CS/HB 1429

1
A bill to be entitled
2An act relating to the Florida Workers' Compensation Joint
3Underwriting Association, Inc.; amending s. 627.311, F.S.;
4designating the Florida Workers' Compensation Joint
5Underwriting Association, Inc., as a plan of insurers
6operating as a corporation not for profit; revising the
7membership of the board of governors of the association;
8requiring that the corporation's market-assistance plan be
9periodically reviewed and updated; revising requirements
10for goods and services provided by the plan; postponing an
11expiration date for the authority to levy certain deficit
12assessments; increasing the period for meeting certain
13projected cash needs for meeting certain deficits;
14revising rates and rate planning requirements; providing
15circumstances under which policyholders of former subplan
16C are exempt from certain assessments; providing for
17return of certain funds in excess of amounts necessary to
18fund deficits in subplan D or any tier; providing for
19application of certain provisions of law relating to
20ethics, public disclosure, and financial interest
21reporting to senior managers and officers of the plan and
22members of the board of governors of the association;
23providing conflict of interest statement requirements for
24plan employees; providing restrictions on certain persons
25representing persons or entities before the plan;
26prohibiting plan income from inuring to any person;
27prohibiting plan employees or board members from accepting
28gifts or expenditures; providing penalties; authorizing
29the plan to provide insurance coverage to certain
30employers or to employ or reemploy former employees under
31certain conditions; requiring the Office of Insurance
32Regulation to perform a periodic market conduct
33examination of the plan for certain purposes; providing
34for priority of application of plan assets upon
35dissolution; providing a restriction on plan dissolution;
36requiring the plan to request a federal determination of
37its tax-exempt status; providing an effective date.
38
39Be It Enacted by the Legislature of the State of Florida:
40
41     Section 1.  Subsection (5) of section 627.311, Florida
42Statutes, is amended, and subsections (8) and (9) are added to
43that section, to read:
44     627.311  Joint underwriters and joint reinsurers; public
45records and public meetings exemptions.--
46     (5)(a)  The office shall, after consultation with insurers,
47approve a joint underwriting plan of insurers which shall
48operate as the Florida Workers' Compensation Joint Underwriting
49Association, Inc., a nonprofit entity. For the purposes of this
50subsection, the term "insurer" includes group self-insurance
51funds authorized by s. 624.4621, commercial self-insurance funds
52authorized by s. 624.462, assessable mutual insurers authorized
53under s. 628.6011, and insurers licensed to write workers'
54compensation and employer's liability insurance in this state.
55The purpose of the plan is to provide workers' compensation and
56employer's liability insurance to applicants who are required by
57law to maintain workers' compensation and employer's liability
58insurance and who are in good faith entitled to but who are
59unable to procure such insurance through the voluntary market.
60Except as provided herein, the plan must have actuarially sound
61rates that ensure that the plan is self-supporting.
62     (b)  The operation of the plan is subject to the
63supervision of a 9-member board of governors. Each member
64described in subparagraph 1., subparagraph 2., subparagraph 3.,
65or subparagraph 5. shall be appointed by the Financial Services
66Commission and shall serve at the pleasure of the commission.
67The board of governors shall be comprised of:
68     1.  Three members appointed by the Financial Services
69Commission. Each member appointed by the commission shall serve
70at the pleasure of the commission;
71     1.2.  Two representatives of the 20 domestic insurers, as
72defined in s. 624.06(1), having the largest voluntary direct
73premiums written in this state for workers' compensation and
74employer's liability insurance, who which shall be appointed by
75the commission from a list of three nominees for each vacancy
76submitted elected by those 20 domestic insurers. The commission
77may reject all of the nominees recommended for a position and
78request that the insurers submit a new list of five different
79recommended nominees for the position who have not previously
80been recommended by the insurers;
81     2.3.  Two representatives of the 20 foreign insurers as
82defined in s. 624.06(2) having the largest voluntary direct
83premiums written in this state for workers' compensation and
84employer's liability insurance, who which shall be appointed by
85the commission from a list of five nominees for each vacancy
86submitted elected by those 20 foreign insurers. The commission
87may reject all of the nominees recommended for a position and
88request that the insurers submit a new list of five different
89recommended nominees for the position who have not previously
90been recommended by the insurers;
91     3.4.  One representative of person appointed by the largest
92property and casualty insurance agents' association in this
93state, who shall be appointed by the commission from a list of
94five nominees submitted by such association. The commission may
95reject all of the nominees recommended for a position and
96request that the association submit a new list of five different
97recommended nominees for the position who have not previously
98been recommended by the association; and
99     4.5.  The consumer advocate appointed under s. 627.0613 or
100the consumer advocate's designee; and
101     5.  Three other persons appointed by the commission.
102
103Each board member shall be appointed to serve a 4-year term and
104may be appointed to serve consecutive terms. A vacancy on the
105board shall be filled in the same manner as the original
106appointment for the unexpired portion of the term. The Financial
107Services Commission shall designate a member of the board to
108serve as chair. No board member shall be an insurer which
109provides services to the plan or which has an affiliate which
110provides services to the plan or which is serviced by a service
111company or third-party administrator which provides services to
112the plan or which has an affiliate which provides services to
113the plan. The meetings and records minutes, audits, and
114procedures of the board of governors and plan are subject to
115chapters chapter 119 and 286, unless otherwise exempted by law.
116     (c)  The operation of the plan shall be governed by a plan
117of operation that is prepared at the direction of the board of
118governors and approved by order of the office. The plan is
119subject to continuous review by the office. The office may, by
120order, withdraw approval of all or part of a plan if the office
121determines that conditions have changed since approval was
122granted and the purposes of the plan require changes to the plan
123of operation may be changed at any time by the board of
124governors or upon request of the office. The plan of operation
125and all changes thereto are subject to the approval of the
126office. The plan of operation shall:
127     1.  Authorize the board to engage in the activities
128necessary to implement this subsection, including, but not
129limited to, borrowing money.
130     2.  Develop criteria for eligibility for coverage by the
131plan, including, but not limited to, documented rejection by at
132least two insurers which reasonably assures that insureds
133covered under the plan are unable to acquire coverage in the
134voluntary market.
135     3.  Require notice from the agent to the insured at the
136time of the application for coverage that the application is for
137coverage with the plan and that coverage may be available
138through an insurer, group self-insurers' fund, commercial self-
139insurance fund, or assessable mutual insurer through another
140agent at a lower cost.
141     4.  Establish programs to encourage insurers to provide
142coverage to applicants of the plan in the voluntary market and
143to insureds of the plan, including, but not limited to:
144     a.  Establishing procedures for an insurer to use in
145notifying the plan of the insurer's desire to provide coverage
146to applicants to the plan or existing insureds of the plan and
147in describing the types of risks in which the insurer is
148interested. The description of the desired risks must be on a
149form developed by the plan.
150     b.  Developing forms and procedures that provide an insurer
151with the information necessary to determine whether the insurer
152wants to write particular applicants to the plan or insureds of
153the plan.
154     c.  Developing procedures for notice to the plan and the
155applicant to the plan or insured of the plan that an insurer
156will insure the applicant or the insured of the plan, and notice
157of the cost of the coverage offered; and developing procedures
158for the selection of an insuring entity by the applicant or
159insured of the plan.
160     d.  Provide for a market-assistance plan to assist in the
161placement of employers. All applications for coverage in the
162plan received 45 days before the effective date for coverage
163shall be processed through the market-assistance plan. A market-
164assistance plan specifically designed to serve the needs of
165small, good policyholders as defined by the board must be
166reviewed and updated periodically finalized by January 1, 1994.
167     5.  Provide for policy and claims services to the insureds
168of the plan of the nature and quality provided for insureds in
169the voluntary market.
170     6.  Provide for the review of applications for coverage
171with the plan for reasonableness and accuracy, using any
172available historic information regarding the insured.
173     7.  Provide for procedures for auditing insureds of the
174plan which are based on reasonable business judgment and are
175designed to maximize the likelihood that the plan will collect
176the appropriate premiums.
177     8.  Authorize the plan to terminate the coverage of and
178refuse future coverage for any insured that submits a fraudulent
179application to the plan or provides fraudulent or grossly
180erroneous records to the plan or to any service provider of the
181plan in conjunction with the activities of the plan.
182     9.  Establish service standards for agents who submit
183business to the plan.
184     10.  Establish criteria and procedures to prohibit any
185agent who does not adhere to the established service standards
186from placing business with the plan or receiving, directly or
187indirectly, any commissions for business placed with the plan.
188     11.  Provide for the establishment of reasonable safety
189programs for all insureds in the plan. All insureds of the plan
190must participate in the safety program.
191     12.  Authorize the plan to terminate the coverage of and
192refuse future coverage to any insured who fails to pay premiums
193or surcharges when due; who, at the time of application, is
194delinquent in payments of workers' compensation or employer's
195liability insurance premiums or surcharges owed to an insurer,
196group self-insurers' fund, commercial self-insurance fund, or
197assessable mutual insurer licensed to write such coverage in
198this state; or who refuses to substantially comply with any
199safety programs recommended by the plan.
200     13.  Authorize the board of governors to provide the goods
201and services required by the plan through staff employed by the
202plan, through reasonably compensated service providers who
203contract with the plan to provide services as specified by the
204board of governors, or through a combination of employees and
205service providers.
206     a.  Purchases that equal or exceed $2,500, but are less
207than or equal to $25,000, shall be made by receipt of written
208quotes, telephone quotes, or informal bids, whenever practical.
209The procurement of goods or services valued over $25,000 are
210subject to competitive solicitation, except in situations in
211which the goods or services are provided by a sole source or are
212deemed an emergency purchase or the services are exempted from
213competitive-solicitation requirements under s. 287.057(5)(f).
214Justification for the sole-sourcing or emergency procurement
215must be documented. Contracts for goods or services valued at or
216over $100,000 are subject to board approval.
217     b.  The board shall determine whether it is more cost-
218effective and in the best interests of the plan to use legal
219services provided by in-house attorneys employed by the plan
220rather than contracting with outside counsel. In making such
221determination, the board shall document its findings and shall
222consider the expertise needed; whether time commitments exceed
223in-house staff resources; whether local representation is
224needed; the travel, lodging, and other costs associated with in-
225house representation; and such other factors that the board
226determines are relevant.
227     14.  Provide for service standards for service providers,
228methods of determining adherence to those service standards,
229incentives and disincentives for service, and procedures for
230terminating contracts for service providers that fail to adhere
231to service standards.
232     15.  Provide procedures for selecting service providers and
233standards for qualification as a service provider that
234reasonably assure that any service provider selected will
235continue to operate as an ongoing concern and is capable of
236providing the specified services in the manner required.
237     16.  Provide for reasonable accounting and data-reporting
238practices.
239     17.  Provide for annual review of costs associated with the
240administration and servicing of the policies issued by the plan
241to determine alternatives by which costs can be reduced.
242     18.  Authorize the acquisition of such excess insurance or
243reinsurance as is consistent with the purposes of the plan.
244     19.  Provide for an annual report to the office on a date
245specified by the office and containing such information as the
246office reasonably requires.
247     20.  Establish multiple rating plans for various
248classifications of risk which reflect risk of loss, hazard
249grade, actual losses, size of premium, and compliance with loss
250control. At least one of such plans must be a preferred-rating
251plan to accommodate small-premium policyholders with good
252experience as defined in sub-subparagraph 22.a.
253     21.  Establish agent commission schedules.
254     22.  For employers otherwise eligible for coverage under
255the plan, establish three tiers of employers meeting the
256criteria and subject to the rate limitations specified in this
257subparagraph.
258     a.  Tier One.--
259     (I)  Criteria; rated employers.--An employer that has an
260experience modification rating shall be included in Tier One if
261the employer meets all of the following:
262     (A)  The experience modification is below 1.00.
263     (B)  The employer had no lost-time claims subsequent to the
264applicable experience modification rating period.
265     (C)  The total of the employer's medical-only claims
266subsequent to the applicable experience modification rating
267period did not exceed 20 percent of premium.
268     (II)  Criteria; non-rated employers.--An employer that does
269not have an experience modification rating shall be included in
270Tier One if the employer meets all of the following:
271     (A)  The employer had no lost-time claims for the 3-year
272period immediately preceding the inception date or renewal date
273of the employer's coverage under the plan.
274     (B)  The total of the employer's medical-only claims for
275the 3-year period immediately preceding the inception date or
276renewal date of the employer's coverage under the plan did not
277exceed 20 percent of premium.
278     (C)  The employer has secured workers' compensation
279coverage for the entire 3-year period immediately preceding the
280inception date or renewal date of the employer's coverage under
281the plan.
282     (D)  The employer is able to provide the plan with a loss
283history generated by the employer's prior workers' compensation
284insurer, except if the employer is not able to produce a loss
285history due to the insolvency of an insurer, the receiver shall
286provide to the plan, upon the request of the employer or the
287employer's agent, a copy of the employer's loss history from the
288records of the insolvent insurer if the loss history is
289contained in records of the insurer which are in the possession
290of the receiver. If the receiver is unable to produce the loss
291history, the employer may, in lieu of the loss history, submit
292an affidavit from the employer and the employer's insurance
293agent setting forth the loss history.
294     (E)  The employer is not a new business.
295     (III)  Premiums.--The premiums for Tier One insureds shall
296be set at a premium level 25 percent above the comparable
297voluntary market premiums until the plan has sufficient
298experience as determined by the board to establish an
299actuarially sound rate for Tier One, at which point the board
300shall, subject to paragraph (e), adjust the rates, if necessary,
301to produce actuarially sound rates, provided such rate
302adjustment shall not take effect prior to January 1, 2007.
303     b.  Tier Two.--
304     (I)  Criteria; rated employers.--An employer that has an
305experience modification rating shall be included in Tier Two if
306the employer meets all of the following:
307     (A)  The experience modification is equal to or greater
308than 1.00 but not greater than 1.10.
309     (B)  The employer had no lost-time claims subsequent to the
310applicable experience modification rating period.
311     (C)  The total of the employer's medical-only claims
312subsequent to the applicable experience modification rating
313period did not exceed 20 percent of premium.
314     (II)  Criteria; non-rated employers.--An employer that does
315not have any experience modification rating shall be included in
316Tier Two if the employer is a new business. An employer shall be
317included in Tier Two if the employer has less than 3 years of
318loss experience in the 3-year period immediately preceding the
319inception date or renewal date of the employer's coverage under
320the plan and the employer meets all of the following:
321     (A)  The employer had no lost-time claims for the 3-year
322period immediately preceding the inception date or renewal date
323of the employer's coverage under the plan.
324     (B)  The total of the employer's medical-only claims for
325the 3-year period immediately preceding the inception date or
326renewal date of the employer's coverage under the plan did not
327exceed 20 percent of premium.
328     (C)  The employer is able to provide the plan with a loss
329history generated by the workers' compensation insurer that
330provided coverage for the portion or portions of such period
331during which the employer had secured workers' compensation
332coverage, except if the employer is not able to produce a loss
333history due to the insolvency of an insurer, the receiver shall
334provide to the plan, upon the request of the employer or the
335employer's agent, a copy of the employer's loss history from the
336records of the insolvent insurer if the loss history is
337contained in records of the insurer which are in the possession
338of the receiver. If the receiver is unable to produce the loss
339history, the employer may, in lieu of the loss history, submit
340an affidavit from the employer and the employer's insurance
341agent setting forth the loss history.
342     (III)  Premiums.--The premiums for Tier Two insureds shall
343be set at a rate level 50 percent above the comparable voluntary
344market premiums until the plan has sufficient experience as
345determined by the board to establish an actuarially sound rate
346for Tier Two, at which point the board shall, subject to
347paragraph (e), adjust the rates, if necessary, to produce
348actuarially sound rates, provided such rate adjustment shall not
349take effect prior to January 1, 2007.
350     c.  Tier Three.--
351     (I)  Eligibility.--An employer shall be included in Tier
352Three if the employer does not meet the criteria for Tier One or
353Tier Two.
354     (II)  Rates.--The board shall establish, subject to
355paragraph (e), and the plan shall charge, actuarially sound
356rates for Tier Three insureds.
357     23.  For Tier One or Tier Two employers which employ no
358nonexempt employees or which report payroll which is less than
359the minimum wage hourly rate for one full-time employee for 1
360year at 40 hours per week, the plan shall establish actuarially
361sound premiums, provided, however, that the premiums may not
362exceed $2,500. These premiums shall be in addition to the fee
363specified in subparagraph 26. When the plan establishes
364actuarially sound rates for all employers in Tier One and Tier
365Two, the premiums for employers referred to in this paragraph
366are no longer subject to the $2,500 cap.
367     24.  Provide for a depopulation program to reduce the
368number of insureds in the plan. If an employer insured through
369the plan is offered coverage from a voluntary market carrier:
370     a.  During the first 30 days of coverage under the plan;
371     b.  Before a policy is issued under the plan;
372     c.  By issuance of a policy upon expiration or cancellation
373of the policy under the plan; or
374     d.  By assumption of the plan's obligation with respect to
375an in-force policy,
376
377that employer is no longer eligible for coverage through the
378plan. The premium for risks assumed by the voluntary market
379carrier must be no greater than the premium the insured would
380have paid under the plan, and shall be adjusted upon renewal to
381reflect changes in the plan rates and the tier for which the
382insured would qualify as of the time of renewal. The insured may
383be charged such premiums only for the first 3 years of coverage
384in the voluntary market. A premium under this subparagraph is
385deemed approved and is not an excess premium for purposes of s.
386627.171.
387     25.  Require that policies issued and applications must
388include a notice that the policy could be replaced by a policy
389issued from a voluntary market carrier and that, if an offer of
390coverage is obtained from a voluntary market carrier, the
391policyholder is no longer eligible for coverage through the
392plan. The notice must also specify that acceptance of coverage
393under the plan creates a conclusive presumption that the
394applicant or policyholder is aware of this potential.
395     26.  Require that each application for coverage and each
396renewal premium be accompanied by a nonrefundable fee of $475 to
397cover costs of administration and fraud prevention. The board
398may, with the prior approval of the office, increase the amount
399of the fee pursuant to a rate filing to reflect increased costs
400of administration and fraud prevention. The fee is not subject
401to commission and is fully earned upon commencement of coverage.
402     (d)1.  The funding of the plan shall include premiums as
403provided in subparagraph (c)22. and assessments as provided in
404this paragraph.
405     2.a.  If the board determines that a deficit exists in Tier
406One or Tier Two or that there is any deficit remaining
407attributable to any of the plan's former subplans and that the
408deficit cannot be fully funded by using policyholder surplus
409attributable to former subplan C or, if the surplus in the
410former subplan C does not fully fund the without the use of
411deficit assessments, the board shall request the office to levy,
412by order, a deficit assessment against premiums charged to
413insureds for workers' compensation insurance by insurers as
414defined in s. 631.904(5). The office shall issue the order after
415verifying the amount of the deficit. The assessment shall be
416specified as a percentage of future premium collections, as
417recommended by the board and approved by the office. The same
418percentage shall apply to premiums on all workers' compensation
419policies issued or renewed during the 12-month period beginning
420on the effective date of the assessment, as specified in the
421order.
422     b.  With respect to each insurer collecting premiums that
423are subject to the assessment, the insurer shall collect the
424assessment at the same time as the insurer collects the premium
425payment for each policy and shall remit the assessments
426collected to the plan as provided in the order issued by the
427office. The office shall verify the accurate and timely
428collection and remittance of deficit assessments and shall
429report such information to the board. Each insurer collecting
430assessments shall provide such information with respect to
431premiums and collections as may be required by the office to
432enable the office to monitor and audit compliance with this
433paragraph.
434     c.  Deficit assessments are not considered part of an
435insurer's rate, are not premium, and are not subject to the
436premium tax, to the assessments under ss. 440.49 and 440.51, to
437the surplus lines tax, to any fees, or to any commissions. The
438deficit assessment imposed shall become plan funds at the moment
439of collection and shall not constitute income to the insurer for
440any purpose, including financial reporting on the insurer's
441income statement. An insurer is liable for all assessments that
442the insurer collects and must treat the failure of an insured to
443pay an assessment as a failure to pay premium. An insurer is not
444liable for uncollectible assessments.
445     d.  When an insurer is required to return unearned premium,
446the insurer shall also return any collected assessments
447attributable to the unearned premium.
448     e.  Deficit assessments as described in this subparagraph
449shall not be levied after July 1, 2012 2007.
450     3.a.  All policies issued to Tier Three insureds shall be
451assessable. All Tier Three assessable policies must be clearly
452identified as assessable by containing, in contrasting color and
453in not less than 10-point type, the following statement:
454
455"This is an assessable policy. If the plan is unable to pay its
456obligations, policyholders will be required to contribute on a
457pro rata earned premium basis the money necessary to meet any
458assessment levied."
459
460     b.  The board may from time to time assess Tier Three
461insureds to whom the plan has issued assessable policies for the
462purpose of funding plan deficits. Any such assessment shall be
463based upon a reasonable actuarial estimate of the amount of the
464deficit, taking into account the amount needed to fund medical
465and indemnity reserves and reserves for incurred but not
466reported claims, and allowing for general administrative
467expenses, the cost of levying and collecting the assessment, a
468reasonable allowance for estimated uncollectible assessments,
469and allocated and unallocated loss adjustment expenses.
470     c.  Each Tier Three insured's share of a deficit shall be
471computed by applying to the premium earned on the insured's
472policy or policies during the period to be covered by the
473assessment the ratio of the total deficit to the total premiums
474earned during such period upon all policies subject to the
475assessment. If one or more Tier Three insureds fail to pay an
476assessment, the other Tier Three insureds shall be liable on a
477proportionate basis for additional assessments to fund the
478deficit. The plan may compromise and settle individual
479assessment claims without affecting the validity of or amounts
480due on assessments levied against other insureds. The plan may
481offer and accept discounted payments for assessments which are
482promptly paid. The plan may offset the amount of any unpaid
483assessment against unearned premiums which may otherwise be due
484to an insured. The plan shall institute legal action when
485necessary and appropriate to collect the assessment from any
486insured who fails to pay an assessment when due.
487     d.  The venue of a proceeding to enforce or collect an
488assessment or to contest the validity or amount of an assessment
489shall be in the Circuit Court of Leon County.
490     e.  If the board finds that a deficit in Tier Three exists
491for any period and that an assessment is necessary, the board
492shall certify to the office the need for an assessment. No
493sooner than 30 days after the date of such certification, the
494board shall notify in writing each insured who is to be assessed
495that an assessment is being levied against the insured, and
496informing the insured of the amount of the assessment, the
497period for which the assessment is being levied, and the date by
498which payment of the assessment is due. The board shall
499establish a date by which payment of the assessment is due,
500which shall be no sooner than 30 days nor later than 120 days
501after the date on which notice of the assessment is mailed to
502the insured.
503     f.  Whenever the board makes a determination that the plan
504does not have a sufficient cash basis to meet 6 3 months of
505projected cash needs due to a deficit in Tier Three, the board
506may request the department to transfer funds from the Workers'
507Compensation Administration Trust Fund to the plan in an amount
508sufficient to fund the difference between the amount available
509and the amount needed to meet a 6-month 3-month projected cash
510need as determined by the board and verified by the office,
511subject to the approval of the Legislative Budget Commission. If
512the Legislative Budget Commission approves a transfer of funds
513under this sub-subparagraph, the plan shall report to the
514Legislature the transfer of funds and the Legislature shall
515review the plan during the next legislative session or the
516current legislative session, if the transfer occurs during a
517legislative session. This sub-subparagraph shall not apply until
518the plan determines and the office verifies that assessments
519collected by the plan pursuant to sub-subparagraph b. are
520insufficient to fund the deficit in Tier Three and to meet 6 3
521months of projected cash needs.
522     4.  The plan may offer rating, dividend plans, and other
523plans to encourage loss prevention programs.
524     (e)  For rates and rating plans effective on or after
525January 1, 2008, the plan shall establish and use its rates and
526rating plans, and the plan may establish and use changes in
527rating plans at any time, but no more frequently than two times
528per any rating class for any calendar year. By December 1, 1993,
529and December 1 of each year thereafter, except as provided in
530subparagraph (c)22., the board shall establish and use
531actuarially sound rates for use by the plan to assure that the
532plan is self-funding while those rates are in effect. Such rates
533and rating plans must be filed with the office within 30
534calendar days after their effective dates, and shall be
535considered a "use and file" filing. Any disapproval by the
536office must have an effective date that is at least 60 days from
537the date of disapproval of the rates and rating plan and must
538have prospective effect only. The plan shall may not be subject
539to any order by the office to return to policyholders any
540portion of the rates disapproved by the office. The office may
541not disapprove any rates or rating plans unless it demonstrates
542that such rates and rating plans are excessive, inadequate, or
543unfairly discriminatory.
544     (f)  No later than June 1 of each year, the plan shall
545obtain an independent actuarial certification of the results of
546the operations of the plan for prior years, and shall furnish a
547copy of the certification to the office. If, after the effective
548date of the plan, the projected ultimate incurred losses and
549expenses and dividends for prior years exceed collected
550premiums, accrued net investment income, and prior assessments
551for prior years, the certification is subject to review and
552approval by the office before it becomes final.
553     (g)  Whenever a deficit exists, the plan shall, within 90
554days, provide the office with a program to eliminate the deficit
555within a reasonable time. The deficit may be funded through
556increased premiums charged to insureds of the plan for
557subsequent years;, through the use of policyholder surplus
558attributable to any year, including the use of surplus
559attributable to former subplan C as authorized in subparagraph
560(d)2.; through the use of assessments as provided in
561subparagraph (d)2.;, and through assessments on assessable
562policies as provided in subparagraph (d)3. Any entity that was a
563policyholder of former subplan C is not subject to any
564assessments that are attributable to deficits in former subplan
565C.
566     (h)  Any premium or assessments collected by the plan in
567excess of the amount necessary to fund projected ultimate
568incurred losses and expenses of the plan and not paid to
569insureds of the plan in conjunction with loss prevention or
570dividend programs shall be retained by the plan for future use.
571Any state funds received by the plan in excess of the amount
572necessary to fund deficits in subplan D or any tier shall be
573returned to the state.
574     (i)  The decisions of the board of governors do not
575constitute final agency action and are not subject to chapter
576120.
577     (j)  Policies for insureds shall be issued by the plan.
578     (k)  The plan created under this subsection is liable only
579for payment for losses arising under policies issued by the plan
580with dates of accidents occurring on or after January 1, 1994.
581     (l)  Plan losses are the sole and exclusive responsibility
582of the plan, and payment for such losses must be funded in
583accordance with this subsection and must not come, directly or
584indirectly, from insurers or any guaranty association for such
585insurers.
586     (m)  Senior managers and officers, as defined in the plan
587of operation, and members of the board of governors are subject
588to part III of chapter 112, including, but not limited to, the
589code of ethics and public disclosure and reporting of financial
590interests pursuant to s. 112.3145. Senior managers, officers,
591and board members are also required to file such disclosures
592with the Office of Insurance Regulation. The executive director
593of the plan or his or her designee shall notify each newly
594appointed and existing appointed member of the board of
595governors, senior manager, and officer of their duty to comply
596with the reporting requirements of part III of chapter 112. At
597least quarterly, the executive director of the plan or his or
598her designee shall submit to the Commission on Ethics a list of
599names of the senior managers, officers, and members of the board
600of governors who are subject to the public disclosure
601requirements under s. 112.3145. Each joint underwriting plan or
602association created under this section is not a state agency,
603board, or commission. However, for the purposes of s. 199.183(1)
604only, the joint underwriting plan is a political subdivision of
605the state and is exempt from the corporate income tax.
606     (n)  On or before July 1 of each year, employees of the
607plan shall sign and submit a statement to the plan attesting
608that they do not have a conflict of interest as defined in part
609III of chapter 112. As a condition of employment, all
610prospective employees shall sign and submit a conflict-of-
611interest statement to the plan. Each joint underwriting plan or
612association may elect to pay premium taxes on the premiums
613received on its behalf or may elect to have the member insurers
614to whom the premiums are allocated pay the premium taxes if the
615member insurer had written the policy. The joint underwriting
616plan or association shall notify the member insurers and the
617Department of Revenue by January 15 of each year of its election
618for the same year. As used in this paragraph, the term "premiums
619received" means the consideration for insurance, by whatever
620name called, but does not include any policy assessment or
621surcharge received by the joint underwriting association as a
622result of apportioning losses or deficits of the association
623pursuant to this section.
624     (o)  Any senior manager or officer of the plan who is
625employed by the plan as of January 1, 2008, regardless of the
626date of hire, and who subsequently retires or terminates
627employment may not represent another person or entity before the
628plan for 2 years after retirement or termination of employment
629from the plan.
630     (p)  No part of the income of the plan may inure to the
631benefit of any private person.
632     (q)  Notwithstanding ss. 112.3148 and 112.3149 or other
633provision of law, an employee or board member may not knowingly
634accept, directly or indirectly, any expenditure or gift from a
635person or entity, or an employee or representative of such
636person or entity, which has a contractual relationship with the
637plan or is under consideration for a contract. An employee or
638board member who fails to comply with this paragraph is subject
639to penalties provided under s. 112.317.
640     (r)  This section does not prohibit the plan from providing
641insurance coverage to any employer with whom a former employee
642of the plan is affiliated or employing or reemploying any former
643employee of the plan in a part-time, full-time, temporary, or
644permanent capacity so long as such employment does not violate
645any provision of part III of chapter 112.
646     (s)(o)  Neither the plan nor any member of the board of
647governors is liable for monetary damages to any person for any
648statement, vote, decision, or failure to act, regarding the
649management or policies of the plan, unless:
650     1.  The member breached or failed to perform her or his
651duties as a member; and
652     2.  The member's breach of, or failure to perform, duties
653constitutes:
654     a.  A violation of the criminal law, unless the member had
655reasonable cause to believe her or his conduct was not unlawful.
656A judgment or other final adjudication against a member in any
657criminal proceeding for violation of the criminal law estops
658that member from contesting the fact that her or his breach, or
659failure to perform, constitutes a violation of the criminal law;
660but does not estop the member from establishing that she or he
661had reasonable cause to believe that her or his conduct was
662lawful or had no reasonable cause to believe that her or his
663conduct was unlawful;
664     b.  A transaction from which the member derived an improper
665personal benefit, either directly or indirectly; or
666     c.  Recklessness or any act or omission that was committed
667in bad faith or with malicious purpose or in a manner exhibiting
668wanton and willful disregard of human rights, safety, or
669property. For purposes of this sub-subparagraph, the term
670"recklessness" means the acting, or omission to act, in
671conscious disregard of a risk:
672     (I)  Known, or so obvious that it should have been known,
673to the member; and
674     (II)  Known to the member, or so obvious that it should
675have been known, to be so great as to make it highly probable
676that harm would follow from such act or omission.
677     (t)(p)  No insurer shall provide workers' compensation and
678employer's liability insurance to any person who is delinquent
679in the payment of premiums, assessments, penalties, or
680surcharges owed to the plan or to any person who is an
681affiliated person of a person who is delinquent in the payment
682of premiums, assessments, penalties, or surcharges owed to the
683plan. For purposes of this paragraph, the term "affiliated
684person" of another person means:
685     1.  The spouse of such other natural person;
686     2.  Any person who directly or indirectly owns or controls,
687or holds with the power to vote, 5 percent or more of the
688outstanding voting securities of such other person;
689     3.  Any person who directly or indirectly owns 5 percent or
690more of the outstanding voting securities that are directly or
691indirectly owned or controlled, or held with the power to vote,
692by such other person;
693     4.  Any person or group of persons who directly or
694indirectly control, are controlled by, or are under common
695control with such other person;
696     5.  Any officer, director, trustee, partner, owner,
697manager, joint venturer, or employee, or other person performing
698duties similar to persons in those positions, of such other
699persons; or
700     6.  Any person who has an officer, director, trustee,
701partner, or joint venturer in common with such other person.
702     (u)(q)  Effective July 1, 2004, the plan is exempt from the
703premium tax under s. 624.509 and any assessments under ss.
704440.49 and 440.51.
705     (v)  The office shall perform a comprehensive market
706conduct examination of the plan periodically to determine
707compliance with its plan of operation and internal operating
708policies and procedures.
709     (w)  Upon dissolution of the plan, the assets of the plan
710shall be applied first to pay all debts, liabilities, and
711obligations of the plan, including the establishment of
712reasonable reserves for any contingent liabilities or
713obligations, and all remaining assets of the plan shall become
714property of the state and shall be deposited into the Workers'
715Compensation Administration Trust Fund. However, dissolution of
716the plan shall not take effect as long as the plan has financial
717obligations outstanding unless adequate provision has been made
718for the payment of financial obligations pursuant to the
719documents authorizing the financial obligations.
720     (8)  Each joint underwriting plan or association created
721under this section is not a state agency, board, or commission.
722However, solely for the purposes of s. 199.183(1), the joint
723underwriting plan is a political subdivision of the state and is
724exempt from the corporate income tax.
725     (9)  Each joint underwriting plan or association may elect
726to pay premium taxes on the premiums received on its behalf or
727may elect to have the member insurers to whom the premiums are
728allocated pay the premium taxes if the member insurer had
729written the policy. The joint underwriting plan or association
730shall notify the member insurers and the Department of Revenue
731by January 15 of each year of its election for the same year. As
732used in this subsection, the term "premiums received" means the
733consideration for insurance, by whatever name called, but does
734not include any policy assessment or surcharge received by the
735joint underwriting association as a result of apportioning
736losses or deficits of the association pursuant to this section.
737     Section 2.  No later than January 1, 2008, the Florida
738Workers' Compensation Joint Underwriting Association, Inc.,
739shall submit a request to the Internal Revenue Service for a
740letter ruling or determination on the plan's eligibility as a
741tax-exempt entity.
742     Section 3.  This act shall take effect July 1, 2007.


CODING: Words stricken are deletions; words underlined are additions.