HB-4362, As Passed House, May 7, 2015

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 4362

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1969 PA 317, entitled

 

"Worker's disability compensation act of 1969,"

 

by amending section 611 (MCL 418.611), as amended by 1993 PA 198.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 611. (1) Each employer under this act, subject to the

 

approval of the director, shall secure the payment of compensation

 

under this act by either of the following methods:

 

     (a) By receiving authorization from the director to be a self-

 

insurer. In the case of an individual employer, the director may

 

grant that authorization upon a reasonable showing by the employer

 

of the employer's solvency and financial ability to pay the

 

compensation and benefits provided for in this act and to make

 

payments directly to the employer's employees as the employees

 

become entitled to receive the payment under the terms and

 

conditions of this act and pursuant to R 408.43c of the Michigan

 

administrative code. If the director determines it to be necessary,

 

the director shall require the furnishing of a bond or other

 

security in a reasonable form and amount. Such security as may be

 

required by the director may be provided by furnishing specific

 

excess insurance, aggregate excess insurance coverage through a

 

carrier authorized to write in this state in an amount acceptable

 

to the director, a surety bond, an irrevocable letter of credit in

 

a format acceptable to the bureau, agency, and claims payment

 

guarantees.

 

     (b) By insuring against liability with an insurer authorized

 

to transact the business of worker's compensation insurance within

 

this state.

 

     (2) Under procedures and conditions specifically determined by

 

the director, 2 or more employers in the same industry with

 

combined assets of $1,000,000.00 or more, or 2 or more public

 

employers of the same type of unit, may be permitted by the

 

director to enter into agreements to pool their liabilities under

 

this act for the purpose of qualifying as self-insurers. Each of

 

the employer members participating in a self-insurer group

 

possesses ownership in its proportional share of the assets of the

 

group in excess of the self-insurer group obligations. The trustees

 

of a self-insurer group, acting in their fiduciary capacity, shall

 

establish processes and procedures for the distribution of excess

 

assets with the approval of the director. For purposes of this

 

subsection, cities, townships, counties, and villages; or 1 or more

of the agencies, instrumentalities, or other legal entities of

 

cities, townships, counties, or villages or any combination

 

thereof; or authorities of 1 or more of cities, townships,

 

counties, or villages or any combination thereof created pursuant

 

to law shall be are considered public employers of the same type of

 

unit. An employer member of the approved group shall be is

 

classified as a self-insurer. For purposes of this subsection,

 

universities and colleges, community colleges, and local and

 

intermediate school districts, shall be are considered public

 

employers of the same type of unit. The director may grant

 

authorization to become a member of an approved group upon a

 

reasonable showing by an employer of the employer's solvency and

 

financial stability to meet the employer's obligations as a member

 

of the group. If the director determines it to be necessary, the

 

director may require the furnishing of a surety bond, fidelity

 

bond, or other security by the group in a reasonable form and

 

amount. Such The security as may be required by the director

 

requires may be provided by furnishing specific excess insurance,

 

aggregate excess insurance coverage through a carrier authorized to

 

write in this state , including the state accident fund, in an

 

amount acceptable to the director. An irrevocable letter of credit

 

in a format currently used by the bureau on December 15, 1992 or a

 

surety bond may be furnished in place of aggregate excess

 

insurance. The current format of the irrevocable letter of credit

 

used by the bureau agency on December 15, 1992 shall be is

 

acceptable until the format of the irrevocable letter of credit is

 

promulgated by agency rules. of the bureau. If an irrevocable

letter of credit is proposed, the director may require an

 

independent actuarial opinion from the group fund supporting the

 

proposal and estimating the ultimate loss at 90% confidence level.

 

Assets of the fund allocated for the payment of administrative

 

expenses or set aside for claims payments shall not be used as

 

collateral for the irrevocable letter of credit. Use of surplus

 

assets as collateral shall require must have prior bureau agency

 

approval. If the director determines it to be necessary, the

 

director may obtain an independent review of the actuarial opinion

 

submitted by the group fund at the expense of the group fund to

 

determine the ability of the group fund to meet its obligation

 

under the terms and conditions of this act. The group fund shall

 

make available all documentation used for the actuarial report if

 

requested by the director for an independent review. An employer,

 

except a public employer, permitted to become a member of a self-

 

insurers' group under this act shall execute a written agreement in

 

which the employer agrees to jointly and severally assume and

 

discharge, by payment, any lawful award entered by the bureau

 

agency against a member of the group. If the case in which the

 

award is entered is appealed by either party, then the award shall

 

first must be upheld before a member of the group may be is liable.

 

In the case of a public employer that is permitted to become a

 

member of a self-insurers' group, any Any lawful award entered by

 

the bureau agency, and upheld if appealed, against a public

 

employer which that is a member of a group , if the award is upheld

 

on appeal, shall be is a liability of the group jointly but not

 

severally. and, if If the group is unable to pay the award, the

group or the bureau agency shall individually assess those public

 

employers who were members on the date of injury to the extent

 

necessary to pay the award. An assessment shall be is a contractual

 

obligation of the public employer. As used in this subsection,

 

"public employer" means a city, village, township, county, school

 

district, or community college; or an agency, entity, or

 

instrumentality thereof; or an authority comprised of comprising

 

any combination of the foregoing. This subsection shall does not

 

alter the obligation of either a group or an employer from

 

complying to comply with section 862. For purposes of this

 

subsection, an authorized group self-insurer, in conjunction with

 

providing security for the payment of compensation and benefits

 

provided for in this act, may provide coverage customarily known as

 

employer's liability insurance for members of the group.

 

     (3) For the purpose of determining whether employers are in

 

the same industry under subsection (2), the following shall apply:

 

     (a) The forest industry shall be considered as includes those

 

businesses engaged in the growing, harvesting, processing, or sale

 

of forest products, except at the retail level, unless more than

 

80% of the income from the retailer comes from the growing,

 

harvesting, processing, or wholesale sale of forest products, and

 

any supplier or service companies that receive more than 80% of

 

their income from these businesses.

 

     (b) "Forest products" include Christmas trees, firewood, maple

 

syrup, and all other products derived from wood or wood fiber which

 

that are manufactured with woodworking equipment including saws,

 

planers, drills, chippers, lumber dry kilns, sanders, glue presses,

nailers, notchers, shapers, lathes, molders, and other similar

 

finishing processes.

 

     (4) The director may permit a nonpublic health care facility

 

employer to become a member of a self-insurers' group with public

 

employers pursuant to under subsection (2) if the principal service

 

rendered by the nonpublic health care facility employer is the same

 

type of service rendered by the public employers. If a nonpublic

 

health care facility employer is permitted to become a member of

 

the same self-insurers' group with public employers, any lawful

 

award entered by the bureau agency against that nonpublic health

 

care facility employer, if the award is upheld on appeal, shall be

 

is a liability of the group and, if the group is unable to pay the

 

award, the group or the bureau agency shall individually assess

 

those nonpublic health care facility employers who were members on

 

the date of injury to the extent necessary to pay the award. The

 

director may waive the requirement of the written agreement

 

required of a nonpublic health care facility employer under

 

subsection (2) as to any member of a group involving a combination

 

of public and nonpublic health care facility employers. Except as

 

otherwise provided in this subsection, subsection (2) shall be is

 

applicable to all self-insurers' groups and their individual

 

employer members.

 

     (5) The director may decline to approve an application for

 

individual or group self-insurance or terminate the self-insured

 

privilege if the self-insurer fails to demonstrate that the self-

 

insurer will be able to meet all present and future obligations

 

under this act or the self-insurer fails to maintain security

requirements previously imposed as a condition for approval. Notice

 

of intent to deny or terminate self-insured status shall be mailed

 

to the self-insurer. The notice shall must include the grounds for

 

denial or termination. The self-insurer may request a hearing

 

before the director within 15 days after the mailing of the notice

 

by the bureau. agency. If the recommendation for termination of

 

self-insured status is based on the self-insurer's failure to

 

maintain existing security requirements such as excess insurance,

 

letters of credit, guarantees, or surety bonds, the self-insurer

 

shall reinstate the security requirements pending the hearing.

 

Proof of such the reinstatement shall accompany the request for

 

hearing. Failure If the self-insurer fails to reinstate existing

 

security requirements, shall allow the director to may make a final

 

decision on the evidence before him or her without further hearing.

 

     (6) If an appeal is taken from a decision of the director made

 

pursuant to under subsection (5), the director may require the

 

self-insurer to post a surety bond, irrevocable letter of credit,

 

or other security in a reasonable amount to guarantee that money

 

will be available to pay workers' worker's disability compensation

 

benefits to injured employees covered by the self-insured program.

 

Such The security shall must be filed with the director at the time

 

an appeal is taken to the appellate commission and shall must be

 

consistent with the provisions of R 408.43a and R 408.43q of the

 

Michigan administrative code. If the self-insurer is a group fund,

 

the director shall review the assets and liabilities, claims

 

experience history, and future claims potential of the group fund

 

and recognize the ability of the group fund to assess its

membership in making a decision on the need for additional

 

security. A claim for review of the director's order or decision

 

made pursuant to subsection (5) shall be filed with the workers'

 

Michigan compensation appellate commission within 15 days after the

 

mailing date of the order or decision. If a claim for review is not

 

filed within 15 days, the aggrieved party shall be is considered to

 

have waived the right to appeal. Within 15 days after service of a

 

copy of the claim for review, unless the time is extended by order

 

of the appellate commission, the bureau agency shall file the

 

original or certified copy of the entire record of the proceedings,

 

unless parties to the proceedings for review stipulate that the

 

record be shortened. A party who unreasonably refuses to so

 

stipulate may be taxed by the appellate commission for the

 

additional costs of preparation. If the self-insurer disputes the

 

imposition of additional security at time of appeal, such the

 

dispute shall must be in the form of a motion directed to the

 

appellate commission within 15 days after the filing of the record.

 

The bureau's agency's reply to such the motion shall be filed

 

within 15 days after receipt of appellant's motion. The appellate

 

commission shall act on the motion within 15 days after filing of

 

the bureau's the agency files its reply to appellant's motion and

 

shall notify the parties of interest of its decision. The appealing

 

party's brief shall be filed with the appellate commission 15 days

 

after the filing of the record and a copy shall be served upon the

 

opposite party. The bureau's agency's reply brief shall be filed

 

within 15 days after receipt of the appellant's brief. Oral

 

argument may be requested by any party to the proceedings. Such The

request shall must be in the form of a motion directed to the

 

appellate commission within 15 days after the filing of the record.

 

The appellate commission shall act on the motion within 15 days of

 

filing the motion and shall notify the parties in interest of its

 

decision. Otherwise, and subsequent to the expiration of after 15

 

days, the appellate commission shall hear the case upon the record

 

and shall consider such the briefs as that have been filed. The

 

decision of the appellate commission shall be made within 30 days

 

after the date of the oral argument or, if no oral argument, within

 

30 days after the date that the bureau's agency's brief is required

 

to be filed. The appellate commission may remand the matter to the

 

bureau agency for purposes of supplying a complete record if it is

 

determined determines that the record is insufficient for purposes

 

of review. The commencement of proceedings Proceedings under this

 

section shall do not operate as a stay of the bureau's agency's

 

order, including any additional security imposed by the director,

 

unless stayed by order of the appellate commission. The commission

 

commission-ordered stay shall be is subject to such any conditions

 

as that the appellate commission may impose. imposes. The appellate

 

commission shall have the has jurisdiction to affirm, modify, or

 

set aside the order or decision of the director. An appeal from a A

 

final order entered by the appellate commission enters relating to

 

a decision or order of the director to deny an application for

 

self-insurance or to terminate the self-insured privilege under

 

subsection (5) may be made appealed by filing an application for

 

leave to appeal to the court of appeals within 30 days after the

 

order.

     (7) The director , from time to time, may review and alter a

 

decision approving the election of an employer to adopt any 1 of

 

the methods permitted by subsection (1), (2), or (4) if, in the

 

director's judgment, that action is necessary or desirable for any

 

reason.

 

     (8) Under procedures and conditions specifically determined by

 

the director, an individual, partnership, or corporation desiring

 

to engage in the business of servicing an approved worker's

 

compensation self-insurance program for an individual or group of

 

employers shall make application apply to the director before

 

entering into a contract with the individual or group of employers

 

and shall satisfy the director that the individual, partnership, or

 

corporation has adequate facilities and competent personnel to

 

service a self-insurance program in a manner which that will

 

fulfill the employer's obligations under this act.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.

 

     Enacting section 2. It is the intent of the legislature that

 

the 2015 amendatory act that amended MCL 418.611 clarifies and

 

expresses the original intent of the legislature that employer

 

members own their proportional share of the assets of self-insurer

 

groups authorized under MCL 418.611 in excess of the self-insurer

 

group obligations. Unless a judgment or final order has been

 

entered in the action and all rights to appeal the judgment or

 

final order have been exhausted or have expired, the amendments

 

made in the 2015 amendatory act that amended MCL 418.611 are

 

intended to apply to any claim made or action taken on or after the

effective date of the 2015 amendatory act that amended MCL 418.611

 

to enforce the ownership rights of employer members participating

 

in a self-insurer group, and to any claim made or action taken to

 

enforce the ownership rights of employer members participating in a

 

self-insurer group that is pending on the effective date of the

 

2015 amendatory act that amended MCL 418.611.