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Introduced Version House Bill 4390 History

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Key: Green = existing Code. Red = new code to be enacted
H. B. 4390

(By Delegates Webster, Miley, DeLong, Burdiss, Brown, Caputo, Longstreth, Fleischauer, Kessler, Moore and Guthrie)

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[Introduced February 4, 2008;

referred to the Committee on the Judiciary.]

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A BILL to amend and reenact §23-2C-2 and §23-2C-5 of the Code of West Virginia, 1931, as amended; and to amend and reenact §33- 2-10 of said code, all relating to the insurance commissioner's rulemaking authority for workers' compensation; and requiring legislative rules.

Be it enacted by the Legislature of West Virginia:
That §23-2C-2 and §23-2C-5
of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that §33-2-10 of said code be amended and reenacted, all to read as follows:
CHAPTER 23. WORKERS' COMPENSATION.

ARTICLE 2C. EMPLOYERS' MUTUAL INSURANCE COMPANY.
§23-2C-2. Definitions.
(a) "Executive director" means the Executive Director of the West Virginia Workers' Compensation Commission as provided in section one-b, article one of this chapter.
(a) "Assigned Risk Fund" shall be a fund held by the State Treasurer's office consisting of funds deposited pursuant to this article. Disbursements shall be made from the Assigned Risk Fund upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in this article.
(b) "Commission" means the West Virginia Workers' Compensation Commission as provided by section one, article one of this chapter.
(c) "Insurance Commissioner" means the Insurance Commissioner of West Virginia as provided in section one, article two, chapter thirty-three of this code.
(d)(c) "Company" or "successor to the commission" means the employers' mutual insurance company created pursuant to the terms of this article.
(d) "Comprehensive financial plan" shall mean the plan compiled by the director for acceptance by the Insurance Commissioner identifying and forecasting cash flows, funding sources, debt terms and structures and scheduled amortization and permanent resolution of all Old Fund liabilities. The comprehensive financial plan shall provide for the retirement of the revenue bonds authorized by article two-d of this chapter and all realized and potential claims against the Old Fund shall be fully reserved. The comprehensive financial plan may include any other information the Insurance Commissioner may require as a basis for managing the post-transition fiscal soundness of the Old Fund.
(e) "Policy default" shall mean a policyholder that has failed to comply with the terms of its workers' compensation insurance policy and is consequently without workers' compensation insurance coverage.
(e) "Executive director" means the Executive Director of the West Virginia Workers' Compensation Commission as provided in section one-b, article one of this chapter.
(f) "Industrial insurance" means insurance which provides all compensation and benefits required by this chapter.
(f) "Industrial Council" means the advisory group established in section five of this article.
(g) "Insurer" includes:
(1) A self-insured employer; and
(2) A private carrier.
(g) "Industrial insurance" means insurance which provides all compensation and benefits required by this chapter.
(h)"Industrial Council" means the advisory group established in section five of this article.
(h) "Insurance Commissioner" means the Insurance Commissioner of West Virginia as provided in section one, article two, chapter thirty-three of this code.
(i)"Mutualization Transition Fund" shall be a fund over which the State Treasurer is custodian. Moneys transferred or otherwise payable to the Mutualization Transition Fund shall be deposited in the State Treasury to the credit of the Mutualization Transition Fund. Disbursements shall be made from the Mutualization Transition Fund upon requisitions signed by the executive director, and, upon termination of the commission, the Insurance Commissioner, and shall be reasonably related to the legal, operational, consultative and human resource-related expenses associated with the establishment of the company and the transferring of personnel from the commission to the company.
(i) "Insurer" means:
(1) A self-insured employer; and
(2) A private carrier.
(j) "New Fund liabilities" shall mean all claims payment obligations (indemnity and medical expenses) for all claims, actual and incurred but not reported, for any claim with a date of injury or last exposure on or after the first day of July, two thousand five: Provided, That New Fund liabilities shall begin with claims payments becoming due and owing on said claims on or after the first day of January, two thousand six.
(j) "Mutualization Transition Fund" shall be a fund over which the State Treasurer is custodian. Moneys transferred or otherwise payable to the Mutualization Transition Fund shall be deposited in the State Treasury to the credit of the Mutualization Transition Fund. Disbursements shall be made from the Mutualization Transition Fund upon requisitions signed by the executive director, and, upon termination of the commission, the Insurance Commissioner, and shall be reasonably related to the legal, operational, consultative and human resource-related expenses associated with the establishment of the company and the transferring of personnel from the commission to the company.
(k)"New Fund liabilities" shall mean all claims payment obligations (indemnity and medical expenses) for all claims, actual and incurred but not reported, for any claim with a date of injury or last exposure on or after the first day of July, two thousand five: Provided, That New Fund liabilities shall begin with claims payments becoming due and owing on said claims on or after the first day of January, two thousand six.
(k) "New Fund" means a fund owned and operated by the commission and, upon termination of the commission, the successor organization of the West Virginia Workers' Compensation Commission and shall consist of those funds transferred to it from the Workers' Compensation Fund and any other applicable funds. New Fund shall include all moneys due and payable to the Workers' Compensation Fund for the quarters ending the thirtieth day of September, two thousand five, and the thirty-first day of December, two thousand five, which have not been collected by the Workers' Compensation Fund as of the thirty-first day of December, two thousand five.
(l)"Old Fund" shall mean a fund held by the State Treasurer's office consisting of those funds transferred to it from the Workers' Compensation Fund or other sources and those funds due and owing the Workers' Compensation Fund as of the thirtieth day of June, two thousand five, that are thereafter collected. The Old Fund and assets therein shall remain property of the state and shall not novate or otherwise transfer to the company.
(l) "New Fund liabilities" means all claims payment obligations (indemnity and medical expenses) for all claims, actual and incurred but not reported, for any claim with a date of injury or last exposure on or after the first day of July, two thousand five: Provided, That New Fund liabilities shall begin with claims payments becoming due and owing on said claims on or after the first day of January, two thousand six.
(m)"Old Fund liabilities" mean all claims payment obligations (indemnity and medical expenses), related liabilities and appropriate administrative expenses necessary for the administration of all claims, actual and incurred but not reported, for any claim with a date of injury or last exposure on or before the thirtieth day of June, two thousand five: Provided, That Old Fund liabilities shall include all claims payments for any claim, regardless of date of injury or last exposure, through the thirty-first day of December, two thousand five: Provided, however, That Old Fund liabilities shall include all claims with dates of injuries or last exposure prior to the first day of July, two thousand four, for bankrupt self-insured employers that had defaulted on their claims obligations which have been recognized by the commission in its actuarially determined liability number as of the thirtieth day of June, two thousand five.
(m) "Old Fund" means a fund held by the State Treasurer's office consisting of those funds transferred to it from the Workers' Compensation Fund or other sources and those funds due and owing the Workers' Compensation Fund as of the thirtieth day of June, two thousand five, that are thereafter collected. The Old Fund and assets therein shall remain property of the state and shall not novate or otherwise transfer to the company.
(n) "Private carrier" means any insurer or the legal representative of an insurer authorized by the Insurance Commissioner to provide workers' compensation insurance pursuant to this chapter and which maintains an office in the state. The term does not include a self-insured employer or private employers but shall include any successor to the commission.
(n) "Old Fund liabilities" means all claims payment obligations (indemnity and medical expenses), related liabilities and appropriate administrative expenses necessary for the administration of all claims, actual and incurred but not reported, for any claim with a date of injury or last exposure on or before the thirtieth day of June, two thousand five: Provided, That Old Fund liabilities shall include all claims payments for any claim, regardless of date of injury or last exposure, through the thirty-first day of December, two thousand five: Provided, however, That Old Fund liabilities shall include all claims with dates of injuries or last exposure prior to the first day of July, two thousand four, for bankrupt self-insured employers that had defaulted on their claims obligations which have been recognized by the commission in its actuarially determined liability number as of the thirtieth day of June, two thousand five.
(o) "Uninsured Employer Fund" means a fund held by the State Treasurer's office consisting of those funds transferred to it from the Workers' Compensation Fund and any other source. Disbursements from the Uninsured Employer Fund shall be upon requisitions signed by the Insurance Commissioner, and as otherwise set forth in an exempt legislative rule promulgated by the workers' compensation board of managers.
(o) "Policy default" means a policyholder that has failed to comply with the terms of its workers' compensation insurance policy and is consequently without workers' compensation insurance coverage.
(p) "Self-Insured Employer Guaranty Risk Pool" shall be a fund held by the State Treasurer's office consisting of those funds transferred to it from the guaranty pool created pursuant to 85 CSR §19 (2004) and any future funds collected through continued administration of that exempt legislative rule as administered by the Insurance Commissioner. Disbursements shall be made from the Self-Insured Employer Guaranty Risk Pool upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in 85 CSR §19 (2004).
(p) "Private carrier" means any insurer or the legal representative of an insurer authorized by the Insurance Commissioner to provide workers' compensation insurance pursuant to this chapter and which maintains an office in the state. The term does not include a self-insured employer or private employers but shall include any successor to the commission.
(q) "Self-Insured Employer Security Risk Pool" shall be a fund held by the state's Treasurer consisting of those funds paid into it through the Insurance Commissioner's administration of 85 CSR §19 (2004). Disbursement from said fund shall be made from the Self-Insured Employer Security Risk Pool upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in 85 CSR §19: Provided, That said liabilities shall be limited to those self-insured employers who default on their claims obligations after the termination of the commission.
(r) (q) "Private Carrier Guaranty Fund" shall be means a fund held by the State Treasurer's office consisting of funds deposited pursuant to this article. Disbursements shall be made from the Private Carrier Guaranty Fund upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in this article.
(r) "Self-Insured Employer Guaranty Risk Pool" means a fund held by the State Treasurer's office consisting of those funds transferred to it from the guaranty pool created pursuant to 85 CSR §19 and any future funds collected through continued administration of that exempt legislative rule as administered by the Insurance Commissioner: Provided, That, on and after the first day of July, two thousand nine the exemption shall expire and the rule will be subject to all of the provisions of article three, chapter twenty- nine-a of this code. Disbursements shall be made from the Self- Insured Employer Guaranty Risk Pool upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in 85 CSR §19.
(s) "Assigned Risk Fund" shall be a fund held by the State Treasurer's office consisting of funds deposited pursuant to this article. Disbursements shall be made from the Assigned Risk Fund upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in this article.
(s) "Self-Insured Employer Security Risk Pool" means a fund held by the state's Treasurer consisting of those funds paid into it through the Insurance Commissioner's administration of 85 CSR §19. Disbursement from said fund shall be made from the Self- Insured Employer Security Risk Pool upon requisitions signed by the Insurance Commissioner. The obligations of the fund shall be as provided in 85 CSR §19: Provided, That said liabilities shall be limited to those self-insured employers who default on their claims obligations after the termination of the commission.
(t) "Comprehensive financial plan" shall mean the plan compiled by the director for acceptance by the Insurance Commissioner identifying and forecasting cash flows, funding sources, debt terms and structures and scheduled amortization and permanent resolution of all Old Fund liabilities. The comprehensive financial plan shall provide for the retirement of the revenue bonds authorized by article two-d of this chapter and all realized and potential claims against the Old Fund shall be fully reserved. The comprehensive financial plan may include any other information the Insurance Commissioner may require as a basis for managing the post-transition fiscal soundness of the Old Fund.
(t)"Uninsured Employer Fund" means a fund held by the State Treasurer's office consisting of those funds transferred to it from the Workers' Compensation Fund and any other source. Disbursements from the Uninsured Employer Fund shall be upon requisitions signed by the Insurance Commissioner, and as otherwise set forth in an exempt legislative rule promulgated by the insurance commissioner: Provided, That, on and after the first day of July, two thousand nine the exemption shall expire and all such rules are subject to all of the provisions of article three, chapter twenty-nine-a of this code.
§23-2C-5. Creation of the industrial council; duties.
(a) There is hereby created within the office of the insurance commissioner an industrial council.
(b) On or before the first day of July, two thousand five, the Governor with the advice and consent of the Senate, shall appoint five voting members to the industrial council who meet the requirements and qualifications prescribed in this subsection. Two members of the West Virginia Senate and two members of the West Virginia House of Delegates shall serve as advisory nonvoting members of the board. The Governor shall appoint the legislative members to the board. No more than three of the legislative members may be of the same political party. The Insurance Commissioner shall serve as an advisory nonvoting member of the board.
(1) (A) Five members shall be appointed by the Governor with the advice and consent of the Senate for terms that begin upon appointment after the effective date of this legislation and expire as follows:
(i) One member shall be appointed for a term ending the thirtieth day of June, two thousand seven;
(ii) Two members shall be appointed for a term ending the thirtieth day of June, two thousand eight; and
(iii) Two members shall be appointed for a term ending the thirtieth day of June, two thousand nine.
(B) Except for appointments to fill vacancies, each subsequent appointment shall be for a term ending the thirtieth day of June of the fourth year following the year the preceding term expired. In the event a vacancy occurs, it shall be filled by appointment for the unexpired term. A member whose term has expired shall continue in office until a successor has been duly appointed and qualified. No member of the council may be removed from office by the Governor except for official misconduct, incompetency, neglect of duty or gross immorality.
(C) No appointed member may be a candidate for or hold elected office. Members may be reappointed for no more than two full terms.
(2) Each of the appointed voting members of the council shall be appointed based upon his or her demonstrated knowledge and experience to effectively accomplish the purposes of this chapter. They shall meet the minimum qualifications as follows:
(A) Each shall hold a baccalaureate degree from an accredited college or university: Provided, That no more than one of the appointed voting members may serve without a baccalaureate degree from an accredited college or university if the member has a minimum of fifteen years' experience in his or her field of expertise as required in this subdivision;
(B) Each shall have a minimum of ten years' experience in his or her field of expertise. The Governor shall consider the following guidelines when determining whether potential candidates meet the qualifications of this subsection: Expertise in insurance claims management; expertise in insurance underwriting; expertise in the financial management of pensions or insurance plans; expertise as a trustee of pension or trust funds of more than two hundred beneficiaries or three hundred million dollars; expertise in workers' compensation management; expertise in loss prevention and rehabilitation; expertise in occupational medicine demonstrated by licensure as a medical doctor in West Virginia and experience, board certification or university affiliation; or expertise in similar areas of endeavor;
(C) At least one shall be a certified public accountant with financial management or pension or insurance audit expertise; at least one shall be an attorney with financial management experience; one shall be an academician holding an advanced degree from an accredited college or university in business, finance, insurance or economics; and one shall represent organized labor.
(D) The council shall appoint one member to serve as chairperson. The chairperson shall serve for a one-year term and may serve more than one consecutive term. The council shall hold meetings at the request of the chairperson or at the request of at least three of the members of the council, but no less frequently than once every three months. The chairperson shall determine the date and time of each meeting. Three members of the council constitute a quorum for the conduct of the business of the council. No vacancy in the membership of the council shall impair the right of a quorum to exercise all the rights and perform all the duties of the council. No action shall be taken by the council except upon the affirmative vote of three members of the council.
(3) (A) Each voting appointed member of the council shall receive compensation of not more than three hundred fifty dollars per day for each day during which he or she is required to and does attend a meeting of the board.
(B) Each voting appointed member of the council is entitled to be reimbursed for actual and necessary expenses incurred for each day or portion thereof engaged in the discharge of official duties in a manner consistent with guidelines of the travel management office of the Department of Administration.
(C) Each member of the council shall be provided appropriate liability insurance, including, but not limited to, errors and omissions coverage, without additional premium, by the State Board of Risk and Insurance Management established pursuant to article twelve, chapter twenty-nine of this code.
(c) The industrial council shall:
(1) In consultation with the Insurance Commissioner, establish operating guidelines and policies designed to ensure the effective administration of the workers' compensation insurance market in West Virginia.
(2) Review and approve, reject or modify rules that are proposed by the Insurance Commissioner for operation and regulation of the workers' compensation insurance market before the rules are filed with the Secretary of State: Provided, That, on and after the first day of July, two thousand nine the exemption shall expire and all such rules are subject to all of the provisions of article three, chapter twenty-nine-a of this code. The rules adopted by the industrial council are not subject to sections nine through sixteen, inclusive, article three, chapter twenty-nine-a of this code. The industrial council shall follow the remaining provisions of said chapter for giving notice to the public of its actions and for holding hearings and receiving public comments on the rules.
(3) In accordance with the laws and rules of West Virginia, establish and monitor performance standards and measurements to ensure the timeliness and accuracy of activities performed under chapter twenty-three of this code and applicable rules.
(4) Submit for approval by the Legislature, as an isolated and clearly discernable component of the Insurance Commissioner's budget, a budget for the sufficient administrative resources and funding requirements necessary for their duties under this article.
(5) Perform all record and information gathering functions necessary to carry out its duties under this code.
(6) Every two years, conduct an overview of the safety initiatives currently being utilized or which could be utilized in the workers' compensation insurance market and report said finding to the Joint Committee on Government and Finance. Each private carrier and self-insured employer shall cooperate with the council in the performance of its duties to evaluate insurer services provided to employers in controlling losses and providing information on the prevention of industrial accidents or occupational diseases. Each employer, private carrier and self-insured employer shall provide to the council, upon request, any information, statistics or data in its records requested by the council in the performance of these duties.
(7) Perform all other duties as specifically provided in this chapter for the industrial council and those duties incidental thereto.
(8) Establish a method of indexing claims of injured workers that will make information concerning the injured workers of one insurer available to other insurers.
(A) Every insurer shall provide information, as required by the industrial council, for establishing and maintaining the claims index.
(B) If an employee files a claim with an insurer, the insurer is entitled to receive from the administrator a list of the prior claims of the employee. If the insurer desires to inspect the files related to the prior claims, he or she must obtain the written consent of the employee or the Insurance Commissioner or his or her designee. The use of the information contained in the files is limited to the administration of the claim.
CHAPTER 33. INSURANCE.

ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-10. Rules and regulations.
(a) The commissioner is authorized to promulgate and adopt rules relating to insurance as are necessary to discharge his or her duties and exercise his or her powers and to effectuate the provisions of this chapter, protect and safeguard the interests of policyholders and the public of this state.
(b) The commissioner is authorized to promulgate rules necessary to discharge his or her duties relating to workers' compensation insurance as set forth in chapter twenty-three of this code, which shall be exempt, until the first day of July, two thousand nine, from the provisions of article three, chapter twenty-nine-a of this code, article three of this code, except that these rules shall be filed with the Secretary of State's Office. Beginning the first day of July, two thousand nine, article three, chapter twenty-nine-a of the code is applicable to all rules proposed by the commissioner relating to workers' compensation insurance.
(c) Prior to assuming regulatory authority over workers' compensation insurance pursuant to article two-c, chapter twenty-three of this code, the commissioner shall review and revise all applicable rules to reflect the assumption of this new regulatory authority: Provided, That all such revisions shall be exempt from the provisions of chapter twenty-nine-a, article three, except that the amended rules shall be filed with the Secretary of State's Office.

NOTE: The purpose of this bill is to remove the current exemption of the Insurance Commissioner from legislative review of rules relating to the regulation of workers' compensation insurance market beginning July 1, 2009.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

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