholly or in part, for the period of 1 year prior to
30 the date of the injury, and except that the judge of
31 compensation claims may, at the option of the judge of
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1 compensation claims, or upon the application of the insurance
2 carrier, commute all future installments of compensation to be
3 paid to such aliens by paying or causing to be paid to them
4 one-half of the commuted amount of such future installments of
5 compensation as determined by the judge of compensation
6 claims, and provided further that compensation to dependents
7 referred to in this subsection shall in no case exceed
8 $75,000.
9 Section 8. Except as otherwise expressly provided in
10 this act, and except for this section, which shall take effect
11 upon becoming a law, this act shall take effect July 1, 2004.
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