2006 Louisiana Laws - RS 23:1195 — Authorization; trade or professional association; initial financial requirements

§1195.  Authorization; trade or professional association; initial financial requirements

A.(1)  Any five or more Louisiana employers who are not public entities, each of whom has a positive net worth, is financially solvent and is capable of assuming the obligations set forth under this Chapter and who is a member of the same bona fide trade or professional association as the other employers, may agree to pool their liabilities to their employees on account of personal injury and occupational disease arising out of or incurred during the course and scope of the employment relationship on a fund year basis.  This arrangement shall not be deemed to be insurance and shall not be subject to the provisions of Chapter 1 of Title 22 of the Louisiana Revised Statutes of 1950.

(2)  An agreement to pool liabilities under this Chapter shall be set forth in an indemnity agreement signed by the employer and fund representative acknowledging and agreeing to the assumption of the liabilities as set forth in this Subpart.

(3)  The arrangement shall not be a member insured of the Louisiana Insurance Guaranty Association, nor shall the Louisiana Insurance Guaranty Association be liable under any circumstances for any claims, or increments of any claims, made against the arrangement.

(4)  The arrangement may include the establishment of a trust fund by a trade or professional association for its members, and the arrangement, whether established by association members or by an association, shall be known as a group self-insurance fund for workers' compensation and shall be governed by a board of trustees.

(5)(a)  The arrangement shall be domiciled in the state of Louisiana.  All books, records, documents, accounts, and vouchers shall be kept in such a manner that the arrangement's financial condition, affairs, and operations can be ascertained and so that its financial statements filed with the commissioner of insurance can be readily verified and its compliance with the law determined.  Any or all books, records, documents, accounts, and vouchers may be photographed or reproduced on film.  Any photographs, microphotographs, optical imaging, or film reproductions of any original books, records, documents, accounts, and vouchers shall for all purposes be considered the same as the originals thereof and a transcript, exemplification, or certified copy of any such photograph, microphotograph, optical imaging, or film reproduction shall for all purposes be deemed to be a transcript, exemplification, or certified original.  Any original so reproduced may thereafter be disposed of or destroyed, as provided for in Subparagraph (b) of this Paragraph, if provision is made for preserving and examining the reproduction.

(b)  All original books, records, documents, accounts, and vouchers, or such reproductions thereof, shall be preserved and kept in this state for the purpose of examination and until the authority to destroy or otherwise dispose of the records is secured from the commissioner of insurance.  All original records shall be maintained for the period commencing on the first day following the last period examined by the commissioner of insurance through the subsequent examination period, or three years, whichever is greater, except that any original whereby the member agrees to or acknowledges such member's in solido liability for liabilities of fund shall be permanently maintained.

(6)  At all times throughout the existence of the fund, two or more members of the arrangement shall maintain a minimum combined net worth of one million dollars and a ratio of current assets to current liabilities of at least one-to-one.

(7)  Notwithstanding the provisions of this Subsection, employers who have pooled their liabilities under Subparagraph (1)(a) of this Subsection may also pool their liabilities under the United States Longshore and Harbor Worker's Compensation Act, when the liability is clearly identified with the course and scope of employment of the employee of the member employer under this Chapter and their fund has been authorized by the United States Department of Labor to insure payment of such compensation.

B.  For the purposes of this Subpart, a "bona fide trade or professional association" shall mean a trade or professional association which:

(1)(a)  Is a tax exempt organization approved by the Internal Revenue Service under the provisions of 26 United States Code Section 501;

(b)  Is a nonprofit corporation organized under Chapter 2 of Title 12 of the Louisiana Revised Statutes; or

(c)  Is otherwise approved by the department.

(2)  Provides services to its membership so that the primary function of the trade or professional association is not the sponsorship, operation, or management of a fund, or related employee safety program, or other related activities.

(3)  Is either:

(a)  Chartered and domiciled in the state of Louisiana and has been in existence for a period of five years or more; or

(b)  Chartered and domiciled in the state of Louisiana and whose members, prior to April 15, 1991, organized and placed in operation a fund.

C.  Each fund shall submit evidence at its inception to the Department of Insurance which establishes financial strength and liquidity of the members to pay compensation claims promptly and support the financial ability of the fund to satisfy its obligations upon the establishment of the fund, including:

(1)  Financial statements, audited by an independent certified public accountant, of at least two members, showing at the inception of the fund a combined worth of those members of not less than the amount required by Subsection A of this Section.

(2)  Current financial statements of all other members.

(3)  Schedules of the entire membership showing:

(a)  The ratio of current assets to current liabilities of all members combined to be greater than one-to-one.

(b)  The working capital of all members combined to be of an amount establishing financial strength and liquidity of the members to pay compensation claims promptly.

(c)  The net worth of all members combined to be not less than the amount required by Subsection A of this Section.

(4)  Other financial information and documents as required by the department.

D.  For purposes of this Subpart, "public entities" shall mean political subdivisions as defined in Section 44 of Article VI of the Constitution of Louisiana.  However, "public entities" shall not include hospital service districts and health care facilities established by local governing authorities.

Acts 1995, No. 703, §1, eff. June 21, 1995; Acts 1997, No. 445, §1, eff. June 22, 1997; Acts 2006, No. 634, §1, eff. June 23, 2006.