HOUSE BILL NO. 5191

A bill to amend 1969 PA 317, entitled

"Worker's disability compensation act of 1969,"

by amending section 501 (MCL 418.501), as amended by 2014 PA 228, and by adding section 536.

the people of the state of michigan enact:

Sec. 501. (1) A self-insurers' security fund and a second injury fund are created.

(2) A silicosis, dust disease, and logging industry compensation fund is created.

(3) An uninsured employer's security fund is created in the state treasury. The fund shall succeed to all of the assets, if any, of the former uninsured employer's security account of the workplace health and safety fund created in former section 723.

(4) The private employer group self-insurers security fund is created on January 1, 2020. The PEGSISF shall receive assessments from and be responsible for payment of eligible claims made against individual members of groups of self-insured private employers who pool their liabilities under this act as group funds in the manner provided in section 611, if the group is otherwise unable to pay.

(5) As used in this chapter:

(a) "Employment in the logging industry" means employment in the logging industry as described in the section in the workmen's compensation and employers liability insurance manual, entitled, "logging or lumbering and drivers code no. 2702," which is filed with and approved by the commissioner of insurance.

(b) "Private employer group self-insurers security fund" or "PEGSISF" means the fund created in subsection (4).

Sec. 536. (1) The uninsured employer's security fund created under section 501 succeeds all of the assets, if any, of the former uninsured employer's security account of the workplace health and safety fund created in former section 723.

(2) The legislature shall appropriate sufficient funds to the uninsured employer's security fund to administer the fund. The trustees shall not implement the requirements of this section until the legislature appropriates sufficient funds.

(3) The state treasurer shall deposit money and other assets received from any source into the fund. Subject to subsection (6), the state treasurer shall direct the investment of money in the fund in the same manner as surplus funds in the state treasury as provided in 1855 PA 105, MCL 21.141 to 21.147, and credit interest and earnings from the investment to the fund. Money in the fund at the close of the fiscal year does not lapse to the general fund.

(4) The trustees shall expend money from the fund on appropriation only for 1 or more of the following purposes:

(a) Subject to subsections (9) and (10), to pay benefits to an injured employee or an injured employee's dependent if the injured employee meets all of the following conditions:

(i) Sustains a compensable injury on or after the effective date of the amendatory act that added this section.

(ii) Does not receive benefits under this act because the employee's employer is an uninsured employer at the time of the employee's injury.

(b) To pay expenses incurred by the trustees for the defense or administration of claims under this section.

(5) The trustees shall not expend money deposited from the fund for enforcement or regulatory purposes unless otherwise authorized under this section.

(6) The state treasurer shall deposit money earned from investments under subsection (3) into the fund quarterly and notify the trustees of the amount credited to the fund.

(7) A claimant shall submit to the director an application for benefits that are payable by the trustees from the fund on a form and in a manner prescribed by the director. Upon receipt of an application, the director shall notify the claimant's employer and the trustees of the claim for benefits.

(8) If the trustees determine that a claim for benefits under this act is against an uninsured employer, the trustees shall make all reasonable attempts to notify the uninsured employer in writing of the claim and the uninsured employer's liability under this act.

(9) An uninsured employer shall pay a claim for benefits or appear and respond to a claim as provided in this act. If an uninsured employer does not pay a claim or appear and respond to a claim, the uninsured employer waives all rights under this act. If the uninsured employer does not respond as provided in section 222, the uninsured employer is considered to have waived its rights under this act.

(10) If an uninsured employer waives its rights as described in subsection (9), the trustees must exercise all rights and obligations of an employer and carrier under this act, including the right to redeem a claim for benefits as described in section 836. An uninsured employer shall provide information to the trustees, including, but not limited to, the uninsured employer's books, records, payroll, or other information the trustees request that is necessary for the trustees to exercise the rights and obligations of an employer. If an uninsured employer does not provide the requested information, the uninsured employer is subject to a civil fine of not more than $10,000.00 for each offense. The prosecutor of the county in which the violation occurred or the attorney general may bring an action to collect the fine. A fine collected must be deposited in the fund.

(11) The trustees' redemption of a claim terminates the liability of the fund. The redemption does not prohibit an employee from pursuing an action against the employee's uninsured employer as described in this act.

(12) If an uninsured employer is found to be liable to pay benefits and does not pay those benefits, the trustees may pay the benefits from the fund as provided in this section.

(13) For a compensable injury that occurs on or after the effective date of the amendatory act that added this section, the trustees may seek reimbursement for money paid or owed to an employee or dependents of a deceased employee from an uninsured employer or its successors, as applicable, that is liable to the fund for either of the following amounts:

(a) An amount equal to 3 times the benefits to which an employee or dependents of a deceased employee are entitled under this act, including all costs of administration of the claim that have been paid or are to be paid to an employee or dependents of a deceased employee from the fund.

(b) An amount equal to 3 times any actual and reasonable expenses incurred in processing a claim.

(14) The trustees may initiate a civil action against an uninsured employer under this section by referral to the attorney general's office for remedies described in subsection (13).

(15) An uninsured employer's liability under this section must not be reduced because of any reduction in benefits paid as described in subsection (16). If the trustees obtain reimbursement from an uninsured employer for a period in which the uninsured employer paid an employee or dependent of a deceased employee less than 100% of the benefits owed to the employee or dependent, the trustees must pay the employee or dependent the difference between the amount paid by the uninsured employer and the amount of benefits that the employee or dependent would otherwise be entitled under subsection (9).

(16) If an employee of an uninsured employer obtains recovery under section 641(2) or 827, the fund is entitled to an offset of the amount recovered against the trustees' obligations under this act. The reasonable costs and attorney fees of the employee and interest on any judgment must be deducted first.

(17) Payments made by the trustees from the fund are not subject to section 801(2), (3), and (6). Payments made or owed to an employee under section 171 are not subject to this section. An employer, fund other than the uninsured employer's security fund, or carrier that pays or owes benefits under section 171 is not eligible for reimbursement from the fund.

(18) Not later than April 1 of each year, the trustees shall submit a report to the state budget director and the standing appropriations committees of the senate and house of representatives that includes, but is not limited to, all of the following information for the immediately preceding year:

(a) The number of claims received under the fund.

(b) The number of claims approved and the number of claims paid by the fund.

(c) The cost of administering the fund.

(19) Not later than March 31 of each year, the trustees shall report to the chairs of the appropriations committees of the senate and house of representatives the estimated amount of both of the following:

(a) The anticipated cost of benefits in the next fiscal year that are payable by the fund for the current fiscal year.

(b) The amount of any anticipated shortfall in the fund that may prevent the payment of a claim by the fund for the current fiscal year.

(20) As used in this section:

(a) "Fund" means the uninsured employers security fund created under section 501, unless the context requires otherwise.

(b) "Uninsured employer" means an employer that fails to comply with the requirements under section 611.