Section 9100.10  Insurance Forms

 

Where the Commission or an agent designated by the Commission (herein referred to as the National Council on Compensation Insurance) has prescribed submission of a policy information page according to Section 9100.20, no other document will be accepted for filing with the Commission or the National Council on Compensation Insurance.

 

(Source:  Amended at 10 Ill. Reg. 15615, effective September 10, 1986)

 

Section 9100.20  Policy Information Page

 

a)         Every insurer, upon issuance of an insurance policy, must, within 10 days, file a policy information page with the National Council on Compensation Insurance showing the locations and character of the business operations, the date effective, and the policy number. The policy information page must be countersigned by a duly authorized agent of the insurance company.

 

b)         A policy information page shall be required when a previous policy information page has been filed and the coverage has been extended, renewed or otherwise continued by the same insurance carrier.

 

(Source:  Amended at 40 Ill. Reg. 15788, effective November 9, 2016)

 

Section 9100.30  Termination of Insurance

 

No termination notice of policy shall be accepted by the Commission or National Council on Compensation Insurance unless filed on a form prescribed and furnished by the Commission or National Council on Compensation Insurance. Such notice shall provide the following information:  carrier name; National Council on Compensation Insurance carrier code; Insured's name and address; federal identification number; the number, effective date, and expiration date of the policy; reason for termination/cancellation; and reinstatement date, if applicable.

 

(Source:  Amended at 10 Ill. Reg. 15615, effective September 10, 1986)

 

Section 9100.40  Requirements for Approval as a Self-Insurer

 

a)         Application

 

1)         Initial Application

 

A)        Any private employer under the Workers' Compensation Act [820 ILCS 305] (the Act) and/or the Workers' Occupational Diseases Act [820 ILCS 310] (WODA) who desires to be approved as a self-insurer shall file with the Commission an Application for Approval on a form prescribed by the Commission and the most current 3 years' audited financial statements. A private employer does not include group self-insured employers under Section 4(a) of the Act or Section 4(a) of WODA or the State of Illinois, any political subdivision of the State, unit of local government or school district, or any other public authorities or quasi-governmental bodies, including any subunits of the foregoing entities.  (Section 4a-2(c) of the Act) Any reference in this Part to workers' compensation insurance coverage shall encompass coverage under both the Act and WODA.

 

B)        The application and current financial statements shall be signed and sworn to by the president or vice-president and secretary or assistant secretary of the employer, if it is a corporation, or by all of the partners, if it is a copartnership, or by the owner if it is neither a copartnership nor a corporation.  (Section 4(a)(1) of the Act)

 

C)        In the event the employer does not have audited financial statements, the employer must submit financial statements that have been prepared by an outside accounting firm.

 

D)        Each controlled employer or subsidiary requesting approval as a self-insurer shall provide the current financial statements of the parent corporations or each of its controlling persons designated by the Commission.

 

i)          A subsidiary means any entity in which another company, directly or indirectly, owns, controls or holds, with the power to vote a majority (more than 50 percent) of the outstanding voting securities of the company.

 

ii)         Controlled employer means a not-for-profit corporation with respect to which an individual or another entity has the right either to elect or appoint, directly or indirectly, a majority of the directors, trustees or other governing body of a not-for-profit corporation, or has the right to approve or disapprove, directly or indirectly, the persons appointed as a majority of the directors, trustees or other governing body of a not-for-profit corporation.

 

iii)        Controlling person means an individual or entity that has the right to elect or appoint, directly or indirectly, a majority of the directors, trustees or other governing body of a not-for-profit corporation, or has the right to approve or disapprove, directly or indirectly, the persons appointed as a majority of the directors, trustees or other governing body of a not-for-profit corporation.

 

E)        All initial applications and financial statements shall be submitted at least 60 days prior to the requested effective date of self-insurance. (Section 4(a)(1) of the Act)

 

F)         All initial applications must include evidence of current workers' compensation insurance coverage that shall be maintained until final approval as a self-insurer is granted.

 

G)        Each private employer applying for self-insurance shall indicate how it will service its self-insurance program.  The employer shall provide adequate facilities for the investigation, administration and payment of claims or shall contract with a service company possessing the personnel and facilities to provide those services.  In determining whether facilities are adequate for the investigation, administration and payment of claims, the following shall be considered:

 

i)          whether there is personnel experienced in the adjudication of workers' compensation claims;

 

ii)         whether there is a reporting system for workers' compensation claims;

 

iii)        whether the reporting system is automated and the frequency of reports generated by the system;

 

iv)        the response system to claims filing; and

 

v)         whether a current estimate of the expected total cost for each claim is established based on facts of each claim, medical information, and provisions of the Act. This estimation is not trended, based on discounted present value, or actuarially developed.

 

H)        If the employer has contracted with a service company for the administration of claims, a copy of the contract shall be submitted with the initial application.

 

2)         Renewal Application

 

A)        Each private self-insurer shall, upon notice from the Commission, file annually an application to continue the self-insurance privilege.  The renewal application shall be on a form prescribed by the Commission and shall be accompanied by thefinancial statements described in subsection (a)(1)(A).  The renewal application and financial statements shall be signed and sworn to in accordance with subsection (a)(1)(B).  Each subsidiary or controlled employer requesting approval as a self‑insurer shall provide the current financial statement of its parent corporations or controlling persons designated by the Commission.

 

B)        The self-insurer shall indicate any change in how it will service its self-insurance program.  If the employer has contracted with a service company for the administration of claims, a copy of the current contract shall be submitted with the renewal application.

 

b)         Application Fee

 

1)         Each private employer applying for self-insurance and each private self-insurer applying for renewal (continuation) of the self-insurance privilege shall pay a nonrefundable application fee of $500 that shall be deposited upon receipt by the Commission into the Self-Insurers Administration Fund.  (Section 4a-4(a) of the Act)

 

2)         If the applicant is a corporation, an application fee shall be required of each corporation and each and every corporate subsidiary. (Section 4a-4(a) of the Act) If the applicant is a not-for-profit corporation employer, an application fee shall be required for each and every controlling person and each and every employer applying for the self-insurance privilege or the renewal of the self-insurance privilege.

 

3)         The application fee shall be paid by check or money order, payable to the Self-Insurers Administration Fund.

 

c)         Review of Application

 

1)         Within 45 days after receipt of an initial application or an application to renew the self-insurance privilege, the Self-Insurer's Advisory Board (the Board) shall review or see to the review of the application and submit its recommendations for disposition to the chairman of the Commission (the Chairman).  (Section 4(j) of the Act)

 

2)         The review of the application shall include, but not be limited to, consideration of the earned points on the financial ratios set forth in this subsection (c)(2):

 

A)        Earned Points on Financial Ratios

 

i)          Current Assets to Current Liabilities

 

2	:	1	=	6 points
1.75	:	1	=	5 points
1.6	:	1	=	4 points
1.4	:	1	=	3 points
1.25	:	1	=	2 points
1.1	:	1	=	1 points
1	:	1	=	0 points

 

            (A negative ratio, one in which current assets are less than current liabilities, may be considered a reason to reject a new application.)

 

ii)          Capital & Retained Earnings (Net of Treasury Stock) to Sales (Less Discounts)

 

20%	=	6 points
17.5%	=	5 points
13.5%	=	4 points
10%	=	3 points
8.5%	=	2 points
7%	=	1 points
5%	=	0 points

 

iii)          Capital & Retained Earnings to Long Term Debt

 

2	:	1	=	6 points
1.75	:	1	=	5 points
1.6	:	1	=	4 points
1.4	:	1	=	3 points
1.25	:	1	=	2 points
1.1	:	1	=	1 points
1	:	1	=	0 points

 

B)        An employer who earns a total of 18 points in the 3 financial ratios in subsection (c)(2)(A) in each year of the most current 3 years' audited financial statements and has been self-insured for a minimum of 3 consecutive years may be deemed to have satisfied the Commission of its financial strength to meet its workers' compensation obligations without the necessity of furnishing security, indemnity or bond or making some other provision satisfactory to the Commission for securing its workers' compensation obligations pursuant to subsection (c)(3).

 

C)        A total of 9 to 18 points earned in the 3 financial ratios in subsection (c)(2)(A) shall create a rebuttable presumption that the employer's application should be approved conditional upon the furnishing of appropriate security or other means satisfactory to the Commission for securing its workers' compensation obligations pursuant to subsection (c)(3).

 

D)        The Board may recommend for approval applicants who earn less than 9 points in the financial ratios of subsection (c)(2)(A) if the employer's application and financial statement, together with appropriate security or other means satisfactory to the Commission for securing its workers' compensation obligations pursuant to subsection (c)(3), demonstrate the ability of the employer to meet its obligations under the Act/WODA.

 

3)         Security

When an applicant is required to furnish security or provide some other means satisfactory to the Commission to guarantee payment of its workers' compensation obligation, the furnishing of that security or other provision shall be a condition precedent to the approval of the initial or renewal application for self-insurance.  The Chairman shall also require that the applicant further secure payment of liabilities under the Act/WODA by obtaining a policy of excess workers' compensation insurance on such form as may be required by the Commission.

 

A)        Security Determination

 

i)          The amount of the security shall be based upon, but not be limited to, such criteria as the employer's financial strength, industry, the amount of excess insurance, and demonstrated loss experience.

 

ii)         An employer's financial strength shall be determined by applying the financial ratio summarization in this subsection (c)(3)(A).  The financial ratio summarization is based upon the total number of earned points as calculated by applying the financial ratios in subsection (c)(2)(A).  A financial factor (percentage) is assigned to the financial ratio summarization.  The applicable financial factor is applied in determining the amount of security in subsections (c)(3)(B) and (C).

 

Financial Ratio Summarization
Financial Factor		Earned Points
16 - 18 points	=			35%
14 - 15 points	=			40%
12 - 13 points	=			60%
9 - 11 points	=			70%

 

B)        Security/Loss Fund Determination

 

i)          When the employer submits audited financial statements containing an unqualified opinion, the security requirement shall be determined by using the highest amount of security obtained after applying the following formulas:

 

Minimum security to be not less than $200,000.

 

RESERVE FORMULA

 

Total outstanding loss reserves are multiplied by the applicable trending factor.  In the event that an employer's losses are affected by growth or size of the entity, the reserves may be equalized.  The following formula is then applied:

 

total outstanding loss reserves (loss fund) x applicable trending factor x applicable financial factor = security.

 

PAID LOSS FORMULA

 

Paid losses for up to each of the last 5 years are multiplied by the applicable trending factors.  The total of paid losses is divided by the number of years used to obtain the average yearly paid loss.  However, in the event that an employer's losses are affected by growth or size of the entity, the paid losses may be equalized.  The following formula is then applied:

 

average yearly paid loss (loss fund) x applicable trending factor x applicable financial factor = security.

 

ii)         If the employer submits financial statements that do not contain an unqualified opinion or are not audited, the security requirements shall be determined by using the highest amount of security obtained after applying the following formulas:

 

Minimum security to be not less than $200,000.

 

RESERVE FORMULA

 

total outstanding loss reserves (loss fund) x applicable trending factor x 125% = security.

 

PAID LOSS FORMULA

 

Paid losses for up to each of the last 5 years are multiplied by the applicable trending factors.  The total of paid losses is divided by the number of years used to obtain the average yearly paid loss.  The following formula is then applied:

 

average yearly paid loss (loss fund) x applicable trending factor x 125% = security

 

iii)        If the employer self-administers its workers' compensation claims program, or if the claims administration contract with an outside administrator does not include service on a life of claim basis, a factor of 120% is applied to the formulas used in subsection (c)(3)(B)(i) and (ii)  to cover the contingent claims cost in the event of insolvency.

 

iv)        All trending factors used in this subsection (b)(3)(C) are adopted by resolution of the Board and are available from the Board or the Commission upon request. Trending factors are determined by reviewing the rates of inflation for self-insurance, including claim payments, both medical and indemnity, and costs of claim administration.  The trending factor shall be determined after consultation with a Fellow of the Casualty Actuarial Society.

 

C)        The security requirement for self-insurers who, upon initial or renewal application, earn less than 9 points after applying the financial ratios in subsection (c)(2)(A), shall be determined as a percentage of the loss fund size as follows:

 

Points Scored	Loss Fund Size	Percentage of Loss Fund
6 - 8.9	0 - 250,000	130
	250,001-500,000	120
	500,001-1,0000,000	110
	1,000,001 +	100
3 - 5.9	0 - 250,000	150
	250,001-500,000	130
	500,001-1,000,000	120
	1,000,001 +	110
0 - 2.9	0 - 250,000	200
	250,001-500,000	175
	500,001-1,000,000	150
	1,000,001 +	130

 

If the percentage of loss fund referred to in this subsection (b)(3)(C) is less than 125% and the employer has submitted financial statements that do not contain an unqualified opinion or are not audited, the percentage of loss fund used will be 125%.  In addition, if the employer self-administers its workers' compensation claims program or if the claims administration contract with an outside administrator does not include service on a life of claim basis, a factor of 120% is applied to cover the contingent claims cost in the event of insolvency.

 

D)        Acceptable Security Instruments

 

i)          Surety Bond:  Must be on a form prescribed by the Commission.  No surety bond may be terminated unless the Chairman has received written notice of the prospective termination at least 60 days prior to the termination date.

 

ii)         Escrow Agreement:  Deposits under escrow agreements shall be cash, negotiable United States government bonds or negotiable general obligation bonds of the State of Illinois.  The cash or bonds shall be deposited in escrow with any State or national bank or trust company having trust authority in the State of Illinois. (Section 4(b) of the Act) All escrow agreements shall be on a form provided by the Commission.  Securities used to fund an escrow account shall have at all times a market value at least equal to the security requirement determined by the Chairman. (See subsection (c)(3)(A).)

 

iii)        Letter of Credit:  Must be issued by a financial institution acceptable to the Commission and be written in conformity with prescribed format.  All letters of credit must be accompanied by a Self-Insurer's Agreement to Post on a form prescribed by the Commission.

 

4)         Guarantee Agreement

A subsidiary or a controlled employer shall obtain a guarantee agreement executed by the parent company or controlling persons designated by the Commission.  Pursuant to the agreement, the parent company or the controlling persons shall guarantee that the obligations of the subsidiary or the controlled employer under the Act/WODA shall be paid.  The guarantee agreement shall be submitted on a form prescribed by the Commission.  Whenever a guarantor under such an agreement ceases to be a parent company or controlling persons with respect to the subsidiary or controlled employer whose obligations it has guaranteed, the former parent company and subsidiary or controlling persons and controlled employer shall notify the Commission immediately. Notwithstanding any other provisions of this Part, if the Board determines that a controlled person or subsidiary is controlled by an alien controlling person or parent company, is a utility, or is unable or unwilling to provide a guarantee agreement, the Chairman may, in his or her discretion, waive the requirement that the controlled employer or subsidiary provide a guarantee agreement; if the controlled employer or subsidiary or utility furnishes to the Commission security in an amount to be determined by the same methods used when an unaudited financial statement has been provided in accordance with subsection (c)(3)(B)(ii). "Alien controlling person" or "parent company" means a controlling person or parent company created or organized under the laws of a jurisdiction other than the United States of America or any political subdivision thereof.

 

d)         Decision

Within 45 days after receipt of an initial application or application to renew (continue) the self-insurance privilege, the Board shall advise the Chairman of its recommendations regarding the disposition of that initial or renewal application.  If the Chairman disagrees with any of the Board's recommendations, the Chairman shall, within 30 days after receipt of the Board's recommendations, notify the Board of the reasons in support of the decision. The Chairman shall also promptly notify the employer of the decision within 15 days after receipt of the recommendation of the Board. (Section 4(j) of the Act)

 

1)         Approval

 

A)        The Chairman shall notify the applicant in writing that it has been approved as a self-insurer.  Approval may be conditioned upon the furnishing of appropriate and adequate security.  The notice shall set forth the requirements to be met, including, but not limited to, the furnishing of security and the basis for the security, obtaining appropriate excess workers' compensation insurance, submission of an appropriate claims administration and loss control program, and payment of assessments prescribed by the Commission (see Section 4a-7 of the Act).

 

B)        Within 60 days after receipt of the notice described in subsection (d)(1)(A), the conditionally approved employer shall comply with all of the requirements of conditional approval stated in the notice.  The Chairman shall then issue a certificate of approval as a self-insurer.  The effective date of self-insurance shall be set forth in the certificate of approval.

 

C)        Failure of the conditionally approved employer to comply with all requirements of conditional approval within 60 days after receipt of the notice or to file a request for reconsideration pursuant to subsection (f) shall cause the Chairman to issue an Order denying the request for approval as a self-insurer.  The Order shall be subject to review under subsection (h).  Nothing in this subsection (d)(1) shall bar the employer from reapplying for approval as a self-insurer.

 

2)         Denial

 

A)        The Chairman shall notify the employer in writing that the employer's initial or renewal application and financial statement do not warrant approval of the self-insurance privilege.  The notice shall set forth the reasons why the employer's application for approval as a self-insurer should be denied.

 

B)        Failure of the employer to file a request for reconsideration pursuant to subsection (f) shall cause the Chairman to issue an Order denying the request for approval as a self-insurer.  The Order shall be subject to review under subsection (h).

 

C)        When the Chairman denies an application for renewal of the self-insurance privilege, nothing in this subsection (d)(2) shall bar an employer from reapplying for approval as a self-insurer.  A reapplication shall be considered an initial application and must qualify under subsection (c)(2).

 

e)         Additional Information

 

1)         The Chairman may at any time, on his or her own initiative or at the request of the Board, require a self-insurer to file additional information related to the self insurer's ability to adequately secure payment of its financial obligations under the Act/WODA.  That information shall include, but not be limited to, information related to:

 

A)        the employer's financial condition;

 

B)        the employer's ability to provide an adequate claims administration program;

 

C)        the employer's loss control or safety program; and

 

D)        the employer's ability to provide adequate excess insurance coverage.

 

2)         Upon review of the additional information, if the Chairman finds, after consultation with the Board, that the security furnished by the self-insurer should be adjusted or that the self-insurance privilege should be terminated, the Chairman shall notify the employer of any change in the security requirement or of his or her intent to terminate the self-insurance privilege and the reasons for termination.  The notice shall set forth a time and place of hearing on the matter, which shall be within 30 days after the date of the notice. The Chairman shall notify the employer of the decision in writing after the hearing date.  These decisions shall be subject to review under subsection (h).

 

3)         Failure of a self-insurer to comply with a request for additional information, without good cause, may cause the Chairman to initiate proceedings to terminate the self-insurance privilege.

 

f)         Petition for Reconsideration

 

1)         Within 21 days after receipt of a notice of conditional approval or a notice that the employer's initial or renewal application does not warrant approval of the self-insurance privilege, the employer may file a petition for reconsideration of the Chairman's determination.

 

2)         The petition for reconsideration shall be made in writing and must state the reasons why the Chairman should reconsider the decision.

 

3)         The petition shall be accompanied by any documents that support the employer's position and, if applicable, any information not previously considered.  The information may include, but is not limited to, evidence of an improving financial condition that was not available to the Board when the application was reviewed.

 

4)         Request for Hearing

 

A)        The employer may request a hearing on the petition for reconsideration. The request for hearing must be filed with the request for reconsideration.

 

B)        Upon the filing of a timely petition for reconsideration and request for hearing, the Chairman shall issue a notice that sets forth a place and time of hearing, which shall be within 30 days after the date of the notice.

 

C)        Hearings on the petition for reconsideration shall be conducted in accordance with subsection (g).

 

D)        In the absence of a request for hearing, the Chairman may consider all matters at issue from the petition for reconsideration and accompanying documentation.

 

5)         The Chairman shall issue an order notifying the employer of his or her final decision and the reasons for that decision.  The Order shall be subject to review under subsection (h).

 

g)         Conduct of Hearings

 

1)         All hearings under this Section shall be conducted by the Chairman or a Commissioner designated by the Chairman.

 

2)         All hearings shall be conducted in accordance with the requirements of Article 10 of the Illinois Administrative Procedure Act [5 ILCS 100/Art. 10].

 

3)         At the hearing, the employer shall have the right to respond and to call witnesses, cross-examine witnesses and present evidence.

 

4)         The Commission, or any member of the Commission, shall have the power to administer oaths, to subpoena and examine witnesses, and issue subpoena duces tecum requiring the production of such books, papers, records or documents as may be evidence to determine the issues of denial or termination of the self-insurance privilege or adjustment of the security.  (Section 16 of the Act)

 

5)         The Illinois Rules of Evidence and Article VIII of the Code of Civil Procedure [35 ILCS 5/Art. VIII] shall apply at the hearing.

 

h)         Appeal

All Orders made by the Chairman under Section 4(j) of the Act shall be subject to review in the same manner and within the same time as provided by Section 19(f) of the Act for review of awards and decisions of the Commission. (Section 4(j) of the Act)

 

i)          Requirements Following Termination of the Self-Insurance Privilege

 

1)         Termination of the employer's self-insurance privilege does not terminate its obligation to provide the Commission with security. The Chairman shall approve release of the security when the Chairman determines, in his or her discretion, that the employer, as a private self-insurer, has no outstanding liability under the Act/WODA.

 

2)         Former self-insurers shall be liable for any and all assessments until they have discharged all obligations to pay compensation that arose during the self-insurance period.  (Section 4a-7(b) of the Act)

 

(Source:  Amended at 40 Ill. Reg. 15788, effective November 9, 2016)

 

Section 9100.50  Self-Insurers to File Statements and Reports

 

All employers who are or hereafter become self-insurers in compliance with these rules, and the requirements of the Workers' Compensation Act and/or Workers' Occupational Diseases Act shall file such statements and reports and give such information as the Industrial Commission may from time to time require and demand or deem necessary to satisfy the Commission as to the securing of the payment of compensation provided for in the Acts.

 

Section 9100.60  Administration of Claims Against Securities, Indemnity or Bonds of Self-Insurers

 

a)         Determination of Self-Insurer's Insolvent Condition

This Section applies whenever:

 

1)         Any self-insured employer who is unable to pay compensation under Sections 7(f), 8(a), 8(b), 8(c), 8(d)(1), 8(d)(2), 8(e), 8(f), 19(a) and 19(g) of the Workers' Compensation Act (the Act) and Section 7 of the Workers' Occupational Diseases Act (WODA) has filed a written notice of that inability to pay with the Commission; or

 

2)         Any person who has filed an Application for Adjustment of Claim against a self-insured employer gives written notice to the Commission that the Commission determines has raised a question with respect to that employer's ability to pay compensation under the Act/WODA; or

 

3)         It is established that a court of competent jurisdiction has determined or is conducting proceedings to determine that a self-insured employer is unable to pay compensation under the Act/WODA; or

 

4)         Any self-insurer has filed for, or is the subject of, any proceeding under the federal Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et seq.) or is a party, whether plaintiff or defendant, in any proceeding in which a receiver, liquidator, custodian, rehabilitator, sequestrator or trustee, or similar officer for the self-insurer or its property, has been appointed;

 

b)         The Commission, on its own motion or on the motion of any other party, shall hold a hearing to determine the ability of the self-insurer to pay compensation under the Act and to determine the existence and status of any action described in subsection (a).  The Commission or any member of the Commission shall have the power to administer oaths, to subpoena and examine witnesses, and to issue subpoena duces tecum requiring the production of such books, papers, records or documents as may be evidence to determine such issues. [820 ILCS 305/16]

 

c)         Duty to Notify

A self-insured employer that is claiming it is unable to pay compensation under the Act/WODA and that is a party to a bankruptcy proceeding described in subsection (a)(4), or that is the subject of an order set forth in subsection (a)(3) or (4), shall file written notice of that fact with the Commission within 10 days after the occurrence of the event.

 

d)         Stay

Upon notification of any of the actions described in subsection (a), the Commission shall, on its own motion, stay all proceedings before the Commission involving that self-insured employer for at least 60 days.

 

e)         Transfer of Securities, Indemnity or Bonds to the Commission

 

1)         The Commission will issue notification, within 20 days after a hearing, of its determination that the self-insured employer is unable to pay compensation due under the Act/WODA, has filed for, or is the subject of, any bankruptcy proceeding (see subsection (a)(4)), or is the subject of an order under subsection (a)(3) or (4).  Any holder of any securities, indemnity or bonds furnished by that employer guaranteeing the payment of compensation under the Act/WODA shall notify the Commission in writing whether it is willing and able to administer those funds.  Unless the holder has provided written notification to the Commission within the 20-day period that it is able and willing to administer the funds, the holder shall immediately deliver all such securities, indemnity, or bonds to the Commission; otherwise, the Commission shall order the delivery or refer the matter to the Attorney General's Office for litigation to collect or recover all such securities, indemnity, or bonds.

 

2)         Upon receipt of the securities, indemnity, or bonds, the Commission shall deposit the proceeds of those securities, indemnity, or bonds with any state or national bank or trust company having trust authority in the State of Illinois that has been ranked in the upper 10% in the Annual Report submitted by the State of Illinois Director of the Division of Banking of the Department of Financial and Professional Regulation and that has the lowest fees for administration of escrow funds.  Deposits in the bank or trust company shall be in the form of negotiable United States government bonds or negotiable general obligation bonds of the State of Illinois.  The bank or trust company shall administer the funds and, upon the order of the Commission, shall distribute the funds.  The administration fees for the bank or trust company shall be payable only from the interest accrued on the proceeds from the time of deposit.

 

f)         Filing Periods for Claims Against Securities, Indemnity, or Bonds

 

1)         If the bankruptcy proceedings described in subsection (a)(4) have been commenced or the Order affecting an entity under subsection (a)(3) or (4) was entered prior to September 17, 1984, any claim against the securities, indemnity, or bonds with respect to a case for which an Application for Adjustment of Claim has not already been filed pursuant to 50 Ill. Adm. Code 9020.20 must have been filed on or before September 17, 1984.

 

2)         If the bankruptcy proceedings described in subsection (a)(4) have been commenced or the Order affecting an entity under subsection (a)(3) or (4) was entered on or after September 17, 1984, any claim with respect to a case for which an Application for Adjustment of Claim has not already been filed pursuant to 50 Ill. Adm. Code 9020.20 must be filed on or before 12 months after the date of the commencement of those proceedings or the entry of the Order.

 

g)         Distribution of Securities, Indemnity, or Bonds

 

1)         Upon determination by the Commission of the extent of the self-insured employer's liability under the Act in all cases for which Applications for Adjustment of Claims or Settlement Contract Petitions have been filed or for which claims are pending against the securities, indemnity, or bonds, the Commission shall hold a hearing to determine the proceeds of the securities, indemnity, or bonds.  Notice of this hearing will be by mail at least 15 business days before the hearing and shall be given to all parties, including the holders of the securities, indemnity, or bonds.

 

2)         If, after a hearing pursuant to subsection (g)(1), the Commission determines that the proceeds of the securities, indemnity, or bonds are sufficient to pay all claims against the assets in full, it shall order the holder or the depository bank or trust company to make payment to the parties entitled to the assets who have perfected claims against those assets, in accordance with the terms of awards or settlements the Commission entered or approved.

 

3)         If the Commission determines that the proceeds of securities, indemnity, or bonds are not sufficient to pay all claims in full, those claims that are for compensation for death and for temporary and total permanent disability and claims for medical expenses shall, as a class, be payable prior to payment of any other claims.  If the proceeds are not sufficient to pay all claims within this class in full, payment of those claims will be prorated on the basis of the amount of each claim in proportion to the amount of the securities, indemnity, and bonds available for distribution.

 

4)         After all claims within the class have been paid in full, if any amount from the proceeds of securities, indemnity, or bonds remains for distribution, payments of all other claims will be prorated on the basis of the amount of each identified claim in proportion to the amount of the remainder of the securities, indemnity, or bonds.

 

5)         If, after all identified claims are paid in full, any surplus securities, indemnity, or bond amounts remain, the Commission shall order those amounts returned to the employer, bond company, or other party with legal right to those monies. Any interest earned from the Commission's deposit of such securities, indemnities, or bonds will be retained by the Commission and deposited into the Self-Insurers Security Fund.

 

(Source:  Amended at 47 Ill. Reg. 6166, effective April 13, 2023)

 

Section 9100.70  Administration of Claims Against Group Self-Insurer's Insolvency Fund

 

Upon the written notification of any party in interest or on its own motion, the Commission shall hold a hearing or hearings to determine whether the following events have occurred:

 

a)         the Director of Insurance has determined that compensation and medical services provided under the Workers' Compensation Act and Workers' Occupational Act may be unpaid by reason of the default of an insolvent group self-insurer [820 ILCS 305/4(a)(6)];

 

b)         the penal sum of the surety bond, indemnity or securities, if any, has been exhausted;

 

c)         the assessment of individual employer member of the group self-insurer in default has been exhausted; and if so, amounts of compensation and medical services which remains unpaid from time to time to persons who have filed Application for Adjustment of Claims pursuant to 50 Ill. Adm. Code 9020.20 and settlements against the insolvent group self-insurer.  Upon the determination by the Commission of the extent of the insolvent group self-insurer's outstanding liability under the Workers' Compensation Act and Workers' Occupational Diseases Act the Commission shall order the necessary payments be made from the Group Self-Insurer's Insolvency Fund.

 

(Source:  Added at 9 Ill. Reg. 3705, effective March 12, 1985)

 

Section 9100.80  Administration of Claims Against the Self-Insured Employers Liability Fund

 

a)         Upon the determination of any party in interest or on its own motion, the Commission shall hold a hearing or hearings to determine whether the following events have occurred:

 

1)         the Commission pursuant to 50 Ill. Adm. Code 9100.60(a)(1)-(4) has held a hearing and has determined that the self insured employer is unable to pay compensation and medical expenses provided under the Workers' Compensation Act;

 

2)         penal sum of the surety bond, indemnity or securities have been exhausted;

 

3)         judgment have been rendered against the self-insured employer in accordance with Section 19(g) on or after the effective date of this Section, December 16, 1983;

 

4)         execution has been levied against the self-insured employer and has been returned unsatisfied in whole or in part; and if so, the amounts of compensation and medical expenses which remain unpaid from time to time to persons who have filed unsatisfied judgments against the insolvent self-insured employer.  Upon the determination by the Commission of the extent of the insolvent self-insured employer's outstanding liability, the Commission shall issue an initial order of assessment within 30 days against each employer who has been granted authority to self insure under Section 4(a) of the Workers' Compensation Act which will be paid into the Self-Insured Employers Liability Fund.  The order shall provide for a sum sufficient to secure estimated payments of compensation, medical expenses and administrative charges of the fund for a period of one year following the date of the order; and

 

b)         When it is determined by the Commission that compensation due and owing will extend beyond one year the Commission shall issue an order for further assessment of each self-insured employer payable within 30 days in order to secure payment of compensation, medical expenses and administrative charges from the Self-Insured Employers Liability Fund.

 

(Source:  Added at 9 Ill. Reg. 3705, effective March 12, 1985)

 

Section 9100.85  Administration of Claims Against the Injured Workers' Benefit Fund

 

a)         Reimbursement

 

1)         The Commission shall have the right to obtain reimbursement for any compensation obligations paid by the Injured Workers' Benefit Fund (IWBF) from any individual employer/owner, corporate officer, director of a corporate employer, partner of an employer partnership, or member of an employer limited liability company.  (Section 4(d) of the Act)

 

2)         If an injured employee or his or her personal representative receives payment from the IWBF, the State of Illinois has the same rights under Section 5(b) of the Act/WODA that the employer who failed to pay the benefits due to the injured employee would have had if the employer had paid those benefits.  Any moneys recovered by the State as a result of the State's exercise of its rights under those statutes shall be deposited into the IWBF for the payment of claims.  (Section 4(d) of the Act)

 

b)         Administration for IWBF Payout

To qualify for payment from the IWBF, a claimant must have filed an Application for Adjustment of Claim against the employer (see 50 Ill. Adm. Code 9020.20) and must have named the State Treasurer as ex-officio custodian of the IWBF as a party respondent, or must have amended the Application of Adjustment of Claim to do so.

 

(Source:  Added at 40 Ill. Reg. 15788, effective November 9, 2016)

 

Section 9100.90  Insurance Coverage:  Compliance

 

a)         Employers to Insure Payment of Compensation

Any employer that is subject to Section 3 of the Act or elects to provide and pay the compensation provided for in the Workers' Compensation Act (the Act) or the Workers’ Occupational Diseases Act (WODA) shall insure payment of that compensation as required by Section 4(a) of the Act/WODA by obtaining approval from the Commission to operate as a self-insurer or by insuring its entire liability to pay the compensation using an insurance carrier authorized, licensed or permitted to do such insurance business in Illinois.

 

b)         Failure to Insure Payment of Compensation Liability; Penalty

Penalties may be assessed by the Commission after reasonable notice and hearing in accordance with Section 4 of the Act and Section 4 of WODA.

 

c)         Hearings

 

1)         Notice of Hearing; Locations

 

A)        A matter under this subsection (c) is commenced by the Department of Insurance by service of a Notice of Hearing upon the employer at least 30 days prior to the time fixed for hearing.

 

B)        Service will be accomplished in accordance with the following:

 

i)          by personal service as set forth in the Illinois Code of Civil Procedure [735 ILCS 5/Art. II];

 

ii)         by any method of United States registered or certified mail addressed to the employer at the last known address or to the employer's representative; or

 

iii)        if service using the methods in subsections (c)(1)(B)(i) and (ii) is unsuccessful, as otherwise ordered by the Commission.

 

C)        The Notice of Hearing shall be a written statement setting forth, but not limited to, the following information:

 

i)          the name and address of the employer;

 

ii)         the time, date, and place of hearing;

 

iii)        the name of the Commissioner;

 

iv)        a statement of the section of the statute alleged to be violated, periods of non-compliance, and the penalty that may be imposed; and

 

v)         a statement that failure to appear at the hearing, if no continuance has been obtained prior to the hearing, shall constitute a default and shall result in a finding that there has been a knowing and willful failure of the employer to insure the employer’s liability to pay compensation in accordance with Section 4(a) of the Act or to comply with an Order of the Commission under Section 4(c) and an assessment of penalties under Section 4(d).

 

D)        The hearing shall be set at a site designated by the assigned Commissioner.

 

2)         Assignment

 

A)        In all cases in which the employer is principally located in Cook County, a matter to be scheduled for hearing under this Section will be randomly assigned to a Commissioner.

 

B)        In all other cases, a matter to be scheduled for hearing under this Section will be assigned to the Commissioner who serves the territory within which the employer is principally located.

 

3)         Conduct of Hearings

 

A)        At the hearing, a representative of the Department of Insurance shall have the opportunity to introduce evidence, to call and examine witnesses, and to cross-examine witnesses.  The employer or its attorney shall be given the opportunity to show that there has been compliance with Section 4(a) of the Act or an Order of the Commission under Section 4(c) or show cause why compliance has not been accomplished.  The employer or its attorney shall have the opportunity to introduce evidence, to call and examine witnesses, and to cross-examine witnesses.  The representative of the Department of Insurance shall have the right of rebuttal.

 

B)        The Commission or any member of the Commission shall have the power to administer oaths, to subpoena and examine witnesses, and to issue subpoenas duces tecum requiring the production of such books, papers, records, or documents as may be evidence to determine the issue of non-compliance. (Section 16 of the Act)

 

C)        The Illinois Rules of Evidence and Article VIII of the Code of Civil Procedure [735 ILCS 5/Art. VIII] shall apply except to the extent they conflict with the Workers' Compensation Act, the Workers' Occupational Diseases Act, or the Rules Governing Practice Before the Workers' Compensation Commission (50 Ill. Adm. Code: Chapter VI).

 

D)        A certification from an employee of the National Council on Compensation Insurance stating that no policy information page has been filed in accordance with Section 9100.20 shall be deemed prima facie evidence of that fact.

 

E)        A certification from an employee of the Commission stating that an employer has not been approved as a self-insurer shall be deemed prima facie evidence of that fact.

 

d)         Decision

The Commission, after the hearing is concluded, shall issue a decision that includes:

 

1)         the findings of the Commission;

 

2)         when applicable, the dates of failure to insure and the amount of penalty assessed for each day;

 

3)         the payment procedures provided in subsection (e); and

 

4)         a statement of the conditions for a judicial review of the Commission's decision in accordance with the requirements of 50 Ill. Adm. Code 9060.

 

e)         Payment Procedures

When the Commission assesses a penalty against an employer in accordance with Section 4(d) of the Act or WODA, payment shall be made according to the following procedure:

 

1)         Payment of the penalty shall be made by certified check or money order made payable to the Illinois Workers' Compensation Commission or by an electronic format prescribed by the Commission and accepted by the Illinois Office of the Comptroller.

 

2)         Payment shall be mailed or presented within 30 days after the final Order of the Commission or the order of the court on review after final adjudication.  Payments submitted by mail shall be sent to:

 

Workers' Compensation Commission

Fiscal Department

69 West Washington Street

Suite 900

Chicago, Illinois  60602.

 

f)         Work-Stop Order

 

1)         Failure to Insure Payment of Compensation Liability; Work-Stop Order

When the panel has issued a decision under subsection (f)(5), the Commission may issue a Work-Stop Order on an employer requiring the cessation of all business operations at the employer's places of employment or job sites.

 

2)         Hearings, Notice, Locations

 

A)        A matter under this subsection (f) is commenced by the Department of Insurance’s Insurance Compliance Division by service of a Notice of Work-Stop Hearing upon an employer at least 5 days prior to the time fixed for hearing.

 

B)        Service shall be accomplished in accordance with the following:

 

i)          by personal service as set forth in the Illinois Code of Civil Procedure [735 ILCS 5/Art. II];

 

ii)         by any method of United States registered or certified mail addressed to the employer at the last known address or to the employer's representative;

 

iii)        by posting a copy of the Notice of Work-Stop Hearing at the entrance of the employer's places of employment or in a prominent place at the job sites; or

 

iv)        if service using the methods in subsections (f)(2)(B)(i) through (iii) is unsuccessful, as otherwise ordered by the Commission.

 

C)        The Notice of Work-Stop Hearing shall set forth the following information:

 

i)          The name and address of the employer;

 

ii)         The time, date, and place of hearing;

 

iii)        A statement of the Section of the statute alleged to be violated, periods of non-compliance, and that a Work-Stop Order may be issued;

 

iv)        A statement that failure to appear at the hearing shall constitute a default and shall result in a finding that:

 

•           there has been a knowing failure of the employer to provide coverage required by Section 4(a) of the Act;

 

•           the failure to insure is deemed an immediate serious danger to public health, safety and welfare; and

 

•           a Work-Stop Order shall be issued by the Commission hearing panel at the close of evidence.

 

3)         Assignments

 

A)        A matter to be scheduled for a Work-Stop Order hearing in Chicago shall be randomly assigned to any available Commissioner.

 

B)        A matter to be scheduled for a Work-Stop Order hearing in Springfield shall be assigned to a Commissioner and scheduled at the Commissioner’s next available review date.

 

C)        The hearing shall be held within 7 days after the date of the Notice of Work-Stop Hearing.

 

4)         Hearings under this subsection (f) shall be conducted in accordance with subsection (c)(3).

 

5)         Decision

 

A)        A panel of 3 Commissioners (one member representing the employing class, one member representing the employee class, and one member representing neither the employing or employee class) shall issue a decision at the close of the hearing that shall include:

 

i)          The findings of the Commission;

 

ii)         The dates of failure to insure;

 

iii)        A statement of the conditions for a judicial review of the Commission's decision in accordance with the requirements of 50 Ill. Adm. Code 9060.

 

B)        If the panel's decision finds that the employer has knowingly failed to provide the workers’ compensation coverage required by Section (4)(a) of the Act, that failure is statutorily deemed an immediate serious danger to public health, safety and welfare justifying service by the Commission of a Work-Stop Order under subsection (f)(1). (Section 4(d) of the Act)

 

6)         Issuance and Posting of Work-Stop Order

 

A)        A Work-Stop Order shall take effect immediately upon issuance by the Commission.

 

B)        Posting of Work-Stop Order

 

i)          Upon taking effect, the Commission shall direct the Department of Insurance to post a Notice of Work-Stop Order at the employer's places of employment or job sites reflecting the decision of the Commission.

 

ii)         The Notice of Work-Stop Order shall be in the form of a sign of sufficient size and visibility to serve as notice to the public or persons at or entering the employer's places of employment or job sites that a Work-Stop Order is in effect. The notice shall be affixed to the employer's places of employment or job sites in any manner possible, including, but not limited to, windows, doors, and fencing.

 

iii)        Upon request by the Commission, any law enforcement agency in the State shall render assistance to the Commission to carry out the provision of Section 4(d) of the Act, including, but not limited to, preventing any employee from remaining at the employer's place of employment after a Work-Stop Order has taken effect. (Section 4(d) of the Act)

 

7)         Release of Work-Stop Order

 

A)        A Work-Stop Order shall remain in effect until the Commission issues a Release of the Work-Stop Order upon a finding that the employer is in compliance with the workers' compensation insurance coverage requirements of Section 4(a) of the Act. An employer may request a Release of the Work-Stop Order by demonstrating compliance by submitting a copy of the policy information page issued by an insurance carrier (see Section 9100.20) and proof of payment of premium for at least 90 days. The documentation provided must be to the Commission's satisfaction.

 

B)        Release of a Work-Stop Order does not relieve the employer or officers of any fines, penalties or decision that may be assessed for prior noncompliance periods.

 

g)         Emergency Work-Stop Order

 

1)         If a business is declared to be extra hazardous, as defined in Section 3 of the Act, a Commissioner may issue an Emergency Work-Stop Order requiring the cessation of all business operations of such employer at the place of employment or job site while awaiting the ruling of the Commission.

 

2)         A Commissioner may issue an Emergency Work-Stop Order ex parte, prior to holding a hearing. (Section 4(d) of the Act)

 

3)         The Notice of Emergency Work-Stop Hearing shall set forth the following information:

 

A)        The name and address of the employer;

 

B)        The time, date, and place of hearing;

 

C)        A statement of the Section of the statute alleged to be violated, periods of non-compliance, and that an Emergency Work-Stop Order has been issued;

 

D)        A statement that failure to appear at the hearing shall constitute a default and shall result in a finding that:

 

i)          there has been a knowing failure of the employer to provide coverage required by Section 4(a) of the Act;

 

ii)         the failure to insure is deemed an immediate serious danger to public health, safety, and welfare; and

 

iii)        a Work-Stop Order shall be issued by the Commission hearing panel at the close of evidence.

 

4)         Assignments

 

A)        A matter to be scheduled for an Emergency Work-Stop Order hearing in Chicago shall be randomly assigned to any available Commissioner.

 

B)        A matter to be scheduled for an Emergency Work-Stop Order hearing in Springfield shall be assigned to a Commissioner at the Commissioner’s next available review date or any other time at the discretion of the Commissioner.

 

C)        The hearing shall be held within 7 days after the date of the Notice of Emergency Work-Stop Hearing.

 

5)         Hearings under this subsection (g) shall be conducted in accordance with subsection (c)(3).

 

6)         Issuance and Posting of Emergency Work-Stop Order

 

A)        An Emergency Work-Stop Order shall take effect immediately upon issuance by the Commission.

 

B)        Posting of Emergency Work-Stop Order

 

i)          Upon issuing an Emergency Work-Stop Order, the Commission shall issue a Notice of Emergency Work-Stop Hearing to be posted by the Department of Insurance at the employer’s places of employment and job sites.

 

ii)         The Notice of Emergency Work-Stop Order shall be in the form of a sign of sufficient size and visibility to serve as notice to the public or persons at or entering the employer's places of employment or job sites that an Emergency Work-Stop Order is in effect. The notice shall be affixed to the employer's places of employment or job sites in any manner possible, including, but not limited to, windows, doors and fencing.

 

iii)        Upon request by the Commission, any law enforcement agency in the State shall render assistance to the Commission to carry out the provision of Section 4(d) of the Act, including, but not limited to, preventing any employee from remaining at the employer's place of employment after an Emergency Work-Stop Order has taken effect. (Section 4(d) of the Act)

 

7)         Release of Emergency Work-Stop Order

 

A)        An Emergency Work-Stop Order shall remain in effect until the close of the Emergency Work-Stop Hearing or when the Commission issues a Release of the Emergency Work-Stop Order upon a finding that the employer is in compliance with the workers' compensation insurance coverage requirements of Section 4(a) of the Act.  An employer may request a Release of the Emergency Work-Stop Order by demonstrating compliance by submitting a copy of the policy information page issued by an insurance carrier (see Section 9100.20) and proof of payment of premium for at least 90 days.  The documentation provided must be to the Commission's satisfaction.

 

B)        Release of an Emergency Work-Stop Order does not relieve the employer or officers of the terms or mandates of any decisions of the Commission or any fines or penalties that may be assessed for prior noncompliance periods.

 

(Source:  Amended at 47 Ill. Reg. 6166, effective April 13, 2023)