March 19, 2015, Introduced by Reps. Sheppard, LaVoy, Glardon, Webber, Hughes and Iden and referred to the Committee on Commerce and Trade.
A bill to amend 1969 PA 317, entitled
"Worker's disability compensation act of 1969,"
by amending section 611 (MCL 418.611), as amended by 1993 PA 198.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 611. (1) Each employer under this act, subject to the
approval of the director, shall secure the payment of compensation
under this act by either of the following methods:
(a) By receiving authorization from the director to be a self-
insurer. In the case of an individual employer, the director may
grant that authorization upon a reasonable showing by the employer
of the employer's solvency and financial ability to pay the
compensation and benefits provided for in this act and to make
payments directly to the employer's employees as the employees
become entitled to receive the payment under the terms and
conditions of this act and pursuant to R 408.43c of the Michigan
administrative code. If the director determines it to be necessary,
the director shall require the furnishing of a bond or other
security in a reasonable form and amount. Such security as may be
required by the director may be provided by furnishing specific
excess insurance, aggregate excess insurance coverage through a
carrier authorized to write in this state in an amount acceptable
to the director, a surety bond, an irrevocable letter of credit in
a
format acceptable to the bureau, agency, and claims payment
guarantees.
(b) By insuring against liability with an insurer authorized
to transact the business of worker's compensation insurance within
this state.
(2) Under procedures and conditions specifically determined by
the director, 2 or more employers in the same industry with
combined assets of $1,000,000.00 or more, or 2 or more public
employers of the same type of unit, may be permitted by the
director to enter into agreements to pool their liabilities under
this act for the purpose of qualifying as self-insurers. Each of
the employer members participating in a self-insurer group
possesses ownership in its proportional share of the assets of the
group in excess of the self-insurer group obligations. The trustees
of a self-insurer group, acting in their fiduciary capacity, shall
establish processes and procedures for the distribution of excess
assets with the approval of the director. For purposes of this
subsection, cities, townships, counties, and villages; or 1 or more
of the agencies, instrumentalities, or other legal entities of
cities, townships, counties, or villages or any combination
thereof; or authorities of 1 or more of cities, townships,
counties, or villages or any combination thereof created pursuant
to
law shall be are considered public employers of the same type of
unit.
An employer member of the approved group shall be is
classified as a self-insurer. For purposes of this subsection,
universities and colleges, community colleges, and local and
intermediate
school districts, shall be are
considered public
employers of the same type of unit. The director may grant
authorization to become a member of an approved group upon a
reasonable showing by an employer of the employer's solvency and
financial stability to meet the employer's obligations as a member
of the group. If the director determines it to be necessary, the
director may require the furnishing of a surety bond, fidelity
bond, or other security by the group in a reasonable form and
amount.
Such The security as may be required by the director
requires may be provided by furnishing specific excess insurance,
aggregate excess insurance coverage through a carrier authorized to
write
in this state , including the state accident fund, in an
amount acceptable to the director. An irrevocable letter of credit
in
a format currently used by the bureau on December 15, 1992 or a
surety bond may be furnished in place of aggregate excess
insurance.
The current format of the irrevocable letter of credit
used
by the bureau agency on December 15, 1992 shall be is
acceptable until the format of the irrevocable letter of credit is
promulgated
by agency rules. of the bureau. If an irrevocable
letter of credit is proposed, the director may require an
independent actuarial opinion from the group fund supporting the
proposal and estimating the ultimate loss at 90% confidence level.
Assets of the fund allocated for the payment of administrative
expenses or set aside for claims payments shall not be used as
collateral for the irrevocable letter of credit. Use of surplus
assets
as collateral shall require must
have prior bureau agency
approval. If the director determines it to be necessary, the
director may obtain an independent review of the actuarial opinion
submitted by the group fund at the expense of the group fund to
determine the ability of the group fund to meet its obligation
under
the terms and conditions of this act. The group fund shall
make available all documentation used for the actuarial report if
requested by the director for an independent review. An employer,
except a public employer, permitted to become a member of a self-
insurers' group under this act shall execute a written agreement in
which the employer agrees to jointly and severally assume and
discharge,
by payment, any lawful award entered by the bureau
agency
against a member of the group. If the
case in which the
award
is entered is appealed by either
party, then the award shall
first
must be upheld before a member of the group may be is liable.
In
the case of a public employer that is permitted to become a
member
of a self-insurers' group, any Any
lawful award entered by
the
bureau agency, and upheld
if appealed, against a public
employer
which that is a member of a group , if the award is upheld
on
appeal, shall be is a liability of the group jointly but not
severally. and,
if If the group is unable to pay the award, the
group
or the bureau agency shall individually assess those public
employers who were members on the date of injury to the extent
necessary
to pay the award. An assessment shall be is a contractual
obligation of the public employer. As used in this subsection,
"public employer" means a city, village, township, county, school
district, or community college; or an agency, entity, or
instrumentality
thereof; or an authority comprised of comprising
any
combination of the foregoing. This subsection shall does not
alter
the obligation of either a group or an employer from
complying
to comply with section 862. For purposes of this
subsection, an authorized group self-insurer, in conjunction with
providing security for the payment of compensation and benefits
provided for in this act, may provide coverage customarily known as
employer's liability insurance for members of the group.
(3) For the purpose of determining whether employers are in
the
same industry under subsection (2), the following shall apply:
(a)
The forest industry shall be considered as includes those
businesses engaged in the growing, harvesting, processing, or sale
of forest products, except at the retail level, unless more than
80% of the income from the retailer comes from the growing,
harvesting, processing, or wholesale sale of forest products, and
any supplier or service companies that receive more than 80% of
their income from these businesses.
(b) "Forest products" include Christmas trees, firewood, maple
syrup,
and all other products derived from wood or wood fiber which
that are manufactured with woodworking equipment including saws,
planers, drills, chippers, lumber dry kilns, sanders, glue presses,
nailers, notchers, shapers, lathes, molders, and other similar
finishing processes.
(4) The director may permit a nonpublic health care facility
employer to become a member of a self-insurers' group with public
employers
pursuant to under subsection (2) if the principal service
rendered by the nonpublic health care facility employer is the same
type of service rendered by the public employers. If a nonpublic
health care facility employer is permitted to become a member of
the same self-insurers' group with public employers, any lawful
award
entered by the bureau agency
against that nonpublic health
care
facility employer, if the award is upheld on appeal, shall be
is a liability of the group and, if the group is unable to pay the
award,
the group or the bureau agency
shall individually assess
those nonpublic health care facility employers who were members on
the date of injury to the extent necessary to pay the award. The
director may waive the requirement of the written agreement
required of a nonpublic health care facility employer under
subsection (2) as to any member of a group involving a combination
of public and nonpublic health care facility employers. Except as
otherwise
provided in this subsection, subsection (2) shall be is
applicable to all self-insurers' groups and their individual
employer members.
(5) The director may decline to approve an application for
individual or group self-insurance or terminate the self-insured
privilege if the self-insurer fails to demonstrate that the self-
insurer will be able to meet all present and future obligations
under this act or the self-insurer fails to maintain security
requirements previously imposed as a condition for approval. Notice
of intent to deny or terminate self-insured status shall be mailed
to
the self-insurer. The notice shall must include the grounds for
denial or termination. The self-insurer may request a hearing
before the director within 15 days after the mailing of the notice
by
the bureau. agency. If the recommendation for termination of
self-insured status is based on the self-insurer's failure to
maintain existing security requirements such as excess insurance,
letters of credit, guarantees, or surety bonds, the self-insurer
shall reinstate the security requirements pending the hearing.
Proof
of such the reinstatement shall accompany the request for
hearing.
Failure If the
self-insurer fails to reinstate
existing
security
requirements, shall allow the director to may make
a final
decision on the evidence before him or her without further hearing.
(6) If an appeal is taken from a decision of the director made
pursuant
to under subsection (5), the director may require the
self-insurer to post a surety bond, irrevocable letter of credit,
or other security in a reasonable amount to guarantee that money
will
be available to pay workers' worker's
disability compensation
benefits to injured employees covered by the self-insured program.
Such
The security shall must be filed with the
director at the time
an
appeal is taken to the appellate commission and shall must be
consistent
with the provisions of R 408.43a and R 408.43q of the
Michigan administrative code. If the self-insurer is a group fund,
the director shall review the assets and liabilities, claims
experience history, and future claims potential of the group fund
and recognize the ability of the group fund to assess its
membership in making a decision on the need for additional
security. A claim for review of the director's order or decision
made
pursuant to subsection (5) shall be filed with the workers'
Michigan compensation appellate commission within 15 days after the
mailing date of the order or decision. If a claim for review is not
filed
within 15 days, the aggrieved party shall be is considered
to
have waived the right to appeal. Within 15 days after service of a
copy of the claim for review, unless the time is extended by order
of
the appellate commission, the bureau agency shall file the
original or certified copy of the entire record of the proceedings,
unless parties to the proceedings for review stipulate that the
record be shortened. A party who unreasonably refuses to so
stipulate may be taxed by the appellate commission for the
additional costs of preparation. If the self-insurer disputes the
imposition
of additional security at time of appeal, such the
dispute
shall must be in the form of a motion directed to the
appellate commission within 15 days after the filing of the record.
The
bureau's agency's reply to such the motion shall be filed
within 15 days after receipt of appellant's motion. The appellate
commission
shall act on the motion within 15 days after filing of
the
bureau's the agency files its
reply to appellant's motion and
shall notify the parties of interest of its decision. The appealing
party's brief shall be filed with the appellate commission 15 days
after the filing of the record and a copy shall be served upon the
opposite
party. The bureau's agency's
reply brief shall be filed
within 15 days after receipt of the appellant's brief. Oral
argument
may be requested by any party to the proceedings. Such The
request
shall must be in the form of a motion directed to the
appellate commission within 15 days after the filing of the record.
The appellate commission shall act on the motion within 15 days of
filing the motion and shall notify the parties in interest of its
decision.
Otherwise, and subsequent to the expiration of after 15
days, the appellate commission shall hear the case upon the record
and
shall consider such the briefs as that have been filed. The
decision of the appellate commission shall be made within 30 days
after the date of the oral argument or, if no oral argument, within
30
days after the date that the bureau's agency's brief is required
to be filed. The appellate commission may remand the matter to the
bureau
agency for purposes of supplying a complete record if it is
determined
determines that the record is insufficient for purposes
of
review. The commencement of proceedings Proceedings under this
section
shall do not operate as a stay of the bureau's agency's
order, including any additional security imposed by the director,
unless
stayed by order of the appellate commission. The commission
commission-ordered stay shall be is subject
to such any conditions
as
that the appellate commission may impose. imposes. The
appellate
commission
shall have the has jurisdiction to affirm, modify, or
set
aside the order or decision of the director. An appeal from a A
final
order entered by the appellate commission enters relating to
a decision or order of the director to deny an application for
self-insurance or to terminate the self-insured privilege under
subsection
(5) may be made appealed by filing an application for
leave to appeal to the court of appeals within 30 days after the
order.
(7)
The director , from time to time, may review and alter a
decision approving the election of an employer to adopt any 1 of
the methods permitted by subsection (1), (2), or (4) if, in the
director's judgment, that action is necessary or desirable for any
reason.
(8) Under procedures and conditions specifically determined by
the director, an individual, partnership, or corporation desiring
to engage in the business of servicing an approved worker's
compensation self-insurance program for an individual or group of
employers
shall make application apply
to the director before
entering into a contract with the individual or group of employers
and shall satisfy the director that the individual, partnership, or
corporation has adequate facilities and competent personnel to
service
a self-insurance program in a manner which that will
fulfill the employer's obligations under this act.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.