Bill Text: MI HB5487 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Worker's compensation; administration; calculation of and increased assessment limits for certain claims; authorize, and provide for audits and for sanctions for delinquent payments. Amends sec. 551 of 1969 PA 317 (MCL 418.551). TIE BAR WITH: HB 5489'14
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Passed) 2014-07-16 - Assigned Pa 236'14 With Immediate Effect [HB5487 Detail]
Download: Michigan-2013-HB5487-Engrossed.html
HB-5487, As Passed House, May 27, 2014
SUBSTITUTE FOR
HOUSE BILL NO. 5487
A bill to amend 1969 PA 317, entitled
"Worker's disability compensation act of 1969,"
by amending section 551 (MCL 418.551), as amended by 2002 PA 25.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 551. (1) As soon as practicable after January 1 of each
year, the director shall assess pursuant to subsection (3) a sum
that in total is equal to 175% of the total disbursements made from
the second injury fund during the preceding calendar year, less the
amount of net assets in excess of $200,000.00 in that fund as of
December 31 of the preceding calendar year.
(2) As soon as practicable after January 1 of each year, the
director shall assess pursuant to subsection (3) a sum that in
total is equal to 175% of the total disbursements made from the
silicosis, dust disease, and logging industry compensation fund
during the preceding calendar year, less the amount of net assets
in excess of $200,000.00 in that fund as of December 31 of the
preceding calendar year.
(3) The portion of the total assessment amounts under
subsections (1) and (2) allocated to self-insurers shall be equal
to a percentage determined as follows: The total paid losses of all
self-insurers for the preceding calendar year divided by the total
paid losses of all carriers during the preceding calendar year. The
portion of the total assessment amounts under subsections (1) and
(2) allocated to insurers shall be equal to a percentage determined
as follows: The total paid losses of all insurers for the preceding
calendar year divided by the total paid losses of all carriers
during the preceding calendar year. The portion of the total
assessments allocated to self-insurers that shall be collected from
each self-insurer shall be equal to a percentage determined as
follows:
The total paid losses of each that
self-insurer divided by
the total paid losses of all self-insurers during the preceding
calendar year. The portion of the total assessment allocated to
insurers that shall be collected from each insurer shall be equal
to a percentage determined as follows: The amount of total direct
premiums
written as reported by each that
insurer divided by the
amount of total direct premiums written as reported by all insurers
during the preceding calendar year. As used in this subsection:
(a) "Direct premiums written" means standard written Michigan
workers' compensation premium prior to the application of
deductible credits, as reported to the designated advisory
organization, through policy declarations and unit statistical
reports compiled pursuant to the authority in section 2407 of the
insurance code of 1956, 1956 PA 218, MCL 500.2407. For the purposes
of determining assessments under this section, the reported data
for the most recent full calendar year on file with the designated
advisory organization shall be used.
(b) "Total paid losses" means total compensation benefits paid
under this act, exclusive of payments made pursuant to sections
315, 319, and 345.
(4) The director, upon the advice of the trustee representing
the self-insurers, may make additional assessments upon private
self-insurers as the trustee considers necessary to keep the self-
insurers' security fund solvent. After December 31, 2019, the
director shall not assess private employer group self-insurers on
behalf of the self-insurers' security fund. The assessment for the
2015 calendar year and each calendar year thereafter shall be
calculated based exclusively on claims payments and administrative
expense of the self-insurers' security fund for the immediately
preceding calendar year and the estimate of future liability for
the current calendar year as reported in the annual financial
report required under subsection (10), and shall not exceed 3% in
any calendar year exclusive of payments made pursuant to sections
315, 319, and 345. Effective January 1, 2015 through December 31,
2019, the assessment limit under this subsection is increased to a
percentage not to exceed 3.5%, if the proceeds of any assessment
above 3% are used exclusively for claims against the self-insurers'
security fund by disabled employees or dependents, as described in
section 331, of Delphi corporation or Delphi automotive systems
corporation that arise out of employment during the period from May
28, 1999 to October 7, 2009. However, any temporary increase that
raises the assessment above 3.0% shall not be assessed unless all
of the following requirements are met:
(a) An appropriation of $15,000,000.00 or more is made and
placed in a restricted account for the sole purpose of paying
claims described in this subsection, which appropriation does not
lapse at the end of a fiscal year.
(b) An actuarial analysis has confirmed that the sources of
funding described in subdivision (c) will be insufficient to pay
the expected claims.
(c) The claims the self-insurers' security fund receives that
may be paid from the temporary additional assessment exceed the
amount that will be raised from the current assessment plus
$8,000,000.00 of the appropriation under subdivision (a).
(d) Claims are first paid from the 2 sources identified in
subdivision (c) before amounts attributed to the temporary
assessment increase or money from the appropriation above the
$8,000,000.00 identified in subdivision (c) are used to pay claims.
(e) After subtracting the $8,000,000.00 from the appropriation
for use as provided in subdivision (d), an amount equal to 20% of
the balance of the appropriation under subdivision (a) is the
maximum that may be expended from the remainder of the
appropriation in any fiscal year.
(5) Notice of the assessments shall be sent by the director by
first
class first-class mail to each carrier. Payment of
assessments
shall be made so as to be received in the Lansing
office
of the bureau on or before a date specified uniformly in the
notice,
but not less than 90 days after the date of mailing.The
notice shall state that the assessment must be received by the
agency at the address indicated in the notice by 90 days after the
notice mailing date and that interest and penalties will accrue at
the following rates:
(a) Subject to subdivision (c), for an assessment that is
unpaid 90 days after the notice mailing date, interest accrues on
the unpaid balance beginning the ninety-first day and is calculated
in the same manner as interest on a money judgment in a civil
action under section 6013(8) of the revised judicature act of 1961,
1961 PA 236, MCL 600.6013.
(b) Subject to subdivision (c), in addition to the interest
under subdivision (a), a penalty of 1% per month for each month an
assessment is unpaid beginning 181 days after the notice mailing
date.
(c) If a carrier's delinquent assessments and any applicable
interest and penalties total $25.00 or less for all funds in a
single assessment year, the director may waive the assessments,
interest, and penalties.
(6) All assessments constitute elements of loss for the
purpose of establishing rates for worker's compensation insurance.
(7) An employer who has stopped being a self-insurer shall
continue to be liable for a second injury fund; silicosis, dust
disease, and logging industry compensation fund; or self-insurers'
security fund assessment on account of any compensation benefits,
exclusive of payments made pursuant to sections 315, 319, and 345,
paid by the employer during the previous calendar year.
(8) The director shall certify to the trustees the collection
and receipt of all money from assessments, including interest and
penalties, noting any delinquencies. The trustees shall immediately
notify delinquent carriers, including private self-insurers, of
their delinquency in writing by certified mail, return receipt
requested. The trustees shall take action as in their judgment is
proper to effect collection of any delinquent assessment. All money
received from assessments, including interest and penalties, under
this section shall be turned over to the state treasurer who shall
be the custodian of the self-insurers' security fund; the private
employer group self-insurers security fund; the second injury fund;
and the silicosis, dust disease, and logging industry compensation
fund. The treasurer may make those investments as in the
treasurer's judgment are in the best interest of the funds. The
earnings from the investment of the money from the funds shall be
credited to the funds. The state treasurer, at the end of each
fiscal
year, shall determine what the
amount that represents a pro
rata earnings share due to each fund, shall credit the pro rata
earning share to each fund, and shall notify the trustee of the
amount credited and the balance of the respective fund as of
September 30. The trustees shall make separate annual reports and
accountings for each fund, which reports shall be included in the
annual
report of the bureau.agency.
(9) If, after an annual review, the trustee representing the
self-insurers determines that the remaining balance, exclusive of
funds derived from an appropriation from the general fund, exceeds
the amount necessary to pay the known claims, the trustee
representing the self-insurers shall recommend to the director that
the surplus derived from the temporary assessment increase under
subsection (4) be returned, pro rata, to the self-insurers that
paid the assessment increase.
(10) Not later than March 31, 2015 and each year thereafter,
the director shall make available to the public and include in the
agency's annual report an annual financial report of the accounts
and records of the self-insurers' security fund covering the
immediately preceding calendar year. The annual financial report
shall be prepared in accordance with generally accepted accounting
principles and shall contain certificates of examination by an
independent auditor based on generally accepted accounting
principles and generally accepted auditing standards, and supported
by actuarial review and opinion of the future contingent
liabilities. The director may require a special audit to be made at
other times if the financial stability of the fund or the adequacy
of its monetary reserves is in question. An audited financial
statement included in the annual financial report shall include,
but is not limited to, all of the following:
(a) A detailed statement of assets, liabilities, and net
assets.
(b) A detailed statement of revenues and expenses.
(c) A detailed statement of cash flow.
(d) Any related information relevant to the financial
accounting and operations of the self-insurers' security fund.
(e) An estimate of future liability of the self-insurers'
security fund for payment of claims made against a private self-
insurer based on computations that reflect the probable total
future cost of compensation and medical benefits due, or that can
reasonably be expected to be due, over the life of the claim.
(f) A report of each liability assumed for payment of claims
made against a private self-insurer.
(11) Not later than March 31, 2015 and each year thereafter,
the director shall make available to the public and include in the
agency's annual report a report detailing information regarding the
self-insurers' security fund's management of claims. The report
shall include, but is not limited to, all of the following:
(a) Total cost per claim.
(b) Cost per active claim and cost per closed claim.
(c) Indemnity cost per claim.
(d) Medical cost for indemnity claims.
(e) Medical costs for medical-only claims.
(f) Average redemption.
(g) Average paid claim amount.
(h) Average loss adjustment expense.
(i) Methods utilized to increase efficiency and provide
quality control in claims management.
(12) A report prepared under subsection (10) or (11) shall not
include any personally identifiable information.
Enacting section 1. This amendatory act does not take effect
unless House Bill No. 5489 of the 97th Legislature is enacted into
law.
