Senate Bill sb2270e2
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1 A bill to be entitled
2 An act relating to workers' compensation;
3 amending s. 440.107, F.S.; authorizing the
4 department to issue an order of conditional
5 release from a stop-work order if an employer
6 complies with coverage requirements and a
7 penalty payment agreement; amending s. 627.311,
8 F.S.; establishing three tiers of employers
9 eligible for coverage under the plan; providing
10 for criteria and rates for each tier; deleting
11 references to subplans; providing for
12 assessments to cover deficits in tiers one and
13 two; providing procedures to collect the
14 assessment; exempting the plan from specified
15 premium tax and assessments; requiring the
16 Auditor General to conduct an operational audit
17 of the association; requiring the association
18 to comply with the Florida Single Audit Act, if
19 certain conditions are met; providing
20 appropriations; amending s. 627.0915, F.S.,
21 relating to drug-free workplace discounts;
22 providing for notice by insurers to employers
23 of the availability of premium discounts where
24 certain drug-free workplace programs are used;
25 appropriating moneys from the Workers'
26 Compensation Administration Trust Fund to fund
27 plan deficits; providing transitional
28 provisions to subplan "D" policies; providing
29 legislative intent to create a state workers'
30 compensation mutual fund under certain
31 conditions; establishing the Workers'
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1 Compensation Insurance Market Evaluation
2 Committee; providing for appointment of
3 members; requiring the committee to monitor and
4 report; requiring the Office of Insurance
5 Regulation and workers' compensation insurers
6 to report certain information; specifying
7 meeting dates and interim reports for the
8 committee; providing for reimbursement for
9 travel and per diem; providing legislative
10 intent as to the type of mutual fund it intends
11 to create; prohibiting insurers from providing
12 coverage to any person who is an affiliated
13 person of a person who is delinquent in the
14 payment of premiums, assessments, penalties, or
15 surcharges owed to the plan; amending s.
16 440.16(7), F.S., which limits workers'
17 compensation benefits to a nonresident alien
18 for the death of the worker; providing
19 effective dates.
20
21 Be It Enacted by the Legislature of the State of Florida:
22
23 Section 1. Paragraph (a) of subsection (7) of section
24 440.107, Florida Statutes, is amended to read:
25 440.107 Department powers to enforce employer
26 compliance with coverage requirements.--
27 (7)(a) Whenever the department determines that an
28 employer who is required to secure the payment to his or her
29 employees of the compensation provided for by this chapter has
30 failed to secure the payment of workers' compensation required
31 by this chapter or to produce the required business records
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1 under subsection (5) within 5 business days after receipt of
2 the written request of the department, such failure shall be
3 deemed an immediate serious danger to public health, safety,
4 or welfare sufficient to justify service by the department of
5 a stop-work order on the employer, requiring the cessation of
6 all business operations. If the department makes such a
7 determination, the department shall issue a stop-work order
8 within 72 hours. The order shall take effect when served upon
9 the employer or, for a particular employer work site, when
10 served at that work site. In addition to serving a stop-work
11 order at a particular work site which shall be effective
12 immediately, the department shall immediately proceed with
13 service upon the employer which shall be effective upon all
14 employer work sites in the state for which the employer is not
15 in compliance. A stop-work order may be served with regard to
16 an employer's work site by posting a copy of the stop-work
17 order in a conspicuous location at the work site. The order
18 shall remain in effect until the department issues an order
19 releasing the stop-work order upon a finding that the employer
20 has come into compliance with the coverage requirements of
21 this chapter and has paid any penalty assessed under this
22 section. The department may issue an order of conditional
23 release from a stop-work order to an employer upon a finding
24 that the employer has complied with coverage requirements of
25 this chapter and has agreed to remit periodic payments of the
26 penalty pursuant to a payment agreement schedule with the
27 department. If an order of conditional release is issued,
28 failure by the employer to meet any term or condition of such
29 penalty payment agreement shall result in the immediate
30 reinstatement of the stop-work order and the entire unpaid
31 balance of the penalty shall become immediately due. The
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1 department may require an employer who is found to have failed
2 to comply with the coverage requirements of s. 440.38 to file
3 with the department, as a condition of release from a
4 stop-work order, periodic reports for a probationary period
5 that shall not exceed 2 years that demonstrate the employer's
6 continued compliance with this chapter. The department shall
7 by rule specify the reports required and the time for filing
8 under this subsection.
9 Section 2. Subsection (5) of section 627.311, Florida
10 Statutes, is amended to read:
11 627.311 Joint underwriters and joint reinsurers;
12 public records and public meetings exemptions.--
13 (5)(a) The office shall, after consultation with
14 insurers, approve a joint underwriting plan of insurers which
15 shall operate as a nonprofit entity. For the purposes of this
16 subsection, the term "insurer" includes group self-insurance
17 funds authorized by s. 624.4621, commercial self-insurance
18 funds authorized by s. 624.462, assessable mutual insurers
19 authorized under s. 628.6011, and insurers licensed to write
20 workers' compensation and employer's liability insurance in
21 this state. The purpose of the plan is to provide workers'
22 compensation and employer's liability insurance to applicants
23 who are required by law to maintain workers' compensation and
24 employer's liability insurance and who are in good faith
25 entitled to but who are unable to procure purchase such
26 insurance through the voluntary market. The plan must have
27 actuarially sound rates that are not competitive with approved
28 voluntary market rates so that the plan functions as a
29 residual market mechanism assure that the plan is
30 self-supporting.
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1 (b) The operation of the plan is subject to the
2 supervision of a 9-member board of governors. The board of
3 governors shall be comprised of:
4 1. Three members appointed by the Financial Services
5 Commission. Each member appointed by the commission shall
6 serve at the pleasure of the commission;
7 2. Two of the 20 domestic insurers, as defined in s.
8 624.06(1), having the largest voluntary direct premiums
9 written in this state for workers' compensation and employer's
10 liability insurance, which shall be elected by those 20
11 domestic insurers;
12 3. Two of the 20 foreign insurers as defined in s.
13 624.06(2) having the largest voluntary direct premiums written
14 in this state for workers' compensation and employer's
15 liability insurance, which shall be elected by those 20
16 foreign insurers;
17 4. One person appointed by the largest property and
18 casualty insurance agents' association in this state; and
19 5. The consumer advocate appointed under s. 627.0613
20 or the consumer advocate's designee.
21
22 Each board member shall serve a 4-year term and may serve
23 consecutive terms. A vacancy on the board shall be filled in
24 the same manner as the original appointment for the unexpired
25 portion of the term. The Financial Services Commission shall
26 designate a member of the board to serve as chair. No board
27 member shall be an insurer which provides services to the plan
28 or which has an affiliate which provides services to the plan
29 or which is serviced by a service company or third-party
30 administrator which provides services to the plan or which has
31 an affiliate which provides services to the plan. The minutes,
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1 audits, and procedures of the board of governors are subject
2 to chapter 119.
3 (c) The operation of the plan shall be governed by a
4 plan of operation that is prepared at the direction of the
5 board of governors. The plan of operation may be changed at
6 any time by the board of governors or upon request of the
7 office. The plan of operation and all changes thereto are
8 subject to the approval of the office. The plan of operation
9 shall:
10 1. Authorize the board to engage in the activities
11 necessary to implement this subsection, including, but not
12 limited to, borrowing money.
13 2. Develop criteria for eligibility for coverage by
14 the plan, including, but not limited to, documented rejection
15 by at least two insurers which reasonably assures that
16 insureds covered under the plan are unable to acquire coverage
17 in the voluntary market. Any insured may voluntarily elect to
18 accept coverage from an insurer for a premium equal to or
19 greater than the plan premium if the insurer writing the
20 coverage adheres to the provisions of s. 627.171.
21 3. Require notice from the agent to the insured at the
22 time of the application for coverage that the application is
23 for coverage with the plan and that coverage may be available
24 through an insurer, group self-insurers' fund, commercial
25 self-insurance fund, or assessable mutual insurer through
26 another agent at a lower cost.
27 4. Establish programs to encourage insurers to provide
28 coverage to applicants of the plan in the voluntary market and
29 to insureds of the plan, including, but not limited to:
30 a. Establishing procedures for an insurer to use in
31 notifying the plan of the insurer's desire to provide coverage
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1 to applicants to the plan or existing insureds of the plan and
2 in describing the types of risks in which the insurer is
3 interested. The description of the desired risks must be on a
4 form developed by the plan.
5 b. Developing forms and procedures that provide an
6 insurer with the information necessary to determine whether
7 the insurer wants to write particular applicants to the plan
8 or insureds of the plan.
9 c. Developing procedures for notice to the plan and
10 the applicant to the plan or insured of the plan that an
11 insurer will insure the applicant or the insured of the plan,
12 and notice of the cost of the coverage offered; and developing
13 procedures for the selection of an insuring entity by the
14 applicant or insured of the plan.
15 d. Provide for a market-assistance plan to assist in
16 the placement of employers. All applications for coverage in
17 the plan received 45 days before the effective date for
18 coverage shall be processed through the market-assistance
19 plan. A market-assistance plan specifically designed to serve
20 the needs of small, good policyholders as defined by the board
21 must be finalized by January 1, 1994.
22 5. Provide for policy and claims services to the
23 insureds of the plan of the nature and quality provided for
24 insureds in the voluntary market.
25 6. Provide for the review of applications for coverage
26 with the plan for reasonableness and accuracy, using any
27 available historic information regarding the insured.
28 7. Provide for procedures for auditing insureds of the
29 plan which are based on reasonable business judgment and are
30 designed to maximize the likelihood that the plan will collect
31 the appropriate premiums.
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1 8. Authorize the plan to terminate the coverage of and
2 refuse future coverage for any insured that submits a
3 fraudulent application to the plan or provides fraudulent or
4 grossly erroneous records to the plan or to any service
5 provider of the plan in conjunction with the activities of the
6 plan.
7 9. Establish service standards for agents who submit
8 business to the plan.
9 10. Establish criteria and procedures to prohibit any
10 agent who does not adhere to the established service standards
11 from placing business with the plan or receiving, directly or
12 indirectly, any commissions for business placed with the plan.
13 11. Provide for the establishment of reasonable safety
14 programs for all insureds in the plan. All insureds of the
15 plan must participate in the safety program.
16 12. Authorize the plan to terminate the coverage of
17 and refuse future coverage to any insured who fails to pay
18 premiums or surcharges when due; who, at the time of
19 application, is delinquent in payments of workers'
20 compensation or employer's liability insurance premiums or
21 surcharges owed to an insurer, group self-insurers' fund,
22 commercial self-insurance fund, or assessable mutual insurer
23 licensed to write such coverage in this state; or who refuses
24 to substantially comply with any safety programs recommended
25 by the plan.
26 13. Authorize the board of governors to provide the
27 services required by the plan through staff employed by the
28 plan, through reasonably compensated service providers who
29 contract with the plan to provide services as specified by the
30 board of governors, or through a combination of employees and
31 service providers.
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1 14. Provide for service standards for service
2 providers, methods of determining adherence to those service
3 standards, incentives and disincentives for service, and
4 procedures for terminating contracts for service providers
5 that fail to adhere to service standards.
6 15. Provide procedures for selecting service providers
7 and standards for qualification as a service provider that
8 reasonably assure that any service provider selected will
9 continue to operate as an ongoing concern and is capable of
10 providing the specified services in the manner required.
11 16. Provide for reasonable accounting and
12 data-reporting practices.
13 17. Provide for annual review of costs associated with
14 the administration and servicing of the policies issued by the
15 plan to determine alternatives by which costs can be reduced.
16 18. Authorize the acquisition of such excess insurance
17 or reinsurance as is consistent with the purposes of the plan.
18 19. Provide for an annual report to the office on a
19 date specified by the office and containing such information
20 as the office reasonably requires.
21 20. Establish multiple rating plans for various
22 classifications of risk which reflect risk of loss, hazard
23 grade, actual losses, size of premium, and compliance with
24 loss control. At least one of such plans must be a
25 preferred-rating plan to accommodate small-premium
26 policyholders with good experience as defined in
27 sub-subparagraph 22.a.
28 21. Establish agent commission schedules.
29 22. For employers otherwise eligible for coverage
30 under the plan, establish three tiers of employers meeting the
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1 criteria and subject to the rate limitations specified in this
2 subparagraph.
3 a. Tier One.--
4 (I) Criteria, rated employers.--An employer that has
5 an experience modification rating shall be included in Tier
6 One if it meets all of the following:
7 (A) The experience modification is below 1.00;
8 (B) The employer had no lost-time claims subsequent to
9 the applicable experience modification rating period; and
10 (C) The total of the employer's medical-only claims
11 subsequent to the applicable experience modification rating
12 period did not exceed 20 percent of premium.
13 (II) Criteria, nonrated employers.--An employer that
14 does not have an experience modification rating shall be
15 included in Tier One if it meets all of the following:
16 (A) The employer had no lost-time claims for the
17 3-year period immediately preceding the inception date or
18 renewal date of its coverage under the plan;
19 (B) The total of the employer's medical-only claims
20 for the 3-year period immediately preceding the inception date
21 or renewal date of its coverage under the plan did not exceed
22 20 percent of premium;
23 (C) It has secured workers' compensation coverage for
24 the entire three-year period immediately preceding the
25 inception date or renewal date of its coverage under the plan;
26 (D) It is able to provide the plan with a loss history
27 generated by its prior workers' compensation insurer, except
28 that if the employer is not able to produce a loss history due
29 to the insolvency of an insurer, the employer may, in lieu of
30 the loss history, submit an affidavit from the employer and
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1 the employer's insurance agent setting forth the loss history;
2 and
3 (E) It is not a new business.
4 (III) Premiums.--The premiums for Tier One insureds
5 shall be set at a premium level 25 percent above the
6 comparable voluntary market premiums until the plan has
7 sufficient, credible experience as determined by the board to
8 establish an actuarially sound rate for Tier One, at which
9 point the board shall, subject to paragraph (e), adjust the
10 rate, if necessary, to produce actuarially sound rates;
11 provided the rate adjustment does not take effect until
12 January 1, 2007.
13 b. Tier Two.--
14 (I) Criteria, rated employers.--An employer that has
15 an experience modification rating shall be included in Tier
16 Two if it meets all of the following:
17 (A) The experience modification is equal to or greater
18 than 1.00 but not greater than 1.10;
19 (B) The employer had no lost-time claims subsequent to
20 the applicable experience modification rating period; and
21 (C) The total of the employer's medical-only claims
22 subsequent to the applicable experience modification rating
23 period did not exceed 20 percent of premium.
24 (II) Criteria, non-rated employers.--An employer that
25 does not have any experience modification rating shall be
26 included in Tier Two if it is a new business. An employer
27 shall be included in Tier Two if it has less than 3 years of
28 loss experience in the 3-year period immediately preceding the
29 inception date or renewal date of its coverage under the plan
30 and it meets all of the following:
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1 (A) The employer had no lost-time claims for the
2 3-year period immediately preceding the inception date or
3 renewal date of its coverage under the plan;
4 (B) The total of the employer's medical-only claims
5 for the 3-year period immediately preceding the inception date
6 or renewal date of its coverage under the plan did not exceed
7 20 percent of premium; and
8 (C) It is able to provide the plan with a loss history
9 generated by the workers' compensation insurer that provided
10 coverage for the portion or portions of such period during
11 which the employer had secured workers' compensation coverage.
12 If the employer is not able to produce a loss history due to
13 the insolvency of an insurer, the employer may, in lieu of the
14 loss history, submit an affidavit from the employer and the
15 employer's insurance agent setting forth the loss history.
16 (IV) Premiums.--The premiums for Tier Two insureds
17 shall be set at a premium level 50 percent above the
18 comparable voluntary market premiums until the plan has
19 sufficient, credible experience as determined by the board to
20 establish an actuarially sound rate for Tier Two, at which
21 point the board shall, subject to paragraph (e), adjust the
22 rate, if necessary, to produce actuarially sound rates;
23 provided the rate adjustment does not take effect until
24 January 1, 2007.
25 c. Tier Three.--
26 (I) Eligibility.--An employer shall be included in
27 Tier Three if it does not meet the criteria for Tier One or
28 Tier Two.
29 (II) Rates.--The board shall establish, subject to
30 paragraph (e), and the plan shall charge actuarially sound
31
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1 rates for the Tier Three insureds. Establish four subplans as
2 follows:
3 a. Subplan "A" must include those insureds whose
4 annual premium does not exceed $2,500 and who have neither
5 incurred any lost-time claims nor incurred medical-only claims
6 exceeding 50 percent of their premium for the immediate 2
7 years.
8 b. Subplan "B" must include insureds that are
9 employers identified by the board of governors as high-risk
10 employers due solely to the nature of the operations being
11 performed by those insureds and for whom no market exists in
12 the voluntary market, and whose experience modifications are
13 less than 1.00.
14 c. Subplan "C" must include all insureds within the
15 plan that are not eligible for subplan "A," subplan "B," or
16 subplan "D."
17 d. Subplan "D" must include any employer, regardless
18 of the length of time for which it has conducted business
19 operations, which has an experience modification factor of
20 1.10 or less and either employs 15 or fewer employees or is an
21 organization that is exempt from federal income tax pursuant
22 to s. 501(c)(3) of the Internal Revenue Code and receives more
23 than 50 percent of its funding from gifts, grants, endowments,
24 or federal or state contracts. The rate plan for subplan "D"
25 shall be the same rate plan as the plan approved under ss.
26 627.091-627.151, and each participant in subplan "D" shall pay
27 the premium determined under such rate plan, plus a surcharge
28 determined by the board to be sufficient to ensure that the
29 plan does not compete with the voluntary market rate for any
30 participant, but not to exceed 25 percent. However, the
31 surcharge shall not exceed 10 percent for an organization that
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1 is exempt from federal income tax pursuant to s. 501(c)(3) of
2 the Internal Revenue Code.
3 23. For Tier One or Tier Two employers which employ no
4 nonexempt employees or which report payroll which is less than
5 the minimum wage hourly rate for one full-time employee for
6 one year at 40 hours per week, the plan shall establish
7 actuarially sound premiums, provided, however, that the
8 premiums may not exceed $2,500. These premiums shall be in
9 addition to the fee specified in subparagraph 26. When the
10 plan establishes actuarially sound rates for all employers in
11 Tier One and Tier Two, the premiums for employers referred to
12 in this paragraph are no longer subject to the $2,500 cap.
13 24.23. Provide for a depopulation program to reduce
14 the number of insureds in the plan. subplan "D." If an
15 employer insured through the plan subplan "D" is offered
16 coverage from a voluntary market carrier:
17 a. During the first 30 days of coverage under the plan
18 subplan;
19 b. Before a policy is issued under the plan subplan;
20 c. By issuance of a policy upon expiration or
21 cancellation of the policy under the plan subplan; or
22 d. By assumption of the plan's subplan's obligation
23 with respect to an in-force policy,
24
25 that employer is no longer eligible for coverage through the
26 plan. The premium for risks assumed by the voluntary market
27 carrier must be no greater than the same premium the insured
28 would have paid under the plan, and shall be adjusted upon
29 renewal to reflect changes in the plan rates and the tier for
30 which the insured would qualify as of the time of renewal. The
31 insured may be charged such premiums only for the first 2
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1 years of coverage in the voluntary market plus, for the first
2 2 years, the surcharge as determined in sub-subparagraph 22.d.
3 A premium under this subparagraph, including surcharge, is
4 deemed approved and is not an excess premium for purposes of
5 s. 627.171.
6 25.24. Require that policies issued under subplan "D"
7 and applications for such policies must include a notice that
8 the policy issued under subplan "D" could be replaced by a
9 policy issued from a voluntary market carrier and that, if an
10 offer of coverage is obtained from a voluntary market carrier,
11 the policyholder is no longer eligible for coverage through
12 the plan. subplan "D." The notice must also specify that
13 acceptance of coverage under the plan subplan "D" creates a
14 conclusive presumption that the applicant or policyholder is
15 aware of this potential.
16 26. Require that each application for coverage and
17 each renewal premium be accompanied by a nonrefundable fee of
18 $475 to cover costs of administration and fraud prevention.
19 The board may, with the approval of the office, increase the
20 amount of the fee pursuant to a rate filing to reflect
21 increased costs of administration and fraud prevention. The
22 fee is not subject to commission and is fully earned upon
23 commencement of coverage.
24 (d)1. The funding of the plan shall include premiums
25 as provided in subparagraph (c)22. and assessments as provided
26 in this paragraph.
27 2.a. If the board determines that a deficit exists in
28 Tier One or Tier Two or that there is any deficit remaining
29 attributable to the former subplan "D" and that the deficit
30 cannot reasonably be funded without the use of deficit
31 assessments, the board shall request the Office of Insurance
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1 Regulation to levy, by order, a deficit assessment against
2 premiums charged to insureds for workers' compensation
3 insurance by insurers as defined in s. 631.904(5). The office
4 shall issue the order after verifying the amount of the
5 deficit. The assessment shall be specified as a percentage of
6 future premium collections, as recommended by the board and
7 approved by the office. The same percentage shall apply to
8 premiums on all workers' compensation policies issued or
9 renewed during the 12-month period beginning on the effective
10 date of the assessment, as specified in the order.
11 b. With respect to each insurer collecting premiums
12 that are subject to the assessment, the insurer shall collect
13 the assessment at the same time as it collects the premium
14 payment for each policy and shall remit the assessments
15 collected to the plan as provided in the order issued by the
16 Office of Insurance Regulation. The office shall verify the
17 accurate and timely collection and remittance of deficit
18 assessments and shall report the information to the board.
19 Each insurer collecting assessments shall provide the
20 information with respect to premiums and collections as may be
21 required by the office to enable the office to monitor and
22 audit compliance with this paragraph.
23 c. Deficit assessments are not considered a part of an
24 insurer's rate, are not premium and are not subject to the
25 premium tax, to the assessments under ss. 440.49 and 440.51,
26 to the surplus lines tax, to any fees, or to any commissions.
27 The deficit assessment imposed becomes plan funds at the
28 moment of collection and does not constitute income for any
29 purpose, including financial reporting on the insurer's income
30 statement. An insurer is liable for all assessments that it
31 collects and must treat the failure of an insured to pay an
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1 assessment as a failure to pay premium. An insurer is not
2 liable for uncollectible assessments.
3 d. When an insurer is required to return unearned
4 premium, it shall also return any collected assessments
5 attributable to the unearned premium.
6 3.a. All policies issued to Tier Three insureds shall
7 be assessable. All Tier Three assessable policies must be
8 clearly identified as assessable by containing, in contrasting
9 color and in not less than 10-point type, the following
10 statements: "This is an assessable policy. If the plan is
11 unable to pay its obligations, policyholders will be required
12 to contribute on a pro rata earned premium basis the money
13 necessary to meet any assessment levied."
14 b. The board may from time to time assess Tier Three
15 insureds to whom the plan has issued assessable policies for
16 the purpose of funding plan deficits. Any assessment shall be
17 based upon a reasonable actuarial estimate of the amount of
18 the deficit, taking into account the amount needed to fund
19 medical and indemnity reserves and reserves for incurred but
20 not reported claims, and allowing for general administrative
21 expenses, the cost of levying and collecting the assessment, a
22 reasonable allowance for estimated uncollectible assessments,
23 and both allocated and unallocated loss adjustment expenses.
24 c. Each Tier Three insured's share of a deficit shall
25 be computed by applying to the premium earned on the insured's
26 policy or policies during the period to be covered by the
27 assessment the ratio of the total deficit to the total
28 premiums earned during the period upon all policies subject to
29 the assessment. In the event one or more Tier Three insureds
30 fail to pay an assessment, the other Tier Three insureds shall
31 be liable on a proportionate basis for additional assessments
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1 to fund the deficit. The plan may compromise and settle
2 individual assessment claims without affecting the validity of
3 or amounts due on assessments levied against other insureds.
4 The plan may offer and accept discounted payments for
5 assessments which are promptly paid. The plan may offset the
6 amount of any unpaid assessment against unearned premiums
7 which may otherwise be due to an insured. The plan shall
8 institute legal action when necessary and appropriate to
9 collect the assessment from any insured who fails to pay an
10 assessment when due.
11 d. The venue of a proceeding to enforce or collect an
12 assessment or to contest the validity or amount of an
13 assessment shall be in the Circuit Court of Leon County.
14 e. If the board finds that a deficit in Tier Three
15 exists for any period and that an assessment is necessary, it
16 shall certify to the office the need for an assessment. No
17 sooner than 30 days after the date of the certification, the
18 board shall notify in writing each insured who is to be
19 assessed that an assessment is being levied against the
20 insured, and informing the insured of the amount of the
21 assessment, the period for which the assessment is being
22 levied, and the date by which payment of the assessment is
23 due. The board shall establish a date by which payment of the
24 assessment is due, which may not be sooner than 30 days or
25 later than 120 days after the date on which notice of the
26 assessment is mailed to the insured. The plan must be funded
27 through actuarially sound premiums charged to insureds of the
28 plan.
29 2. The plan may issue assessable policies only to
30 those insureds in subplans "C" and "D." Subject to
31 verification by the department, the board may levy assessments
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1 against insureds in subplan "C" or subplan "D," on a pro rata
2 earned premium basis, to fund any deficits that exist in those
3 subplans. Assessments levied against subplan "C" participants
4 shall cover only the deficits attributable to subplan "C," and
5 assessments levied against subplan "D" participants shall
6 cover only the deficits attributable to subplan "D." In no
7 event may the plan levy assessments against any person or
8 entity, except as authorized by this paragraph. Those
9 assessable policies must be clearly identified as assessable
10 by containing, in contrasting color and in not less than
11 10-point type, the following statements: "This is an
12 assessable policy. If the plan is unable to pay its
13 obligations, policyholders will be required to contribute on a
14 pro rata earned premium basis the money necessary to meet any
15 assessment levied."
16 3. The plan may issue assessable policies with
17 differing terms and conditions to different groups within
18 subplans "C" and "D" when a reasonable basis exists for the
19 differentiation.
20 4. The plan may offer rating, dividend plans, and
21 other plans to encourage loss prevention programs.
22 (e) The plan shall establish and use its rates and
23 rating plans, and the plan may establish and use changes in
24 rating plans at any time, but no more frequently than two
25 times per any rating class for any calendar year. By December
26 1, 1993, and December 1 of each year thereafter, the board
27 shall, except as provided in subparagraph (c)22., establish
28 and use actuarially sound rates for use by the plan to assure
29 that the plan is self-funding while those rates are in effect.
30 Such rates and rating plans must be filed with the office
31 within 30 calendar days after their effective dates, and shall
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1 be considered a "use and file" filing. Any disapproval by the
2 office must have an effective date that is at least 60 days
3 from the date of disapproval of the rates and rating plan and
4 must have prospective effect only. The plan may not be subject
5 to any order by the office to return to policyholders any
6 portion of the rates disapproved by the office. The office may
7 not disapprove any rates or rating plans unless it
8 demonstrates that such rates and rating plans are excessive,
9 inadequate, or unfairly discriminatory.
10 (f) No later than June 1 of each year, the plan shall
11 obtain an independent actuarial certification of the results
12 of the operations of the plan for prior years, and shall
13 furnish a copy of the certification to the office. If, after
14 the effective date of the plan, the projected ultimate
15 incurred losses and expenses and dividends for prior years
16 exceed collected premiums, accrued net investment income, and
17 prior assessments for prior years, the certification is
18 subject to review and approval by the office before it becomes
19 final.
20 (g) Whenever a deficit exists, the plan shall, within
21 90 days, provide the office with a program to eliminate the
22 deficit within a reasonable time. The deficit may be funded
23 through increased premiums charged to insureds of the plan for
24 subsequent years, through the use of policyholder surplus
25 attributable to any year, through the use of assessments as
26 provided in subparagraph (d)2., and through assessments on
27 insureds in the plan if the plan uses assessable policies as
28 provided in subparagraph (d)3.
29 (h) Any premium or assessments collected by the plan
30 in excess of the amount necessary to fund projected ultimate
31 incurred losses and expenses of the plan and not paid to
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1 insureds of the plan in conjunction with loss prevention or
2 dividend programs shall be retained by the plan for future
3 use.
4 (i) The decisions of the board of governors do not
5 constitute final agency action and are not subject to chapter
6 120.
7 (j) Policies for insureds shall be issued by the plan.
8 (k) The plan created under this subsection is liable
9 only for payment for losses arising under policies issued by
10 the plan with dates of accidents occurring on or after January
11 1, 1994.
12 (l) Plan losses are the sole and exclusive
13 responsibility of the plan, and payment for such losses must
14 be funded in accordance with this subsection and must not
15 come, directly or indirectly, from insurers or any guaranty
16 association for such insurers.
17 (m) Each joint underwriting plan or association
18 created under this section is not a state agency, board, or
19 commission. However, for the purposes of s. 199.183(1) only,
20 the joint underwriting plan is a political subdivision of the
21 state and is exempt from the corporate income tax.
22 (n) Each joint underwriting plan or association may
23 elect to pay premium taxes on the premiums received on its
24 behalf or may elect to have the member insurers to whom the
25 premiums are allocated pay the premium taxes if the member
26 insurer had written the policy. The joint underwriting plan or
27 association shall notify the member insurers and the
28 Department of Revenue by January 15 of each year of its
29 election for the same year. As used in this paragraph, the
30 term "premiums received" means the consideration for
31 insurance, by whatever name called, but does not include any
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1 policy assessment or surcharge received by the joint
2 underwriting association as a result of apportioning losses or
3 deficits of the association pursuant to this section.
4 (o) Neither the plan nor any member of the board of
5 governors is liable for monetary damages to any person for any
6 statement, vote, decision, or failure to act, regarding the
7 management or policies of the plan, unless:
8 1. The member breached or failed to perform her or his
9 duties as a member; and
10 2. The member's breach of, or failure to perform,
11 duties constitutes:
12 a. A violation of the criminal law, unless the member
13 had reasonable cause to believe her or his conduct was not
14 unlawful. A judgment or other final adjudication against a
15 member in any criminal proceeding for violation of the
16 criminal law estops that member from contesting the fact that
17 her or his breach, or failure to perform, constitutes a
18 violation of the criminal law; but does not estop the member
19 from establishing that she or he had reasonable cause to
20 believe that her or his conduct was lawful or had no
21 reasonable cause to believe that her or his conduct was
22 unlawful;
23 b. A transaction from which the member derived an
24 improper personal benefit, either directly or indirectly; or
25 c. Recklessness or any act or omission that was
26 committed in bad faith or with malicious purpose or in a
27 manner exhibiting wanton and willful disregard of human
28 rights, safety, or property. For purposes of this
29 sub-subparagraph, the term "recklessness" means the acting, or
30 omission to act, in conscious disregard of a risk:
31
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1 (I) Known, or so obvious that it should have been
2 known, to the member; and
3 (II) Known to the member, or so obvious that it should
4 have been known, to be so great as to make it highly probable
5 that harm would follow from such act or omission.
6 (p) No insurer shall provide workers' compensation and
7 employer's liability insurance to any person who is delinquent
8 in the payment of premiums, assessments, penalties, or
9 surcharges owed to the plan or to any person who is an
10 affiliated person of a person who is delinquent in the payment
11 of premiums, assessments, penalties, or surcharges owed to the
12 plan. For the purposes of this paragraph, the term "affiliated
13 person" of another person means:
14 1. The spouse of such other natural person;
15 2. Any person who directly or indirectly owns or
16 controls, or holds with the power to vote, 5 percent or more
17 of the outstanding voting securities of such other person;
18 3. Any person who directly or indirectly owns 5
19 percent or more of the outstanding voting securities that are
20 directly or indirectly owned or controlled, or held with the
21 power to vote, by such other person;
22 4. Any person or group of persons who directly or
23 indirectly control, are controlled by, or are under common
24 control with such other person;
25 5. Any officer, director, trustee, partner, owner,
26 manager, joint venturer, or employee, or other person
27 performing duties similar to persons in those positions, of
28 such other person; or
29 6. Any person who has an officer, director, trustee,
30 partner, or joint venturer in common with such other person.
31
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1 (q) Effective July 1, 2004, the plan is exempt from
2 the premium tax under s. 624.509 and any assessments under ss.
3 440.49 and 440.51.
4 Section 3. The Auditor General shall perform an
5 operational audit, as defined in section 11.45(1), Florida
6 Statutes, of the Workers' Compensation Joint Underwriting
7 Association created under section 627.311(5), Florida
8 Statutes. The scope of the audit shall also include:
9 (1) An analysis of the adequacy and appropriateness of
10 the rates and reserves of the association. The Auditor General
11 shall engage an independent consulting actuary who is an
12 enrolled actuary to evaluate the rates and the reserves of the
13 association.
14 (2) An evaluation of costs associated with the
15 administration and servicing of the policies issued by the
16 association to determine alternatives by which costs can be
17 reduced.
18
19 The Auditor General shall submit a report to the Governor, the
20 President of the Senate, and the Speaker of the House of
21 Representatives no later than October 1, 2004.
22 Section 4. The Workers' Compensation Joint
23 Underwriting Association is subject to the Florida Single
24 Audit Act, as provided in section 215.97, Florida Statutes, if
25 the association expends a total amount of state financial
26 assistance equal to or in excess of $300,000 in any fiscal
27 year. Such audit reports shall be submitted to the President
28 of the Senate, the Speaker of the House of Representatives,
29 and the Governor pursuant to section 215.97, Florida Statutes.
30 Section 5. The sum of $50,000 in nonrecurring funds is
31 appropriated from the Workers' Compensation Administration
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1 Trust Fund to the Office of the Auditor General for the
2 purpose of engaging an actuary to evaluate the rates and
3 reserves of the Florida Workers' Compensation Joint
4 Underwriting Association as required by section 3.
5 Section 6. Section 627.0915, Florida Statutes, is
6 amended to read:
7 627.0915 Rate filings; workers' compensation,
8 drug-free workplace, and safe employers.--
9 (1) The office shall approve rating plans for workers'
10 compensation and employer's liability insurance that give
11 specific identifiable consideration in the setting of rates to
12 employers that either implement a drug-free workplace program
13 pursuant to s. 440.102 and rules adopted thereunder by the
14 commission or implement a safety program pursuant to
15 provisions of the rating plan or implement both a drug-free
16 workplace program and a safety program. The plans must be
17 actuarially sound and must state the savings anticipated to
18 result from such drug-testing and safety programs.
19 (2) An insurer offering a rate plan approved under
20 this section shall notify the employer at the time of a
21 written offer of insurance and at the time of each renewal of
22 the policy of the availability of the premium discount where a
23 drug-free workplace plan is used by the employer pursuant to
24 s. 440.102 and related rules. The commission shall adopt rules
25 to implement this section.
26 Section 7. Notwithstanding the provisions of sections
27 440.50 and 440.51, Florida Statutes, for the 2004-2005 fiscal
28 year:
29 (1) The sum of $10 million is appropriated from the
30 Workers' Compensation Administration Trust Fund in the
31 Department of Financial Services for transfer to the workers'
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1 compensation joint underwriting plan provided in section
2 627.311(5), Florida Statutes, as a capital contribution to
3 fund any deficit in the plan. The Chief Financial Officer
4 shall transfer the funds to the plan no later than July 31,
5 2004.
6 (2) The workers' compensation joint underwriting plan
7 set forth in section 627.311(5), Florida Statutes, may request
8 the Department of Financial Services to transfer an amount not
9 to exceed $25 million from the Workers' Compensation
10 Administration Trust Fund to the plan subject to the approval
11 of the Legislative Budget Commission under sections 216.181
12 and 216.292, Florida Statutes. The workers' compensation joint
13 underwriting plan board of governors and the Office of
14 Insurance Regulation must first certify to the Department of
15 Financial Services that a deficit exists in the workers'
16 compensation joint underwriting plan. The amount requested for
17 transfer to the plan may not exceed the deficit amount jointly
18 certified by the board of governors and the Office of
19 Insurance Regulation to exist in Tier One or Tier Two or for
20 any deficit remaining attributable to the former subplan "D"
21 which cannot be funded without the use of deficit assessments
22 as authorized by section 627.351(5)(d), Florida Statutes.
23 Section 8. Transitional provisions.--Effective upon
24 this act becoming a law:
25 (1) Notwithstanding section 627.311(5), Florida
26 Statutes, to the contrary, no policy in subplan "D" of the
27 Florida Workers' Compensation Joint Underwriting Association
28 is subject to an assessment for the purpose of funding a
29 deficit.
30 (2) Any policy issued by the Florida Workers'
31 Compensation Joint Underwriting Association with an effective
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1 date between the date on which this act becomes a law and June
2 30, 2004, shall be rerated and placed in the appropriate tier
3 provided in section 627.311(5), Florida Statues, as amended
4 effective July 1, 2004, and shall be subject to the premiums
5 and charges provided for in that section as amended.
6 Section 9. Effective upon this act becoming a law:
7 (1) The Legislature intends to create a state workers'
8 compensation mutual fund if workers' compensation coverage is
9 not generally available and affordable to small employers and
10 organizations that are exempt from federal income tax under s.
11 501(c)(3) of the Internal Revenue Code in Florida by October
12 1, 2005. In order to make this determination, there is
13 established the Workers' Compensation Insurance Market
14 Evaluation Committee which shall consist of one member
15 appointed by the Governor, who shall serve as chair; two
16 members appointed by the President of the Senate; and two
17 members appointed by the Speaker of the House of
18 Representatives. The committee shall monitor and report on the
19 number of insurers actively writing workers' compensation
20 insurance in this state for small employers and organizations
21 that are exempt from federal income tax under s. 501(c)(3) of
22 the Internal Revenue Code, the number of policies issued,
23 premium volume written, types of underwriting restrictions
24 utilized, and the extent to which actual premiums charged vary
25 from standard rates, such as the use of excess rates pursuant
26 to section 627.171, Florida Statutes, and rate deviations
27 pursuant to section 627.211, Florida Statutes. The Office of
28 Insurance Regulation shall provide such related information to
29 the committee as is requested, and workers' compensation
30 insurers shall report such information to the office in the
31 manner and format specified by the office.
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1 (2) The committee shall meet once each month,
2 beginning in August 2004, and shall provide interim reports to
3 the appointing officers on October 1, 2004, December 1, 2004,
4 and March 1, 2005, and at such additional times as the
5 President of the Senate and the Speaker of the House of
6 Representatives jointly require. Members of the committee
7 shall be entitled to reimbursement for travel and per diem
8 pursuant to section 112.061, Florida Statutes.
9 (3) If the Legislature determines that workers'
10 compensation coverage is not generally available and
11 affordable to small employers and organizations that are
12 exempt from federal income tax under s. 501(c)(3) of the
13 Internal Revenue Code in Florida, the Legislature intends to
14 create a state mutual fund as a nonprofit entity for the
15 benefit of its policyholders that are a small employer or an
16 organization that is exempt from the federal income tax under
17 s. 501(c)(3) of the Internal Revenue Code. The state mutual
18 fund would compete with private carriers and would be charged
19 with the public mission of customer service, quality loss
20 prevention, timely claims management, active fighting of
21 fraud, and compassionate care for injured workers, at the
22 lowest cost consistent with actuarial sound rates. The fund
23 should primarily rely on an in-house staff of professional
24 employees, rather than contracting with servicing carriers. It
25 is further intended that the state appropriate adequate
26 initial capitalization for the fund and that the fund be
27 subject to the same financial and other requirements as apply
28 to an authorized insurer.
29 Section 10. Subsection (7) of section 440.16, Florida
30 Statutes, is amended to read:
31 440.16 Compensation for death.--
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1 (7) Compensation under this chapter to aliens not
2 residents (or about to become nonresidents) of the United
3 States or Canada shall be the same in amount as provided for
4 residents, except that dependents in any foreign country shall
5 be limited to surviving spouse and child or children, or if
6 there be no surviving spouse or child or children, to
7 surviving father or mother whom the employee has supported,
8 either wholly or in part, for the period of 1 year prior to
9 the date of the injury, and except that the judge of
10 compensation claims may, at the option of the judge of
11 compensation claims, or upon the application of the insurance
12 carrier, commute all future installments of compensation to be
13 paid to such aliens by paying or causing to be paid to them
14 one-half of the commuted amount of such future installments of
15 compensation as determined by the judge of compensation
16 claims, and provided further that compensation to dependents
17 referred to in this subsection shall in no case exceed
18 $75,000.
19 Section 11. Except as otherwise expressly provided in
20 this act, and except for this section, which shall take effect
21 upon becoming a law, this act shall take effect July 1, 2004.
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