HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
CHAMBER ACTION
Senate House
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5 ORIGINAL STAMP BELOW
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11 Representative(s) Clarke offered the following:
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13 Amendment to Amendment (325659) (with title amendment)
14 On page 115, line 5, through page 122, line 24,
15 remove from the amendment: all of said lines,
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17 and insert in lieu thereof:
18 Section 36. Subsections (1), (2), and (3) of section
19 440.38, Florida Statutes, are amended to read:
20 440.38 Security for compensation; insurance carriers
21 and self-insurers.--
22 (1) Every employer shall secure the payment of
23 compensation under this chapter:
24 (a) By insuring and keeping insured the payment of
25 such compensation with any stock company or mutual company or
26 association or exchange, authorized to do business in the
27 state;
28 (b) By furnishing satisfactory proof to the Florida
29 Self-Insurers Guaranty Association, Incorporated, created in
30 s. 440.385, that it has the financial strength necessary to
31 assure timely payment of all current and future claims
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 division of its financial ability to pay such compensation
2 individually and on behalf of its subsidiary and affiliated
3 companies with employees in this state and receiving an
4 authorization from the Department of Insurance, division to
5 pay such compensation directly. The association shall review
6 the financial strength of applicants for membership, current
7 members, and former members and make recommendations to the
8 department regarding their qualifications to self-insure in
9 accordance with this act and ss. 440.385 and 440.386. The
10 department shall consult with the association on any
11 recommendation before taking action. the following provisions:
12 1. The association division may recommend that the
13 Department of Insurance, as a condition to such authorization,
14 require an such employer to deposit with in a depository
15 designated by the association a qualifying deposit. The
16 association shall recommend the type and amount of the
17 qualifying security deposit and shall division either an
18 indemnity bond or securities, at the option of the employer,
19 of a kind and in an amount determined by the division and
20 subject to such conditions as the division may prescribe
21 conditions for the qualifying security deposit, which shall
22 include authorization for to the association to call the
23 qualifying security deposit division in the case of default to
24 sell any such securities sufficient to pay compensation awards
25 and related expenses of the association or to bring suit upon
26 such bonds, to procure prompt payment of compensation under
27 this chapter. In addition, the division shall require, As a
28 condition to authorization to self-insure, the employer shall
29 provide proof that the employer has provided for competent
30 personnel with whom to deliver benefits and to provide a safe
31 working environment. Further, The employer division shall
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 also provide evidence of require such employer to carry
2 reinsurance at levels that will ensure the financial strength
3 and actuarial soundness of such employer in accordance with
4 rules adopted promulgated by the Department of Insurance
5 division. The Department of Insurance division may by rule
6 require that, in the event of an individual self-insurer's
7 insolvency, such qualifying security deposits indemnity bonds,
8 securities, and reinsurance policies are shall be payable to
9 the association Florida Self-Insurers Guaranty Association,
10 Incorporated, created pursuant to s. 440.385. Any employer
11 securing compensation in accordance with the provisions of
12 this paragraph shall be known as a self-insurer and shall be
13 classed as a carrier of her or his own insurance. All such
14 employers shall, if requested, provide the association an
15 actuarial report signed by a member of the American Academy of
16 Actuaries providing an opinion of the appropriate present
17 value of the reserves for current and future compensation
18 claims. If any member or former member of the association
19 refuses to timely provide such a report, the association may
20 obtain an order from a circuit court requiring the member to
21 produce such a report and ordering such other relief as the
22 court determines appropriate. The association shall be
23 entitled to recover all reasonable costs and attorney's fees
24 in such proceedings.
25 2. If the employer fails to maintain the foregoing
26 requirements, the association division shall recommend to the
27 Department of Insurance that it revoke the employer's
28 authority to self-insure, unless the employer provides to the
29 association division the certified opinion of an independent
30 actuary who is a member of the American Academy Society of
31 Actuaries as to the actuarial present value of the employer's
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 determined and estimated future compensation payments based on
2 cash reserves, using a 4-percent discount rate, and a
3 qualifying security deposit equal to 1.5 times the value so
4 certified. The employer shall thereafter annually provide such
5 a certified opinion until such time as the employer meets the
6 requirements of subparagraph 1. The qualifying security
7 deposit shall be adjusted at the time of each such annual
8 report. Upon the failure of the employer to timely provide
9 such opinion or to timely provide a security deposit in an
10 amount equal to 1.5 times the value certified in the latest
11 opinion, the association shall provide such information to the
12 department along with a recommendation, and the Department of
13 Insurance division shall then revoke an such employer's
14 authorization to self-insure., and such Failure to comply with
15 this provision shall be deemed to constitute an immediate
16 serious danger to the public health, safety, or welfare
17 sufficient to justify the summary suspension of the employer's
18 authorization to self-insure pursuant to s. 120.68.
19 3. Upon the suspension or revocation of the employer's
20 authorization to self-insure, the employer shall provide to
21 the division and to the Florida Self-Insurers Guaranty
22 association, Incorporated, created pursuant to s. 440.385 the
23 certified opinion of an independent actuary who is a member of
24 the American Academy Society of Actuaries of the actuarial
25 present value of the determined and estimated future
26 compensation payments of the employer for claims incurred
27 while the member exercised the privilege of self-insurance,
28 using a discount rate of 4 percent. The employer shall provide
29 such an opinion at 6-month intervals thereafter until such
30 time as the latest opinion shows no remaining value of claims.
31 With each such opinion, the employer shall deposit with the
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 association division a qualifying security deposit in an
2 amount equal to the value certified by the actuary. The
3 association has a cause of action against an employer, and
4 against any successor of the employer, who fails to timely
5 provide such opinion or who fails to timely maintain the
6 required security deposit with the association division. The
7 association shall recover a judgment in the amount of the
8 actuarial present value of the determined and estimated future
9 compensation payments of the employer for claims incurred
10 while the employer exercised the privilege of self-insurance,
11 together with attorney's fees. For purposes of this section,
12 the successor of an employer means any person, business
13 entity, or group of persons or business entities, which holds
14 or acquires legal or beneficial title to the majority of the
15 assets or the majority of the shares of the employer.
16 4. A qualifying security deposit shall consist, at the
17 option of the employer, of:
18 a. Surety bonds, in a form and containing such terms
19 as prescribed by the association division, issued by a
20 corporation surety authorized to transact surety business by
21 the Department of Insurance, and whose policyholders' and
22 financial ratings, as reported in A.M. Best's Insurance
23 Reports, Property-Liability, are not less than "A" and "V",
24 respectively.
25 b. Certificates of deposit with financial
26 institutions, the deposits of which are insured through the
27 Federal Deposit Insurance Corporation or the Federal Savings
28 and Loan Insurance Corporation.
29 b.c. Irrevocable letters of credit in favor of the
30 association division issued by financial institutions located
31 within this state, the deposits of which are insured through
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 the Federal Deposit Insurance Corporation described in
2 sub-subparagraph b.
3 d. Direct obligations of the United States Treasury
4 backed by the full faith and credit of the United States.
5 e. Securities issued by this state and backed by the
6 full faith and credit of this state.
7 5. The qualifying security deposit shall be held by
8 the association division, or by a depository authorized by the
9 division, exclusively for the benefit of workers' compensation
10 claimants. The security shall not be subject to assignment,
11 execution, attachment, or any legal process whatsoever, except
12 as necessary to guarantee the payment of compensation under
13 this chapter. No surety bond may be terminated, and no letter
14 of credit other qualifying security may be allowed to expire
15 lapse, without 90 days' prior written notice to the
16 association division and the deposit by the self-insuring
17 employer of some other qualifying security deposit of equal
18 value within 10 business days after such notice. Failure to
19 provide such written notice or failure to timely provide
20 qualifying replacement security after such notice shall
21 constitute grounds for the association division to call or sue
22 upon the surety bond, or to act with respect to other pledged
23 security in any manner necessary to preserve its value for the
24 purposes intended by this section, including the exercise its
25 of rights under a letter of credit. Current self-insured
26 employers must comply with this section on or before December
27 31, 2001, or upon maturity of existing security deposits,
28 whichever occurs later the sale of any security at then
29 prevailing market rates, or the withdrawal of any funds
30 represented by any certificate of deposit forming part of the
31 qualifying security deposit. The Department of Insurance
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 division may specify by rule the amount of the qualifying
2 security deposit required prior to authorizing an employer to
3 self-insure and the amount of net worth required for an
4 employer to qualify for authorization to self-insure;
5 (c) By entering into a contract with a public utility
6 under an approved utility-provided self-insurance program as
7 set forth in s. 624.46225 440.571 in effect as of July 1,
8 1983. The Department of Insurance division shall adopt rules
9 to implement this paragraph;
10 (d) By entering into an interlocal agreement with
11 other local governmental entities to create a local government
12 pool pursuant to s. 624.4622;
13 (e) In accordance with s. 440.135, an employer, other
14 than a local government unit, may elect coverage under the
15 Workers' Compensation Law and retain the benefit of the
16 exclusiveness of liability provided in s. 440.11 by obtaining
17 a 24-hour health insurance policy from an authorized property
18 and casualty insurance carrier or an authorized life and
19 health insurance carrier, or by participating in a fully or
20 partially self-insured 24-hour health plan that is established
21 or maintained by or for two or more employers, so long as the
22 law of this state is not preempted by the Employee Retirement
23 Income Security Act of 1974, Pub. L. No. 93-406, or any
24 amendment to that law, which policy or plan must provide, for
25 at least occupational injuries and illnesses, medical benefits
26 that are comparable to those required by this chapter. A local
27 government unit, as a single employer, in accordance with s.
28 440.135, may participate in the 24-hour health insurance
29 coverage plan referenced in this paragraph. Disputes and
30 remedies arising under policies issued under this section are
31 governed by the terms and conditions of the policies and under
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 the applicable provisions of the Florida Insurance Code and
2 rules adopted under the insurance code and other applicable
3 laws of this state. The 24-hour health insurance policy may
4 provide for health care by a health maintenance organization
5 or a preferred provider organization. The premium for such
6 24-hour health insurance policy shall be paid entirely by the
7 employer. The 24-hour health insurance policy may use
8 deductibles and coinsurance provisions that require the
9 employee to pay a portion of the actual medical care received
10 by the employee. If an employer obtains a 24-hour health
11 insurance policy or self-insured plan to secure payment of
12 compensation as to medical benefits, the employer must also
13 obtain an insurance policy or policies that provide indemnity
14 benefits as follows:
15 1. If indemnity benefits are provided only for
16 occupational-related disability, such benefits must be
17 comparable to those required by this chapter.
18 2. If indemnity benefits are provided for both
19 occupational-related and nonoccupational-related disability,
20 such benefits must be comparable to those required by this
21 chapter, except that they must be based on 60 percent of the
22 average weekly wages.
23 3. The employer shall provide for each of its
24 employees life insurance with a death benefit of $100,000.
25 4. Policies providing coverage under this subsection
26 must use prescribed and acceptable underwriting standards,
27 forms, and policies approved by the Department of Insurance.
28 If any insurance policy that provides coverage under this
29 section is canceled, terminated, or nonrenewed for any reason,
30 the cancellation, termination, or nonrenewal is ineffective
31 until the self-insured employer or insurance carrier or
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 carriers notify the division and the Department of Insurance
2 of the cancellation, termination, or nonrenewal, and until the
3 Department of Insurance division has actually received the
4 notification. The Department of Insurance division must be
5 notified of replacement coverage under a workers' compensation
6 and employer's liability insurance policy or plan by the
7 employer prior to the effective date of the cancellation,
8 termination, or nonrenewal; or
9 (f) By entering into a contract with an individual
10 self-insurer under an approved individual
11 self-insurer-provided self-insurance program as set forth in
12 s. 624.46225. The Department of Insurance division may adopt
13 rules to implement this subsection.
14 (2)(a) The Department of Insurance division shall
15 adopt rules by which businesses may become qualified to
16 provide underwriting claims-adjusting, loss control, and
17 safety engineering services to self-insurers.
18 (b) The Department of Insurance division shall adopt
19 rules requiring self-insurers to file any reports necessary to
20 fulfill the requirements of this chapter. Any self-insurer
21 who fails to file any report as prescribed by the rules
22 adopted by the department division shall be subject to a civil
23 penalty not to exceed $100 for each such failure.
24 (3)(a) The license of any stock company or mutual
25 company or association or exchange authorized to do insurance
26 business in the state shall for good cause, upon
27 recommendation of the division, be suspended or revoked by the
28 Department of Insurance. No suspension or revocation shall
29 affect the liability of any carrier already incurred.
30 (a)(b) The Department of Insurance division shall
31 suspend or revoke any authorization to a self-insurer for
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 failure to comply with this act or for good cause, as defined
2 by rule of the department division. No suspension or
3 revocation shall affect the liability of any self-insurer
4 already incurred.
5 (b)(c) Violation of s. 440.381 by a self-insurance
6 fund shall result in the imposition of a fine not to exceed
7 $1,000 per audit if the self-insurance fund fails to act on
8 said audits by correcting errors in employee classification or
9 accepted applications for coverage where it knew employee
10 classifications were incorrect. Such fines shall be levied by
11 the Department of Insurance division and deposited into the
12 Workers' Compensation Administration Trust Fund.
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15 ================ T I T L E A M E N D M E N T ===============
16 And the title is amended as follows:
17 On page 189, line 6, of the amendment, after the
18 semicolon,
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20 insert:
21 amending s. 440.38, F.S.; transferring
22 operation of provisions requiring the securing
23 of payment of compensation by employers from
24 the Division of Workers' Compensation of the
25 Department of Labor and Employment Security to
26 the Florida Self-Insurer's Guaranty
27 Association, Incorporated, and the Department
28 of Insurance; revising and clarifying
29 requirements and procedures; providing powers
30 and duties of the association and the
31 departments; providing for allocation or
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HOUSE AMENDMENT
hbd-032 Bill No. HB 1655
Amendment No. ___ (for drafter's use only)
1 payment of state funds to the association for
2 certain purposes; providing rulemaking
3 authority;
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