2005 West Virginia Code - §23-2-9. — Election of employer or employers\' group to be self-insured and to provide own system of compensation; exceptions; catastrophe coverage; self administration; rules; penalties; regulation of self-insurers.

§23-2-9. Election of employer or employers' group to be self-insured and to provide own system of compensation; exceptions; catastrophe coverage; self administration; rules; penalties; regulation of self-insurers.

(a) Notwithstanding any provisions of this chapter to the contrary, the following types of employers or employers' groups may apply for permission to self-insure their Workers' Compensation risk including their risk of catastrophic injuries.
(1) The types of employers are:
(A) Any employer who is of sufficient capability and financial responsibility to ensure the payment to injured employees and the dependents of fatally injured employees of benefits provided for in this chapter at least equal in value to the compensation provided for in this chapter;
(B) Any employer or group of employers as provided for subdivision (c) of such capability and financial responsibility who maintains its own benefit fund or system of compensation to which its employees are not required or permitted to contribute and whose benefits are at least equal in value to those provided for in this chapter; or
(C) Any employer who is signatory to a collective bargaining agreement that allows for participation in a group Workers' Compensation insurance program may join with any other employer or employers that are signatory to a collective bargaining agreement or agreements that allow for participation in a group Workers' Compensation program and jointly apply to the commission to collectively self-insure their obligations under this chapter. The employers must collectively meet the conditions set forth in paragraph (A) or (B) of this subdivision. There shall be joint and several liability for all employers who choose to jointly self-insure under the provisions of this article.
(2) In order to be approved for self-insurance status, the employer shall:
(A) Have an effective health and safety program at its workplaces; and
(B) Provide security or bond in an amount and form determined by the executive director with the approval of the board of managers which shall balance the employer's financial condition based upon an analysis of its audited financial statements and the full accrued value of current liability for future claim payments based upon generally accepted actuarial and accounting principles of the employer's existing and expected liability.
(3) Any employer whose record upon the books of the commission shows a liability, as determined on an accrued basis against the Workers' Compensation Fund incurred on account of injury to or death of any of the employer's employees, in excess of premiums paid by the employer, shall not be granted the right, individually and directly or from the benefit funds or system of compensation, to be self-insured until the employer has paid into the Workers' Compensation Fund the amount of the excess of liability over premiums paid, including the employer's proper proportion of the liability incurred on account of catastrophes or second injuries as defined in section one, article three of this chapter and charged against such fund.
(4) Upon a finding that the employer has met all of the requirements of this section, the employer may be permitted self-insurance status. An annual review of each self-insurer's continuing ability to meet its obligations and the requirements of this section shall be made by the Workers' Compensation Commission. This review shall include a redetermination of the amount of security or bond which shall be provided by the employer. Failure to provide any new amount or form of security or bond may cause the employer's self-insurance status to be terminated by the Workers' Compensation Commission. The security or bond provided by employers prior to the second day of February, one thousand nine hundred ninety-five, shall continue in full force and effect until the performance of the employer's annual review and the entry of any appropriate decision on the amount or form of the employer's security or bond.
(5) Whenever a self-insured employer furnishes security or bond, including replacement and amended bonds and other securities, as surety to ensure the employer's or guarantor's payment of all obligations under this chapter for which the security or bond was furnished, the security or bond shall be in the most current form or forms approved and authorized by the commission for use by the employer or its guarantors, surety companies, banks, financial institutions or others in its behalf for that purpose.
(b) (1) Notwithstanding any provision in this chapter to the contrary, self-insured employers shall, effective the first day of July, two thousand four, administer their own claims. The executive director shall, pursuant to rules promulgated by the board of managers, regulate the administration of claims by employers granted permission to self-insure their obligations under this chapter. Such rules shall be promulgated at least thirty days prior to the first day of July, two thousand four. A self-insured employer shall comply with rules promulgated by the board of managers governing the self-administration of its claims.
(2) An employer or employers' group who self-insures its risk and self-administers its claims shall exercise all authority and responsibility granted to the commission in this chapter and provide notices of action taken to effect the purposes of this chapter to provide benefits to persons who have suffered injuries or diseases covered by this chapter. An employer or employers' group granted permission to self-insure and self-administer its obligations under this chapter shall at all times be bound and shall comply fully with all of the provisions of this chapter. Furthermore, all of the provisions contained in article four of this chapter pertaining to disability and death benefits are binding on and shall be strictly adhered to by the self-insured employer in its administration of claims presented by employees of the self-insured employer. Violations of the provisions of this chapter and such rules relating to this chapter as may be approved by the board of managers may constitute sufficient grounds for the termination of the authority for any employer to self-insure its obligations under this chapter. Claim notices currently generated by the commission on behalf of self-insured employers must be generated and sent by the self-insured employer or its third-party administrator.
(c) Each self-insured employer shall, on or before the last day of the first month of each quarter or other assigned reporting period, file with the commission a certified statement of the total gross wages and earnings of all of the employer's employees subject to this chapter for the preceding quarter or other assigned reporting period. Each self-insured employer shall pay into the Workers' Compensation Fund as portions of its self-insured employer premium tax:
(1) A sum sufficient to pay the employer's proper portion of the expense of the administration of this chapter;
(2) A sum sufficient to pay the employer's proper portion of the expense of claims for those employers who are in default in the payment of premium taxes or other obligations;
(3) A sum sufficient to pay the employer's fair portion of the expenses of the disabled workers' relief fund;
(4) A sum sufficient to maintain as an advance deposit an amount equal to the previous quarter or other assigned reporting period's payment of each of the foregoing three sums;
(5) A sum as determined by the commission to be sufficient to pay the employer's portion of rates, surcharges or deficit management and deficit reduction assessments; and
(6) A sum as determined by the commission to pay the employer's portion of self-insured catastrophic injury benefits, and second injury payments on all self-insured second injury claims other than second injury claims for those employers self-insured for second injury. Any employer previously self-insured for second injury benefits shall continue to be responsible for payment of those benefits.
(d) The required payments to the employer's injured employees or dependents of fatally injured employees as benefits provided for by this chapter including second injury benefits and catastrophic injury benefits, if applicable, shall constitute the remaining portion of the self-insurer's premium tax.
(e) Notwithstanding any provision of subsection (d) of this section to the contrary, except for those increases made effective for fiscal year two thousand four by action of the compensation programs performance council heretofore established in article three, chapter twenty-one-a of this code taken prior to the effective date of the amendment and reenactment of this section, the portion of the premium taxes for each self-insured employer as determined under subdivisions (1) through (6), inclusive, subsection (c) of this section shall not be increased during fiscal years two thousand four, two thousand five and two thousand six.
(f)(1) If an employer defaults in the payment of any portion of its self-insured employer premium taxes, surcharges or assessments, the commission shall, in an appropriate case, determine the full accrued value based upon generally accepted actuarial and accounting principles of the employer's liability including the costs of all awarded claims and of all incurred but not reported claims. The amount determined may, in an appropriate case, be assessed against the employer. The commission may demand and collect the present value of the defaulted tax liability. Interest shall accrue upon the demanded amount as provided for in section thirteen of this article until the premium tax is fully paid. Payment of all amounts then due to the commission and to the employer's employees is a sufficient basis for reinstating the employer to good standing with the fund. In addition, any self-insured employer who, without good cause, ceases to make required payments to the employer's injured employees or dependents of fatally injured employees as benefits provided for by this chapter including second injury benefits and catastrophic injury benefits, if applicable, is in default. The board of managers shall establish by rule the procedures by which the existence or nonexistence of good cause is to be determined by the commission.
(2) Premium tax assessments are special revenue taxes under and according to the provisions of state Workers' Compensation law and are considered to be tax claims, as priority claims or administrative expense claims according to those provisions under the law provided in the United States Bankruptcy Code, Title 11 of the United States Code. In addition, as the same was previously intended by the prior provisions of this section, this amendment and reenactment is for the purpose of clarification of the taxing authority of the Workers' Compensation Commission.
(g) Each self-insured employer shall elect whether or not to self-insure its catastrophic injury risk as defined in subsection (c), section one, article three of this chapter. A self-insured employer who elects to insure its catastrophic risk through a policy of excess insurance obtained through a private insurance carrier approved by the commission shall provide a copy of the policy to the commission. Upon termination of the commission, self-insured employers shall either self-insure their catastrophic risk or insure their catastrophic risk through a policy of excess insurance obtained through a private insurance carrier approved by the Insurance Commissioner. Self-insured employers shall also reinsure their catastrophic risks.
(1) If the employer does not elect to self-insure its catastrophic risk, the employer shall pay premium taxes for this coverage in the same manner as is provided for in section four of this article and in rules adopted to implement that section. As stated in this subsection, this option shall expire upon termination of the commission. If the employees of that employer suffer injury or death from a catastrophe, the payment of the resulting benefits shall be made from the catastrophe reserve of the surplus fund provided for in subsection (b), section one, article three of this chapter. Any portion of an employer's catastrophic liability insured and paid under a policy of insurance purchased by the employer shall not be included in the liabilities upon which the employer's security or bond is determined in subsection (a) of this section.
(2) If an otherwise self-insured employer elects to self-insure its catastrophic risk, the security or bond required in subsection (a) of this section shall include the liability for the catastrophic risk.
(h) For those employers previously permitted to self-insure their second injury risks, the amount of the security or bond required in subsection (a) of this section shall include the liability for that risk. All benefits provided for by this chapter which are awarded to the employer's employees which constitute second injury life awards shall be paid by the employer and not the commission.
(i) The commission may create, implement, establish and administer a perpetual self-insurance security risk pool of funds, sureties, securities, insurance provided by private insurance carriers or other states' programs, and other property, of both real and personal properties, to secure the payment of obligations of self-insured employers. If a pool is created, the board of managers shall adopt rules for the organizational plan, participation, contributions and other payments which may be required of self-insured employers under this section. The board of managers may adopt a rule authorizing the commission to assess each self-insured employer in proportion according to each employer's portion of the unsecured obligation and liability or to assess according to some other method provided for by rule which shall properly create and fund the risk pool to serve the needs of employees, employers and the Workers' Compensation Fund by providing adequate security. The board of managers, in establishing a security risk pool, may authorize the executive director to use any assessments, premium taxes and revenues and appropriations as may be made available to the commission. Effective upon termination of the commission, all statutory and regulatory authority provided to the commission and board of managers over pools created pursuant to this section shall transfer to the Insurance Commissioner: Provided, That the funds contained in the security pool shall be deposited into the old fund and the funds contained in the guaranty pool shall be deposited in the self-insured employer guaranty risk pool created in article two-c of this chapter. All assets held by the commission for security pursuant to 85 CSR §19 (2004) shall transfer to the Insurance Commissioner.
(j) Any self-insured employer which has had a period of inactivity due to the nonemployment of employees which results in its reporting of no wages on reports to the commission for a period of four or more consecutive quarters shall have its status at the commission inactivated and shall apply for reactivation to status as a self-insured employer prior to its reemployment of employees. Despite the inactivation, the self-insured employer shall continue to make payments on all awards for which it is responsible. Upon application for reactivation of its status as an operating self-insured employer, the employer shall document that it meets the eligibility requirements needed to maintain self-insured employer status under this section and any rules adopted to implement it. If the employer is unable to requalify and obtain approval for reactivation, the employer shall, effective with the date of employment of any employee, become a subscriber to the Workers' Compensation Fund and, upon termination of the commission, shall purchase Workers' Compensation insurance as provided for in article two-c of this chapter, but shall continue to be a self-insurer as to the prior period of active status and to furnish security or bond and meet its prior self-insurance obligations.
(k) In any case under the provisions of this section that require the payment of compensation or benefits by an employer in periodical payments and the nature of the case makes it possible to compute the present value of all future payments, the commission may, in its discretion, at any time compute and permit to be paid into the Workers' Compensation Fund an amount equal to the present value of all unpaid future payments on the award or awards for which liability exists in trust. Thereafter, the employer shall be discharged from any further portion of premium tax liability upon the award or awards and payment of the award or awards shall be assumed by the commission. Upon termination of the commission, those self-insured employers may thereafter purchase Workers' Compensation insurance as provided for in article two-c of this chapter, but said self-insured employers shall remain liable for their self-insured employer claims liabilities.
(l) Any employer subject to this chapter, who elects to carry the employer's own risk by being a self-insured employer and who has complied with the requirements of this section and of any applicable rules, shall not be liable to respond in damages at common law or by statute for the injury or death of any employee, however occurring, after the election's approval and during the period that the employer is allowed to carry the employer's own risk.
(m) An employer may not hire any person or group to self-administer claims under this chapter as a third-party administrator unless the person or group has been determined to be qualified to be a third-party administrator by the commission pursuant to rules adopted by the board of managers. Any person or group whose status as a third-party administrator has been revoked, suspended or terminated by the commission shall immediately cease administration of claims and shall not administer claims unless subsequently authorized by the commission.
(n) All regulatory, oversight, and document gathering authority provided to the commission under section nine, article two, chapter twenty-three shall transfer to the Insurance Commissioner and the industrial council upon termination of the commission.