Senate Bill No. 602
(By Senator Unger)
[Introduced February 21, 2011; referred to the Committee on Government Organization; and then to the Committee on Finance.]
A BILL to amend and reenact §23-2-1 and §23-2-1b of the Code of West Virginia, 1931, as amended; to amend and reenact §23-2C-10 of said code; and to amend said code by adding thereto a new section, designated §33-2-21a, all relating to workers’ compensation programs of state government entities and their employees; defining participants and exceptions thereto; including the West Virginia Wing of the Civil Air Patrol in such coverage; designating the Insurance Commissioner to manage workers’ compensation risks of state entities; creating a purchasing exemption for the program; authorizing commissioner to assess fees; creating a fund in State Treasury; authorizing investment of funds; permitting loan from Insurance Commissioner’s administrative fund to the state entities’ workers’ compensation program fund and repayment to the administrative fund; allowing coverage under assigned risk plan; and authorizing Insurance Commissioner to propose legislative rules and to adopt emergency rules.
Be it enacted by the Legislature of West Virginia:
That §23-2-1 and §23-2-1b of the Code of West Virginia, 1931, as amended, be amended and reenacted; that §23-2C-10 of said code be amended and reenacted; and that said code be amended by adding thereto a new section, designated §33-2-21a, all to read as follows:
CHAPTER 23. WORKERS’ COMPENSATION.
ARTICLE 2. EMPLOYERS AND EMPLOYEES SUBJECT TO CHAPTER; EXTRATERRITORIAL COVERAGE.
§23-2-1. Employers subject to chapter; elections not to provide certain coverages; notices; filing of business registration certificates.
(a) The State of West Virginia and all governmental agencies or departments created by it, including county boards of education, political subdivisions of the state, the West Virginia Wing of the Civil Air Patrol, any volunteer fire department or company and other emergency service organizations as defined by article five, chapter fifteen of this code, and all persons, firms, associations and corporations regularly employing another person or persons for the purpose of carrying on any form of industry, service or business in this state, are employers within the meaning of this chapter and are required to subscribe to and pay premium taxes into the Workers’ Compensation Fund for the protection of their employees and are subject to all requirements of this chapter and all rules prescribed by the Workers’ Compensation Commission with reference to rate, classification and premium payment: Provided, That rates will be adjusted by the commission to reflect the demand on the compensation fund by the covered employer.
(b) The following employers are not required to subscribe to the fund, but may elect to do so:
(1) Employers of employees in domestic services;
(2) Employers of five or fewer full-time employees in agricultural service;
(3) Employers of employees while the employees are employed without the state except in cases of temporary employment without the state;
(4) Casual employers. An employer is a casual employer when the number of his or her employees does not exceed three and the period of employment is temporary, intermittent and sporadic in nature and does not exceed ten calendar days in any calendar quarter;
(6) Employers engaged in organized professional sports activities, including employers of trainers and jockeys engaged in thoroughbred horse racing; or
(7) Any volunteer rescue squad or volunteer police auxiliary unit organized under the auspices of a county commission, municipality or other government entity or political subdivision; volunteer organizations created or sponsored by government entities, political subdivisions; or area or regional emergency medical services boards of directors in furtherance of the purposes of the Emergency Medical Services Act of article four-c, chapter sixteen of this code: Provided, That if any of the employers described in this subdivision have paid employees, to the extent of those paid employees, the employer shall subscribe to and pay premium taxes into the Workers’ Compensation Fund based upon the gross wages of the paid employees but with regard to the volunteers, the coverage remains optional.
(8) Any employer whose employees are eligible to receive benefits under the federal Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. §901, et seq., but only for those employees eligible for those benefits.
(c) Notwithstanding any other provision of this chapter to the contrary, whenever there are churches in a circuit which employ one individual clergyman and the payments to the clergyman from the churches constitute his or her full salary, such circuit or group of churches may elect to be considered a single employer for the purpose of premium payment into the Workers’ Compensation Fund.
(d) Employers who are not required to subscribe to the Workers’ Compensation Fund may voluntarily choose to subscribe to and pay premiums into the fund for the protection of their employees and in that case are subject to all requirements of this chapter and all rules and regulations prescribed by the commission with reference to rates, classifications and premium payments and shall afford to them the protection of this chapter, including section six of this article, but the failure of the employers to choose to subscribe to and to pay premiums into the fund shall not impose any liability upon them other than any liability that would exist notwithstanding the provisions of this chapter.
(e) Any foreign corporation employer whose employment in this state is to be for a definite or limited period which could not be considered "regularly employing" within the meaning of this section may choose to pay into the Workers’ Compensation Fund the premiums provided for in this section, and at the time of making application to the Workers’ Compensation Commission, the employer shall furnish a statement under oath showing the probable length of time the employment will continue in this state, the character of the work, an estimate of the monthly payroll and any other information which may be required by the commission. At the time of making application the employer shall deposit with the commission to the credit of the Workers’ Compensation Fund the amount required by section five of this article. That amount shall be returned to the employer if the employer's application is rejected by the commission. Upon notice to the employer of the acceptance of his or her application by the commission, he or she is an employer within the meaning of this chapter and subject to all of its provisions.
(f) Any foreign corporation employer choosing to comply with the provisions of this chapter and to receive the benefits under this chapter shall, at the time of making application to the commission in addition to other requirements of this chapter, furnish the commission with a certificate from the Secretary of State, where the certificate is necessary, showing that it has complied with all the requirements necessary to enable it legally to do business in this state and no application of a foreign corporation employer shall be accepted by the commission until the certificate is filed.
(g) The following employers may elect not to provide coverage to certain of their employees under the provisions of this chapter:
(1) Any political subdivision of the state including county commissions and municipalities, boards of education, or emergency services organizations organized under the auspices of a county commission may elect not to provide coverage to any elected official. The election not to provide coverage does not apply to individuals in appointed positions or to any other employees of the political subdivision;
(2) If an employer is a partnership, sole proprietorship, association or corporation, the employer may elect not to include as an "employee" within this chapter, any member of the partnership, the owner of the sole proprietorship or any corporate officer or member of the board of directors of the association or corporation. The officers of a corporation or an association shall consist of a president, a vice president, a secretary and a treasurer, each of whom is elected by the board of directors at the time and in the manner prescribed by the bylaws. Other officers and assistant officers that are considered necessary may be elected or appointed by the board of directors or chosen in any other manner prescribed by the bylaws and, if elected, appointed or chosen, the employer may elect not to include the officer or assistant officer as an "employee" within the meaning of this chapter: Provided, That except for those persons who are members of the board of directors or who are the corporation's or association's president, vice president, secretary and treasurer and who may be excluded by reason of their positions from the benefits of this chapter even though their duties, responsibilities, activities or actions may have a dual capacity of work which is ordinarily performed by an officer and also of work which is ordinarily performed by a worker, an administrator or an employee who is not an officer, no other officer or assistant officer who is elected or appointed shall be excluded by election from coverage or be denied the benefits of this chapter merely because he or she is an officer or assistant officer if, as a matter of fact:
(A) He or she is engaged in a dual capacity of having the duties and responsibilities for work ordinarily performed by an officer and also having duties and work ordinarily performed by a worker, administrator or employee who is not an officer;
(B) He or she is engaged ordinarily in performing the duties of a worker, an administrator or an employee who is not an officer and receives pay for performing the duties in the capacity of an employee; or
(C) He or she is engaged in an employment palpably separate and distinct from his or her official duties as an officer of the association or corporation;
(3) If an employer is a limited liability company, the employer may elect not to include as an "employee" within this chapter a total of no more than four persons, each of whom are acting in the capacity of manager, officer or member of the company.
(h) In the event of election under subsection (g) of this section, the employer shall serve upon the commission written notice naming the positions not to be covered and shall not include the "employee's" remuneration for premium purposes in all future payroll reports, and the partner, proprietor or corporate or executive officer is not considered an employee within the meaning of this chapter after the notice has been served. Notwithstanding the provisions of subsection (g), section five of this article, if an employer is delinquent or in default or has not subscribed to the Fund even though it is obligated to do so under the provisions of this article, any partner, proprietor or corporate or executive officer shall not be covered and shall not receive the benefits of this chapter.
(i) "Regularly employing" or "regular employment" means employment by an employer which is not a casual employer under this section.
(j) Upon the termination of the commission, the criteria governing which employer shall or may subscribe to the Workers’ Compensation Commission shall also govern which employers shall or may purchase Workers’ Compensation insurance under article two-c of this chapter.
§23-2-1b. Special provisions as to premiums.
(a) Except as provided for in subsection (b) of this section, every executive officer of an association or of a corporation, any member of a partnership or owner of a sole proprietorship which has not elected to forgo coverage under this chapter for such officer, member or owner shall pay premiums based upon the actual salary paid to such employee up to an amount sufficient to qualify such employee to receive the maximum level of benefits, but in no event shall the basis for premium be less than the salary necessary to provide such employee with the minimum level of benefits.
(b) Every executive officer of a not-for-profit association or of a not-for-profit corporation which has not elected to forgo coverage under this chapter for such officer, member or owner shall pay premiums based upon the actual salary paid to such employee up to an amount sufficient to qualify such employee to receive the maximum level of benefits, but in no event shall the basis for premium be less than $100.
(c) Every elected official or officer, whether full time or part time and including members of the Legislature, whose governmental entity elects coverage under this chapter for such elected official or officer, shall pay or have paid for him or her premiums based upon the actual salary paid to such elected official or officer up to an amount sufficient to qualify such elected official or officer to receive the maximum level of benefits, but in no event shall the basis for premium be less than the salary necessary to provide such elected official or officer with the minimum level of benefits. For the purposes of this subsection, an elected official or officer shall include a person appointed to an elected position to complete a term for that elected position.
(d) The premium and actual expenses in connection with governmental agencies and departments of the State of West Virginia shall be paid out of the State Treasury from appropriations made for such agencies and departments, in the same manner as other disbursements are made by such agencies and departments.
(e) County commissions, municipalities, other political subdivisions of the state, county boards of education, emergency service organizations organized as aforesaid and volunteer fire departments or companies or the West Virginia Wing of the Civil Air Patrol, shall provide for the funds to pay their prescribed premiums into the fund and such premiums and premiums of state agencies and departments, including county boards of education, shall be paid into the fund in the same manner as herein provided for other employers subject to this chapter.
(f) County commissions and municipalities are hereby authorized to pay all or any part of the premiums prescribed for such emergency service organizations organized as aforesaid and such duly incorporated volunteer fire departments or companies or the West Virginia Wing of the Civil Air Patrol, as may provide services within the county or municipality.
ARTICLE 2C. EMPLOYERS’ MUTUAL INSURANCE COMPANY.
§23-2C-10. West Virginia adverse risk assignment.
(a) The Insurance Commissioner shall provide for the development and administration of an assigned risk plan to provide workers’ compensation insurance coverage to employers who are unable to procure coverage in the voluntary market.
(b) To qualify for coverage under the plan, an employer must have been categorically declined coverage by at least two insurers that are not affiliated with each other. The employer has the burden of establishing that at least two unaffiliated insurers are unwilling to provide coverage at any premium level that is reasonably related to the risk presented by the employer. The assigned risk plan may also provide for other reasonable qualifications and for the termination of coverage under the plan for specified reasons.
(c) Any employer that satisfies the requirements of subsection (b) of this section and other qualifications established in the plan shall be provided coverage at a premium level to be determined or approved by the Insurance Commissioner, which premiums shall be actuarially sound, consistent with classification and rate-making methodologies found in the insurance industry, and calculated to enable the plan to be self-sustaining and, to the greatest extent possible, able to operate without subsidies from employers and insurers in the voluntary market. Rates may not be excessive, inadequate or unfairly discriminatory.
(d) The Insurance Commissioner may designate any third party, including any private carrier or rating organization with substantial experience in developing and administering similar programs in other states, to develop and administer the assigned risk plan for a period of three years, and thereafter, shall contract with any qualified party, including the then current administrator, to continue the administration of the assigned risk plan: Provided, That the Insurance Commissioner must approve the plan prior to the plan becoming operative. The plan established pursuant to this section shall require that all private carriers participate as a condition of their authority to transact business in this state.
(e) In the event the plan incurs a deficit in one or more policy years, the Insurance Commissioner may assess all private carriers providing workers’ compensation insurance in voluntary market funds as are necessary to cover the deficits. The assessments shall result in an equitable distribution of costs among private carriers based upon premiums received by the private carriers in the private market. Assessments made upon the policies of each private carrier pursuant to this section may be collected by each carrier in the form of a surcharge.
(f) Notwithstanding any other provision of this code, the West Virginia Wing of the Civil Air Patrol qualifies for coverage under the assigned risk plan.
CHAPTER 33. INSURANCE.
ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-21a. State Agency Workers’ Compensation Programs.
(a) The intent of this section is to provide a means of managing workers’ compensation coverage for persons directly employed by the State of West Virginia. For the purposes of this section:
(1) “Discretionary participant” means the Parkways Authority, offices of the State Auditor, the State Treasurer, the Secretary of State, the Attorney General, the Department of Agriculture, the State Senate and House of Delegates or their related entities, the Supreme Court of Appeals, the State Police and any other spending unit of the state that is required by section twelve, article two, chapter eleven-b of this code to provide a detailed expenditure schedule to the Secretary of Revenue in his or her capacity as Director of the Budget or the West Virginia Wing of the Civil Air Patrol: Provided, That the term “discretionary participant” does not include any executive state entity other than the State Police and Parkways Authority, any county board of education, any other county entity or its instrumentality or any municipality or its instrumentality.
(2) “Executive state entity” means the Governor’s Office and its affiliated entities, Bureau of Senior Services, or any state department, division, fund, office, position, system, survey or other entity of state government, however designated, transferred to and incorporated in one of the executive departments created in section two, article one, chapter five-f of this code, except the State Police, and that is required by section twelve, article two, chapter eleven-b of this code to provide a detailed expenditure schedule to the Secretary of Revenue in his or her capacity as Director of the Budget.
(b) Notwithstanding any provision of this code to the contrary, the commissioner has sole responsibility for managing the workers' compensation risks of all executive state entities and for supervising and controlling the workers’ compensation programs for such entities: Provided, That any discretionary participant may apply to participate in the program, and if approved to do so by the commissioner, may be allowed to participate under the same terms and conditions as are applicable to executive state entities: Provided, however, That the commissioner may remove any such entity from the program for noncompliance with any conditions of participation: Provided further, That a discretionary participant is, in accordance with rules governing the program, permitted to withdraw from continued participation in the program.
(c) The commissioner may assess such fees or surcharges on participants in the program as he or she determines necessary to manage the workers’ compensation risks of those participants.
(d) The provisions of article three, chapter five-a of this code relating to the Purchasing Division of the Department of Administration do not apply to any contract entered into by the commissioner in furtherance of the requirements of this section: Provided, That those contracts shall be awarded on a competitive basis.
(e)(1) There is hereby established the “State Entities Workers’ Compensation Program Fund.” All premiums, surcharges, assessments, deposits or any other moneys or funds deposited or otherwise designated or accruing to the fund as well as all earnings payable to it, shall be deposited in the State Treasury to the credit of the fund. Expenditures from the fund shall be for the purposes set forth in this section, are authorized from collections, and shall not revert to the General Fund. The fund shall be a separate and distinct fund upon the books and records of the Auditor and Treasurer, and disbursements therefrom shall be made upon requisitions signed by the Insurance Commissioner.
(2) Any premiums, assessments or deposits or any other moneys or funds received for the purposes of this section shall be invested by the State Treasurer at the request of the commissioner.
(3) The Insurance Commissioner may borrow funds as is determined necessary from the Insurance Commission Fund, created in section thirteen-b, article three, chapter thirty-three of this code, for the initial operations of the workers’ compensation program for state entities: Provided, That any borrowed funds shall be deposited to the credit of the “State Entities Workers’ Compensation Program Fund”: Provided, however, That these funds shall be repaid, without interest, and redeposited to the credit of the Insurance Commission Fund as determined by the Insurance Commissioner.
(f) The commissioner may promulgate emergency rules and shall propose for legislative approval legislative rules, in accordance with the provisions of article three, chapter twenty-nine-a of this code, as are necessary to provide for implementation and enforcement of the provisions of this section.
NOTE: The purpose of this bill is to create a program for managing workers’ compensation coverage of state entities by the Insurance Commissioner, including the West Virginia Wing of the Civil Air Patrol.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
§33-2-21a is new; therefore, strike-throughs and underscoring have been omitted.