HB834 - Conference Report

SECTION 1. Section 71-3-153, Mississippi Code of 1972, is amended as follows:

71-3-153. The purpose of Sections 71-3-151 through 71-3-181 is to provide a mechanism for the payment of the covered claims under the Workers' Compensation Law, to avoid excessive delay in payment and to avoid financial loss to claimants because of the insolvency of a self-insurer, to assist in the detection and prevention of self-insurer insolvencies, and to provide * * * associations to assess the cost of such protection among self-insurers.

Sections 71-3-151 through 71-3-181 shall apply to all employers who are self-insurers under the provisions of Section 71-3-75, Mississippi Code of 1972.

SECTION 2. Section 71-3-157, Mississippi Code of 1972, is amended as follows:

71-3-157. For the purposes of Sections 71-3-151 through 71-3-181, the following words shall have the meanings ascribed herein unless the context shall otherwise require:

(a) "Individual association" means the Mississippi Workers' Compensation Individual Self-insurer Guaranty Association created under Section 71-3-159.

(b) "Group association" means the Mississippi Workers' Compensation Group Self-insurer Guaranty Association created under Section 71-3-159.

(d) "Compensation" means amounts payable to claimants under the Mississippi Workers' Compensation Law as defined in Section 71-3-3(j), Mississippi Code of 1972.

(e) "Covered claim" means an unpaid claim upon which compensation or medical is payable by an individual self-insurer or a group self-insurer under the Workers' Compensation Law.

(f) "Self-insurer in default" means an individual self-insurer or a group self-insurer as defined by this chapter that has defaulted or failed for any reason to satisfy any of its obligations under the Workers' Compensation Law, including, without limitation, all obligations for payment of indemnity compensation, disability, expenses of medical, hospital, surgical, rehabilitation and other services, death benefits and funeral expenses, whether such default or failure is the result of insolvency or bankruptcy or receivership or otherwise.

(g) "Member self-insurer" means a self-insurer as defined by this chapter who is a member of the Mississippi Workers' Compensation Individual Self-insurer Guaranty Association or the Mississippi Workers' Compensation Group Self-insurer Guaranty Association.

(h) "Individual self-insurer" is an employer who has been authorized under Section 71-3-75(2), Mississippi Code of 1972, to insure under the Workers' Compensation Law.

(i) "Group self-insurer" is a group of employers who have been authorized under Section 71-3-75(3), Mississippi Code of 1972, to insure under the Workers' Compensation Law.

(j) "Person" means any individual, corporation, partnership, association or voluntary organization.

SECTION 3. Section 71-3-159, Mississippi Code of 1972, is amended as follows:

71-3-159. The Mississippi Workers' Compensation Self-insurer Guaranty Association created under this chapter shall be renamed as the "Mississippi Workers' Compensation Individual Self-insurer Guaranty Association" and there is created a separate nonprofit unincorporated legal entity to be known as the "Mississippi Workers' Compensation Group Self-insurer Guaranty Association." All individual self-insurers shall be and remain members of the individual association and all group self-insurers shall be and remain members of the group association as a condition of their authority under Section 71-3-75, Mississippi Code of 1972. These associations shall perform their functions under * * * plans of operation established and approved under Section 71-3-165 and shall exercise their powers through * * * boards of directors established under Section 71-3-161. However, any individual or group self-insurer composed of the state, or any agency thereof, or county or municipal governments shall not be required to be members of the individual association or the group association.

SECTION 4. Section 71-3-161, Mississippi Code of 1972, is amended as follows:

71-3-161. (1) The boards of directors of the individual association and the group association shall each consist of not less than five (5) nor more than nine (9) persons, serving terms as established in their plans of operation. The members of each of the boards shall be selected by their respective member self-insurers, subject to the approval of the commission. Vacancies of the boards shall be filled for the remaining period of the term in the same manner as initial appointments.

(2) In approving selections to the boards, the commission shall consider, among other things, whether all member self-insurers of their respective association are fairly represented.

(3) Subject to board approval, members of the boards may be reimbursed from the assets of their respective associations for expenses, including, but not limited to, attorney fees, incurred by them as members of the boards of directors.

SECTION 5. Section 71-3-163, Mississippi Code of 1972, is amended as follows:

71-3-163. (1) Each association shall:

(a) Be obligated to the extent of its covered claims existing prior to the date of default and arising within thirty (30) days after the date of default. In no event shall an association be obligated to a claimant in an amount in excess of the obligation of the defaulting member self-insurer of such association.

(b) Be deemed the self-insurer to the extent of obligations on its * * * covered claims and to such extent shall have all rights, duties and obligations of the individual self-insurer in default or insolvent group self-insurer in default as if such self-insurer were not in default.

(c) Assess its respective individual self-insurers or group self-insurers amounts necessary to pay the obligations of the association under subsection (2) of this section, the expenses of handling covered claims and other expenses authorized by Sections 71-3-151 through 71-3-181. The assessments of each individual self-insurer and each group self-insurer shall be two percent (2%) of the gross paid compensation and medical supplies and services of said member self-insurer during each period of six (6) months. Said two percent (2%) assessment shall be collected by the commission at the same time as and pursuant to the procedures adopted by the commission pursuant to Section 71-3-99, Mississippi Code of 1972. If the obligations of the individual association incurred on or after July 1, 2004, for covered claims arising before July 1, 2004, plus necessary expenses of the individual association incurred on or after July 1, 2004, in evaluating, adjusting, defending or settling such covered claims, exceed the total amount of funds held by the individual association on July 1, 2004, then and to that extent all individual employers and groups of employers who were self-insurers on the dates that the covered claims arose shall be liable for a special assessment in the amount of such deficiency. This special assessment shall be collected by the commission in accordance with the procedures adopted by the commission under Section 71-3-99. All obligations for covered claims arising on or after July 1, 2004, shall be the sole obligation of the association to which the self-insurer in default belongs. The two percent (2%) assessment on each individual self-insurer and on each group self-insurer shall be collected by the commission until the sum of Two Million Dollars ($2,000,000.00) is accumulated by the individual association and the sum of One Million Dollars ($1,000,000.00) is accumulated by the group association. At that time the assessments shall be suspended. However, any employer that becomes authorized under Section 71-3-75 to be a member self-insurer after July 1, 1996, is not entitled to have the two percent (2%) assessment suspended until such member self-insurer has contributed to the guaranty fund to which it belongs for the first four (4) years such employer is a member self-insurer * * * regardless of the amount in the guaranty fund of the association to which it belongs. The two percent (2%) assessment shall be reinstituted for all member self-insurers of the individual association at any time that the guaranty fund balance of the individual association reaches One Million Five Hundred Thousand Dollars ($1,500,000.00) and such assessment shall continue until such time as the balance * * * is Two Million Dollars ($2,000,000.00). The two percent (2%) assessment shall be reinstituted for all member self-insurers of the group association at any time that the guaranty fund balance of the group association reaches Seven Hundred Fifty Thousand Dollars ($750,000.00) and such assessment shall continue until such time as the balance is One Million Dollars ($1,000,000.00). If the maximum assessment, together with the other assets of an association, does not provide in any one (1) year an amount sufficient to make all necessary payments, the funds available in such association shall be paid as directed by the commission and any unpaid portion shall be paid as soon thereafter as funds in such association become available. When the guaranty fund balance of the group association reaches One Million Dollars ($1,000,000.00), the commission may waive the need for bonding requirements for self-funded pools.

(d) Investigate claims brought against the association; adjust, compromise, settle and pay covered claims to the extent of the association's obligations; deny all other claims; and may review settlements, releases and judgments to which the member self-insurer in default were parties to determine the extent to which such settlements, releases and judgments may be properly contested.

(e) Notify such persons as the commission directs under Section 71-3-167(2)(a).

(f) Handle claims through its employees or through one or more other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the commission.

(g) Reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association, and shall pay the other expenses of the association authorized by Sections 71-3-151 through 71-3-181.

(2) Each association may:

(a) Employ or retain such persons as are necessary to handle claims and perform other duties of the association.

(b) Sue or be sued.

(c) Negotiate and become a party to such contracts as are necessary to carry out the purposes of Sections 71-3-151 through 71-3-181.

(d) Perform such other acts as are necessary or proper to effectuate the purposes of Sections 71-3-151 through 71-3-181.

SECTION 6. Section 71-3-165, Mississippi Code of 1972, is amended as follows:

71-3-165. (1) Each association shall 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 association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the commission.

(2) If at any time an association fails to submit suitable amendments to its plan, the commission shall, after notice and hearings, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of Sections 71-3-151 through 71-3-181. Such rules shall continue in force until modified by the commission or superseded by a plan submitted by the noncomplying association and approved by the commission.

(3) All member self-insurers shall comply with the plan of operation of the association to which they belong. The plan of operation of each association shall:

(a) Establish the procedures whereby all the powers and duties of the association under Section 71-3-163 will be performed.

(b) Establish procedures for handling assets of the association.

(d) Establish procedures by which claims may be filed with the association, and establish acceptable forms of proof of covered claims.

(e) Establish regular places and times for meetings of the board of directors.

(f) Establish procedures for records to be kept of all financial transactions of the association, its agents and the board of directors.

(g) Provide that any individual self-insurer or group self-insurer aggrieved by any final action or decision of the association to which it belongs may appeal to the commission within thirty (30) days after the action or decision.

(h) Establish the procedures whereby selections for the board of directors will be submitted to the commission.

(i) Contain additional provisions necessary or proper for the execution of the powers and duties of the association.

(4) The plan of operation of each association may provide that any or all powers and duties of the association, except those under Section 71-3-163(1)(c) and Section 71-3-174, are delegated to a corporation, association or other organization which performs or will perform functions similar to those of the association. Such a corporation, association or organization shall be reimbursed as a servicing facility would be reimbursed, and shall be paid for its performance of any other functions of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors of the association and the commission, and may be made only to a corporation, association or organization which extends protection not substantially less favorable and effective than that provided by Sections 71-3-151 through 71-3-181.

SECTION 7. Section 71-3-167, Mississippi Code of 1972, is amended as follows:

71-3-167. (1) The commission shall:

(a) Upon the request of an association or of any other party or without any request on its own motion, enter any appropriate order finding a member self-insurer to be in default and to determine the date of such default and promptly notify the association to which such member self-insurer belongs of the existence of such default and the date of such default.

(b) Upon request of the board of directors of an association, provide such association with a statement of compensation payments of each member self-insurer of such association.

(2) The commission may:

(a) Require that the group association notify the member self-insurers of any group self-insurer in default and any other interested parties of the default. Such notification shall be by mail at their last known address, where available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient.

(b) Suspend or revoke, after notice and hearing, the authority to self-insure granted under Section 71-3-75, Mississippi Code of 1972, of any member self-insurer who fails to pay an assessment when due, or fails to comply with the plan of operation of the association to which it belongs. As an alternative, the commission may levy a fine on any member self-insurer who fails to pay an assessment when due or fails to comply with the plan of operation. Such fine shall not exceed five percent (5%) of the unpaid assessment per month, except that no fine shall be less than One Hundred Dollars ($100.00) per month.

(3) Any final action or order of the commission under Sections 71-3-151 through 71-3-181 shall be subject to judicial review in a court of competent jurisdiction.

SECTION 8. Section 71-3-169, Mississippi Code of 1972, is amended as follows:

71-3-169. (1) Any person recovering from an association under Sections 71-3-151 through 71-3-181 shall be deemed to have assigned his rights under the Workers' Compensation Law to such association to the extent of his recovery from such association. Any claimant seeking the protection of Sections 71-3-151 through 71-3-181 shall cooperate with the association against which claim is made to the same extent as such person would have been required to cooperate with the member self-insurer in default. Such association shall have no cause of action under the Workers' Compensation Law against the claimant * * * of themember self-insurer in default for any sums it has paid out except such causes of action as such member self-insurer in default would have had if such sums had been paid by such member self-insurer in default.

(2) An association may recover from the self-insurer in default and from a group self-insurer in default all amounts paid by such association on account of covered claims of employees of the member self-insurer in default and any group self-insurer in default to which such member self-insurer in default belongs, as well as all expenses incurred by such association in evaluating, adjusting, defending or settling covered claims of such employees * * *. It shall be presumed that all amounts paid by such association under this section are reasonable, necessary and otherwise in compliance with this chapter. There shall be added to any recovery under this section expenses of litigation of such association in obtaining such recovery, interest at the rate of eight percent (8%) per annum commencing on the date of such default and a ten percent (10%) penalty.

SECTION 9. Section 71-3-173, Mississippi Code of 1972, is amended as follows:

71-3-173. To aid in the detection and prevention of individual self-insurer insolvencies and group self-insurer insolvencies:

(a) The board of directors of an association may, upon majority vote, request that the commission order an examination of any of its member self-insurers and group self-insurers which the board in good faith believes may be in a financial condition hazardous to the potential claimants or the public. Upon making any such request to the commission, such board of directors shall recommend for commission approval persons to perform the examination. The examination shall commence within thirty (30) days following the commission's approval of such request for examination. The commission may request a board of directors to recommend for commission approval, and a board of directors can request the commission to approve, alternative persons to complete an examination if it is believed the examination is not being performed in a timely and efficient manner. * * * The cost of such examination shall be paid by the association requesting such examination, and * * * examination reports shall be forwarded to the commission and treated as are other examination reports. In no event shall reports of such examination * * * be released to the board of directors of such association prior to release to the public, but this shall not preclude the commission from complying with paragraph (b) of this section. The commission shall notify the board of directors of such association when the examination is completed. Each request for an examination by an association shall be kept on file by the commission, but it shall not be open to public inspection prior to the release of an examination report to the public.

(b) It shall be the duty of the commission to report to the board of directors of an association when it has reasonable cause to believe that any member self-insurer or group self-insurer examined or being examined at the request of the board of directors of such association may be insolvent or in a financial condition hazardous to potential claimants or the public.

(c) The board of directors of an association may, upon majority vote, make reports and recommendations to the commission upon any matter germane to the solvency, bankruptcy or reorganization of any of its member self-insurers and group self-insurers. Such reports and recommendations shall not be considered public documents.

(d) The board of directors of an association may, upon majority vote, make recommendations to the commission for the detection and prevention of member self-insurer insolvencies and group self-insurer insolvencies.

(e) The board of directors of an association shall, at the conclusion of any * * * insolvency, bankruptcy case or * * * default * * * where such association was obligated to pay covered claims, prepare a report on the history and causes of such insolvency and bankruptcy, based on the information available to such association, and submit such report to the commission.

SECTION 10. The following section shall be codified as Section 71-3-174, Mississippi Code of 1972:

71-3-174. If an association assumes any obligations of an individual self-insurer or group self-insurer under this chapter, and payments of such obligations exceed the assets of such association, such association shall within not less than sixty (60) days thereafter submit for approval by the commission a plan for special assessment of each individual self-insurer and group self-insurer who may be responsible for payment of such obligations in excess of the assets of such association. Such plan for special assessment shall also include the expenses of such association related to the processing of obligations covered by the special assessment plan. Failure to comply with a commission-approved special assessment plan of an association shall create a cause of action in favor of such association against any noncompliant member self-insurer and any noncompliant group self-insurer for recovery of payments and expenses by such association for which the noncompliant member self-insurer or noncompliant group self-insurer should have been obligated. It shall be presumed that all obligations paid by an association pursuant to a commission-approved special assessment plan, including, but not limited to, expenses associated with processing such obligations, are reasonable, necessary and otherwise in compliance with the requirements of this chapter. There shall be added to any recovery under this section expenses of litigation of such association related to such cause of action, interest at the rate of eight percent (8%) per annum beginning on the date of such noncompliance and a ten percent (10%) penalty.

SECTION 11. Section 71-3-175, Mississippi Code of 1972, is amended as follows:

71-3-175. The individual association and group association shall be subject to examination and regulation by the commission. The board of directors of each association shall submit, not later than March 30 of each year, a financial report for the preceding calendar year in a form approved by the commission. The commission shall furnish the board of directors of an association any records of the commission which would aid in the preparation of this financial report.

SECTION 12. Section 71-3-177, Mississippi Code of 1972, is amended as follows:

71-3-177. The individual association and group association shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions except taxes levied on real or personal property.

SECTION 13. Section 71-3-179, Mississippi Code of 1972, is amended as follows:

71-3-179. Subject to Section 71-3-174, there shall be no liability on the part of and no cause of action of any nature shall arise against any individual self-insurer, any group self-insurer, association, * * * agents and employees of an association, board of directors of an association, and the commission and its employees and representatives, or any of them, for any good faith, affirmative action taken by any of them in the performance of their powers and duties under Sections 71-3-151 through 71-3-181. This section does not apply to individual employers who are members of a group self-insurer. Such immunity shall not extend to any acts of gross negligence by any such individual self-insurer, group self-insurer, association, agents and employees of an association, board of directors of an association and the commission and its employees and representative committed in the performance of their duties hereunder.

SECTION 14. Section 71-3-181, Mississippi Code of 1972, is amended as follows:

71-3-181. All proceedings in which any individualself-insurer in default or group self-insurer in default is a party before the commission or in any court in this state, on order of the commission, may be stayed for a period not to exceed six (6) months from the date of the default to permit proper defense by such association of all covered claims. If any judgment, order, decision, verdict or finding is made or entered against such individual self-insurer in default or group self-insurer in default while the stay provided in this section is effective, the association to which such individual self-insurer or group self-insurer belongs may apply to have such judgment, order, decision, verdict or finding set aside by the same court or administrator that made such judgment, order, decision, verdict or finding. Such association shall be permitted to enter its appearance and defend against any covered claim which is pending on the date of default or which is filed thereafter.

SECTION 15. Section 83-21-21, Mississippi Code of 1972, is amended as follows:

83-21-21. (1) The Commissioner of Insurance may establish a stamping procedure for all eligible nonadmitted/surplus lines insurance policies sold on risks subject to the payment of premium taxes to the State of Mississippi.

(2) The Commissioner of Insurance may rely upon the advice and assistance of a duly constituted association of surplus lines agents in carrying out the purposes of this chapter, if the association files with the commissioner:

(a) A copy of the association's constitution and articles of agreement of association or the association's certificate of incorporation and bylaws and any rules and regulations governing the association's activities;

(b) A list of the association's members; and

(c) The name and address of a resident of this state upon whom notices or orders of the commissioner or process issued by the commissioner may be served.

(3) The Commissioner of Insurance may examine the association's records concerning the functions or duties performed on behalf of the commissioner by the association.

(4) The association shall provide a means for the examination of all surplus lines coverages written to determine whether such coverages comply with the law and such rules or regulations as may be issued by the Commissioner of Insurance.

(5) The Commissioner of Insurance may refuse to accept, or may suspend or revoke the acceptance of, an association for any of the following reasons:

(a) It reasonably appears that the association will not be able to carry out the purposes of this chapter;

(b) The association does not maintain and enforce rules and regulations which will ensure that members of the association and persons associated with those members will comply with this chapter, other applicable state law or rules or regulations promulgated under either;

(c) The rules or regulations of the association do not ensure a fair representation of its members in the selection of directors and in the administration of its affairs;

(d) The rules or regulations of the association do not provide for an equitable allocation of reasonable dues, fees and other charges among members;

(e) The rules or regulations of the association impose an undue burden on competition; or

(f) The association fails to meet other applicable requirements prescribed in this chapter.

(6) A surplus lines agent shall cooperate with the association and the Commissioner of Insurance in fulfilling the surplus lines agent's statutory responsibility under this chapter.

(7) Upon request from the association, the Commissioner of Insurance may approve the levy of an examination fee of not more than one percent (1%) of premiums charged under this chapter for the operation of the association to the extent that such operation relieves the commissioner of duties otherwise required of the Commissioner of Insurance under this chapter.

(8) The association may revoke the membership of, and the Commissioner of Insurance may revoke the license in this state of, any licensee who fails to pay the examination fee when due, if the examination fee has been approved by the Commissioner of Insurance.

(9) The fees levied and collected by the association pursuant to this section have been and remain public funds and shall be subject to transfer to the Department of Insurance Special Fund by act of the Legislature; provided, however, that not more than Two Million Dollars ($2,000,000.00) shall be transferred.

SECTION 16. This act shall take effect and be in force from and after July 1, 2004.


X (SIGNED)	X (SIGNED)
Mark Formby	Dean Kirby

X (SIGNED)	X (SIGNED)
Reecy L. Dickson	Billy Hewes III

X (SIGNED)	X (SIGNED)
John L. Moore	Bob M. Dearing