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91_SB1658enr
SB1658 Enrolled LRB9111673JSpcA
1 AN ACT in relation to workers' compensation.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The State Finance Act is amended by changing
5 Section 5.138 as follows:
6 (30 ILCS 105/5.138) (from Ch. 127, par. 141.138)
7 Sec. 5.138. The Group Workers' Compensation Pool
8 Self-Insurers' Insolvency Fund.
9 (Source: P.A. 83-1362.)
10 Section 10. The Illinois Insurance Code is amended by
11 adding Article V 3/4 as follows:
12 (215 ILCS 5/Art. V 3/4 heading new)
13 Article V 3/4 Group Workers' Compensation Pools; pooling;
14 insolvency fund.
15 (215 ILCS 5/107a.01 new)
16 Sec. 107a.01. Short title. This Article may be cited as
17 the Workers' Compensation Pool Law.
18 (215 ILCS 5/107a.02 new)
19 Sec. 107a.02. Scope. This Article applies to all
20 qualified group workers' compensation pools.
21 (215 ILCS 5/107a.03 new)
22 Sec. 107a.03. Purpose. The purpose of this Article is
23 to permit 2 or more employers with homogeneous risk
24 characteristics or that are members of a bona fide
25 professional, commercial, industrial, or trade association,
26 with homogenous risk characteristics to pool their workers'
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1 compensation and employer's liability exposures under this
2 Article.
3 The State of Illinois, a unit of local government or
4 school district, or association or instrumentality thereof,
5 or an intergovernmental risk management association,
6 self-insurance pool or self-administered health and accident
7 cooperative or pool shall not be deemed an "employer" or
8 "pool" for the purpose of this Article.
9 (215 ILCS 5/107a.04 new)
10 Sec. 107a.04. Organization under the Illinois Insurance
11 Code.
12 (a) After December 31, 2000, group workers' compensation
13 pools shall for the purpose of this Article, and this Article
14 only, be considered as though they were assessable domestic
15 mutual insurance companies and subject to the following:
16 (1) Article XII 1/2, Article XIII, Article XIII
17 1/2, Article XXIV; and
18 (2) Sections 126.2, 126.4, 126.7, 132, 132.1
19 through 132.7, 133, 134, 137, 139, 140, 141.1, 141.2,
20 142, 143, 143c, 147, 148, 149, 154.5, 154.6, 154.7,
21 154.8, 155.01, 155.04, 173.1, 173.2, 173.3, 173.4, 173.5,
22 174, 174.1, 175, 176, 178, 179b, 378, 379.1, 408, 408.3,
23 449, 456, 457, and 458, subsections A, B, C, and E of
24 Section 126.5, subsection A of Section 126.6, and
25 subsections (1) and (7) of Section 412 of this Code.
26 (b) If there is a conflict between any Section of this
27 Article and any other Section of this Code, then the
28 provisions of this Article shall apply.
29 (c) No other provision of this Code shall be applicable
30 to any qualified workers' compensation group workers'
31 compensation pool except as provided in this Article.
32 (d) A certificate of authority that is in effect on the
33 effective date of this amendatory Act of the 91st General
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1 Assembly and that was issued pursuant to Section 4a of the
2 Workers' Compensation Act or Section 4a of the Workers'
3 Occupational Diseases Act to a group self-insurer shall
4 remain in effect under this Article. Such group self-insurer
5 shall then be deemed to be a qualified group workers'
6 compensation pool and shall be subject to this Article.
7 (215 ILCS 5/107a.05 new)
8 Sec. 107a.05. Definitions and interchangeable terms.
9 (a) Unless otherwise provided, the following definitions
10 shall apply:
11 "Authorized insurer" means an insurer licensed in this
12 State to transact business as described in Clauses (c) and
13 (d) of Class 2 of Section 4 of this Code.
14 "Calendar Quarter" means the 3-month periods ending March
15 31, June 30, September 30, and December 31.
16 "Director" means the Director of Insurance.
17 "Engaged actively in the business" means a bona fide
18 business concern having conducted commerce, trade, or
19 industry in this State for a specified period of time. Any
20 and all records relating to this requirement shall be open to
21 inspection by the Director or his designee during normal
22 business hours.
23 "Gross annual payroll" means payroll for the preceding
24 fiscal year.
25 "Independent actuarial opinion" means an opinion
26 expressed by a member of the American Academy of Actuaries or
27 Casualty Actuarial Society.
28 "Independent CPA" means an independent certified public
29 accountant or independent certified public accounting firm in
30 good standing and licensed to practice by the Department of
31 Professional Regulation.
32 "Pool" means a qualified group workers' compensation
33 pool as authorized by this Article.
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1 "Qualified group workers' compensation pool" means a
2 group workers' compensation pool that has received a
3 certificate of authority pursuant to this Article.
4 (b) For purposes of incorporating the provisions of this
5 Code designated in paragraphs (1) and (2) of subsection (a)
6 of Section 107a.04 into this Article, the following terms
7 shall be interchangeable:
8 "Contribution" shall be considered premium.
9 "Pooling agreement" shall be considered a policy of
10 insurance.
11 "Trustees of a group workers' compensation pool" shall be
12 considered as though they were directors of a domestic mutual
13 insurance company.
14 (215 ILCS 5/107a.06 new)
15 Sec. 107a.06. Pool administration.
16 (a) An application for Certificate of Authority to
17 establish a pool must include the documentation and
18 information regarding its administrator, pooling agreement,
19 plan of operation, and membership required by this Section.
20 (b) Administrators must disclose all of the following:
21 (1) Biography of the risk manager on forms
22 prescribed by the Director.
23 (2) If a corporation, biographies of all officers
24 and directors.
25 (3) The size of staff and other information, such
26 as the kinds of staff positions, location of
27 administrative offices and the nature of any electronic
28 data processing equipment, if any, available for
29 servicing the pool, to demonstrate that the administrator
30 has the resources to administer the program disclosed
31 pursuant to subsection (d).
32 (4) The most recent financial statement of the
33 administrator. If a publicly held company, a copy of the
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1 last 10-K filed with the Securities and Exchange
2 Commission.
3 (5) The compensation contract of the administrator.
4 (6) The bylaws of the pool and articles of
5 incorporation, if any.
6 (7) Any agreement that subcontracts any of the
7 administrator's duties or responsibilities.
8 (c) A pooling agreement must contain all of the
9 following:
10 (1) A description of the services to be provided by
11 the administrator.
12 (2) The manner in which costs are to be apportioned
13 by the administrator.
14 (3) The initial premium deposit.
15 (4) The assessment provision.
16 (5) The termination provisions and minimum term of
17 membership, which minimum term of membership shall not be
18 less than one year.
19 (6) The duration of liability for additional
20 assessments following termination of membership, which
21 shall be for a period of not less than 3 years.
22 (7) The prerequisites for membership.
23 (8) A provision stating that a claim shall be paid
24 by the pool, regardless of the size of the claim, and
25 that the pool shall be reimbursed by the employer for any
26 amounts required to be paid by the employer under the
27 agreement.
28 (9) A provision stating that the terms of
29 termination after the first year of pool membership shall
30 be dictated by the pooling agreement.
31 (10) If a pooling agreement requires a member to
32 submit written notice in order for the member to withdraw
33 from a qualified pool, then the period in which the
34 member must provide the written notice cannot be greater
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1 than 90 days.
2 (d) Plans of operation must disclose all of the
3 following:
4 (1) A listing of initial members.
5 (2) The aggregate loss history of initial members
6 for each of the last 3 years.
7 (3) The amount of the net retention of the pool and
8 a list of reinsurers.
9 (4) The names of all entities that will provide
10 services for the pool and copies of proposed contracts in
11 connection those services.
12 (5) The safety and loss control programs to be
13 provided or required.
14 (e) The application must contain information about
15 initial members specified on forms prescribed by the
16 Director.
17 (f) The application must contain the combined loss
18 experience for the group for the last 3 years and any other
19 financial data required by the Director.
20 (g) A pool administrator's original books and records
21 relating to the operations of the pool shall at all times be
22 located within the State of Illinois.
23 (h) Any change of the pooling agreement, bylaws, plan of
24 operation, reinsurance agreements, or membership shall be
25 delivered to the Director within 30 days after the amendment
26 or change.
27 (i) A pool trustee must be an employee, officer,
28 director, or owner of a pool member.
29 (215 ILCS 5/107a.07 new)
30 Sec. 107a.07. Standards for issuing and maintaining pool
31 certificates of authority.
32 (a) The Department shall consider the following in
33 evaluating the financial strength of the pool:
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1 (1) The number of employees covered by the pool.
2 (2) The particular industries in which the
3 participants are engaged.
4 (3) The combined net worth of pool participants.
5 (4) Any excess insurance purchased from authorized
6 insurers.
7 (5) The gross annual payroll of members, which must
8 be at least $10,000,000.
9 (b) The pool administrator must either contract with a
10 licensed service company or have sufficient resources, such
11 as those set forth in item (3) of subsection (b) of Section
12 107a.06, to administer the proposed pool.
13 (c) The Department must determine whether the pool can
14 ensure that individual pool members are in compliance with
15 Section 107a.08.
16 (215 ILCS 5/107a.08 new)
17 Sec. 107a.08. Provisions applicable to members of a
18 group workers' compensation pool.
19 (a) All members of a group workers' compensation pool
20 must have homogeneous risk characteristics as provided in
21 Section 107a.03.
22 (b) In determining whether members exhibit homogeneous
23 risk characteristics, the Director shall consider any or all
24 of the following characteristics:
25 (1) The loss frequency inherent in the occupational
26 framework of group members.
27 (2) The loss severity inherent in the occupational
28 framework of group members.
29 (3) The occupational disease potential inherent in
30 the occupational framework of group members.
31 (4) The occupational tasks of member employees.
32 (5) Any other relevant fact the group members
33 present to the Director that has reference to the
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1 classification of similar risks (e.g. SIC codes).
2 (c) Eligibility as a pool participant shall be based
3 upon having a minimum of:
4 (l) 20 employees and $250,000 gross annual payroll;
5 or
6 (2) 10 employees and $125,000 gross annual payroll
7 for participants who have engaged actively in business
8 for a minimum of 3 years; or
9 (3) 5 employees and $62,500 gross annual payroll
10 for participants who have actively engaged in business
11 for a minimum of 5 years.
12 (d) Exceptions to the minimum eligibility requirements
13 of this Section may be allowed by any pool whenever the
14 following conditions are met:
15 (1) the participant has been actively engaged in
16 business for a minimum period of 5 consecutive years in
17 Illinois; and
18 (2) the participant agrees to make all of its
19 financial records available to the Director for
20 reasonable inspection during the period of membership;
21 and
22 (3) the pool administrator certifies to the
23 Director that he examined the financial records of the
24 pool participant prior to the participant's admission to
25 the pool and found the participant to be solvent and
26 financially stable.
27 (215 ILCS 5/107a.09 new)
28 Sec. 107a.09. Service companies for group workers'
29 compensation pools.
30 (a) No association, corporation, partnership, sole
31 proprietorship, trust, or other business entity shall provide
32 services in the design, establishment, or administration of a
33 group workers' compensation pool unless it is licensed to do
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1 so by the Department. An applicant for a license shall state
2 in writing the type of activities it seeks authorization to
3 engage in and the type of services it seeks authorization to
4 provide. The license shall be granted only when the Director
5 is satisfied that the entity possesses the necessary
6 organization, background, character, expertise, and financial
7 integrity to supply the services sought to be offered. The
8 Department may issue a license subject to restrictions or
9 limitations, including restrictions or limitations on the
10 type of services that may be supplied or the activities in
11 which the entity may engage. A license issued under this
12 Section shall be valid for 2 years.
13 (b) To assure that administrators are financially
14 solvent, that pools are administered in a fair and capable
15 fashion, and that administrators are able to process claims
16 and pay benefits in a prompt, fair, and equitable manner,
17 entities licensed to engage in those activities under this
18 Section are subject to supervision and examination by the
19 Department.
20 (c) The Department may adopt rules for the purposes of
21 this Article. The rules shall (i) establish reporting
22 requirements for administrators for group workers'
23 compensation pools, including experience reporting
24 requirements consistent with those established under this
25 Code for insurers; (ii) establish bonding requirements or
26 other provisions assuring the financial integrity of entities
27 administering group self-insurance; and (iii) establish other
28 reasonable requirements to further the purposes of this
29 Article.
30 (215 ILCS 5/107a.10 new)
31 Sec. 107a.10. Bond requirements.
32 (a) An administrator shall obtain and maintain in force
33 fidelity bonds on employees, officers, or positions in an
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1 amount not less than the amount set forth in the column
2 "Minimum Amount of Bond", based on the amount of assets
3 administered on behalf of pools by the administrator (as
4 determined from year to year) stated in the annual statement
5 of the pools as filed with the Department. All such bonds
6 shall be written with at least a one-year discovery period
7 and, if written with less than a 3-year discovery period,
8 shall contain a provision that no cancellation or termination
9 of the bond, whether by or at the request of the insured or
10 by the underwriter, shall take effect before the expiration
11 of 90 days after written notice of the cancellation or
12 termination has been filed with the Department unless an
13 earlier date of cancellation or termination is approved by
14 the Department.
15 (b) The bonds shall include all employees, officers, or
16 positions for the following perils, which may be covered
17 under separate policies:
18 (1) dishonesty of employees and officers;
19 (2) robbery, burglary, larceny, theft, false
20 pretense, hold-up, misplacement, mysterious
21 disappearance, and damage or destruction while property
22 is in any bank, any recognized place of safe deposit, or
23 in transit; and
24 (3) forgery or alteration.
25 (c) The bond shall be written by an insurer licensed to
26 transact business in the State of Illinois.
27 (d) Schedule of assets in relationship to amount of
28 bond:
29 TOTAL ASSETS MINIMUM AMOUNT OF BOND
30 $500,000 or less.............. $20,000 plus 6% of total
31 assets
32 more than $ 500,000 and
33 not more than $1,000,000...... $50,000 plus 4% of assets
34 over $500,000
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1 more than $1,000,000 and
2 not more than $3,000,000...... $70,000 plus 3% of assets
3 over $1,000,000
4 more than $3,000,000 and
5 not more than $5,000,000...... $130,000 plus 2% of assets
6 over $3,000,000
7 more than $5,000,000 and
8 not more than $10,000,000..... $170,000 plus 1.5% of assets
9 over $5,000,000
10 more than $10,000,000......... $245,000 plus 0.75% of assets
11 more than $10,000,000
12 (215 ILCS 5/107a.11 new)
13 Sec. 107a.11. Admissible assets.
14 (a) Admitted assets include amounts permitted under
15 Section 107a.12 as modified by only the following:
16 (1) Direct obligations of the United States of
17 America for the payment of money or obligations for the
18 payment of money that are guaranteed as to the payment of
19 principal and interest by the United States of America.
20 (2) Direct obligations for the payment of money
21 issued by an agency or instrumentality of the United
22 States of America or obligations for the payment of money
23 that are guaranteed as to payment of principal and
24 interest by an agency or instrumentality of the United
25 States of America.
26 (3) Bonds or securities that are issued by any
27 state of the United States and that are secured by the
28 full faith and credit of that state.
29 (4) Certificates of deposit, time deposits, or
30 demand deposits in a bank in the State of Illinois that
31 has deposits insured by the Federal Deposit Insurance
32 Corporation.
33 (5) Saving certificates issued by any savings and
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1 loan association in the State of Illinois that has
2 deposits insured by the Federal Deposit Insurance
3 Corporation.
4 (6) Direct, unconditional obligations of a solvent
5 business corporation for the payment of money on the
6 following conditions:
7 (A) the corporation is incorporated under the
8 laws of the United States of America or any state of
9 the United States of America;
10 (B) the corporation has a tangible net worth
11 of not less than $500,000 and the obligations have
12 been awarded a "1" or "2" rating by the Securities
13 Valuation Office of the National Association of
14 Insurance Commissioners;
15 (C) the corporation is not affiliated with any
16 member of the pool;
17 (D) no such obligation of the corporation has
18 been in default as to principal or interest during
19 the 5 years preceding the date of investment,
20 however, the corporation need not have had
21 obligations outstanding during that period and need
22 not have been in existence for that period, and
23 obligations acquired under this Section may be newly
24 issued;
25 (E) a pool may not invest more than 33 1/3% of
26 its assets under this item (6); and
27 (F) a pool may not invest under this Section
28 more than 5% of its assets in the obligations of any
29 one corporation.
30 (7) Obligations of any political subdivision of any
31 state of the United States of America for the payment of
32 money on the following conditions:
33 (A) the obligations are payable from ad
34 valorem taxes;
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1 (B) the political subdivision is not in
2 default in the payment of principal or interest on
3 any of its direct, general obligations;
4 (C) no investment may be made under this
5 Section in obligations that are secured only by
6 special assessments for local improvements;
7 (D) a pool may not invest under this Section
8 more than 4% of its assets in direct, general
9 obligations issued by any one political subdivision;
10 and
11 (E) a pool may not invest more than 50% of its
12 assets under this item (7).
13 (8) Mutual funds:
14 (A) government money market mutual funds that
15 meet the conditions of paragraphs (c)(2), (c)(3),
16 and (c)(4) of 17 C.F.R. 270.2a-7, revised as of
17 April l, 1992, that have been rated in one of the 2
18 highest rating categories by an independent rating
19 agency recognized by the National Association of
20 Insurance Commissioners, and that invest in
21 obligations issued, guaranteed, or insured by the
22 United States or Canada or any agency or
23 instrumentality of the United States or Canada.
24 (B) fixed income bond mutual funds that meet
25 the conditions of paragraphs (c)(2), (c)(3), and
26 (c)(4) of 17 C.F.R. 270.2a-7, revised as of April 1,
27 1992, and that have been rated in one of the 2
28 highest rating categories by an independent rating
29 agency recognized by the National Association of
30 Insurance Commissioners, however, a pool may not
31 invest in fixed income bond mutual funds more than
32 the greater of $100,000 or 10% of its total assets
33 in any one fund.
34 (9) Not more than 5% of a pool's admitted assets
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1 may be assessment receivables. In order to be an admitted
2 asset, an assessment receivable cannot be more than 60
3 days past due.
4 (10) Not more than 10% of a pool's admitted assets
5 may be reinsurance receivables. In order to be an
6 admitted asset, a reinsurance receivable cannot be more
7 than 90 days past due.
8 (b) Amounts recoverable from authorized reinsurers on
9 unpaid losses may be deducted from the reserves required by
10 Section 4 of the Workers' Compensation Act.
11 (c) All securities eligible for registration shall be
12 registered in the name of the pool and all securities shall
13 be maintained in a State or National Bank having trust powers
14 and located within this State.
15 (215 ILCS 5/107a.12 new)
16 Sec. 107a.12. Annual statement.
17 (a) A pool authorized to do business in this State shall
18 file with the Director by March 1st in each year 2 copies of
19 its financial statement for the year ending December 31st
20 immediately preceding on forms prescribed by the Director,
21 which shall conform substantially to the form of statement
22 adopted by the National Association of Insurance
23 Commissioners. Unless the Director provides otherwise, the
24 annual statement is to be prepared in accordance with the
25 annual statement instructions and the Accounting Practices
26 and Procedures Manual adopted by the National Association of
27 Insurance Commissioners. The Director may promulgate rules
28 for determining which portions of the annual statement
29 instructions and Accounting Practices and Procedures Manual
30 adopted by the National Association of Insurance
31 Commissioners are germane for the purpose of ascertaining
32 the condition and affairs of a pool.
33 (b) The Director shall have authority to extend the time
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1 for filing any statement by any pool for reasons that he
2 considers good and sufficient. The admitted assets shall be
3 shown in the statement at the actual values as of the last
4 day of the preceding year, in accordance with Section 126.7
5 of this Code. The statement shall be verified by oaths of a
6 majority of the trustees or directors of the pool. In
7 addition, when the Director considers it to be necessary and
8 appropriate for the protection of policyholders, creditors,
9 shareholders, or claimants, the Director may require the pool
10 to file, within 60 days after mailing to the pool a notice
11 that a supplemental summary statement is required, a
12 supplemental summary statement, as of the last day of any
13 calendar month occurring during the 100 days next preceding
14 the mailing of the notice, designated by him or her on forms
15 prescribed and furnished by the Director. The Director may
16 require supplemental summary statements to be certified by an
17 independent actuary deemed competent by the Director or by an
18 independent certified public accountant.
19 (c) On or before June 1 of each year, a pool shall file
20 with the Director an audited financial statement reporting
21 the financial condition of the pool as of the end of the most
22 recent calendar year and changes in the surplus funds for the
23 year then ending. The annual audited financial report shall
24 include the following:
25 (1) a report of an independent certified public
26 accountant;
27 (2) a balance sheet reporting assets, as defined in
28 this Article, liabilities, and surplus funds;
29 (3) a statement of gain and loss from operations;
30 (4) a statement of changes in financial position;
31 (5) a statement of changes in surplus funds; and
32 (6) the notes to financial statements.
33 (d) The Director shall require a pool to file an
34 independent actuarial opinion as to the sufficiency of the
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1 loss and loss adjustment expense reserves. This opinion shall
2 be due on June 1 of each year.
3 (215 ILCS 5/107a.13 new)
4 Sec. 107a.13. Group Workers' Compensation Pool
5 Insolvency Fund.
6 (a) All qualified group workers' compensation pools
7 shall pay a sum equal to 0.5% of all compensation and medical
8 service payments made under either the Workers' Compensation
9 Act or the Workers' Occupational Diseases Act during the 6
10 months immediately preceding the date of payment, into the
11 Group Workers' Compensation Pool Insolvency Fund, the
12 successor fund to the Group Self-Insurers' Insolvency Fund.
13 On the effective date of this amendatory Act of the 91st
14 General Assembly, all moneys in the Group Self-Insurers'
15 Insolvency Fund shall be transferred into the Group Workers'
16 Compensation Pool Insolvency Fund.
17 (b) The State Treasurer is ex-officio custodian of the
18 Group Workers' Compensation Pool Insolvency Fund. Moneys in
19 the Fund shall be deposited the same as are State funds and
20 any interest accruing on moneys in the Fund shall be added to
21 the Fund every 6 months. The Fund shall be subject to audit
22 the same as State funds and accounts and shall be protected
23 by the general bond given by the State Treasurer. The Fund
24 shall be considered always appropriated for the purposes of
25 compensating employees who are eligible to receive benefits
26 from their employers pursuant to the provisions of the
27 Workers' Compensation Act or Workers' Occupational Diseases
28 Act when their employer is a member of a qualified group
29 workers' compensation pool and the qualified group workers'
30 compensation pool has become unable to pay compensation and
31 medical service payments due to financial insolvency either
32 prior to or following the date of award. Moneys in the Fund
33 may be used to compensate any type of injury or occupational
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1 disease that is compensable under either the Workers'
2 Compensation Act or the Workers' Occupational Diseases Act.
3 The State Treasurer shall be joined with the qualified group
4 workers' compensation pool as party respondent in any claim
5 or application for adjustment of claim filed against a
6 qualified group workers' compensation pool whenever the
7 compensation and medical services provided pursuant to this
8 Article may be unpaid by reason of default of an insolvent
9 qualified group workers' compensation pool.
10 (c) Payment shall be made out of the Group Workers'
11 Compensation Pool Insolvency Fund only upon order of the
12 Director and only after the penal sum of the fidelity bond
13 and securities, if any, has been exhausted. It shall be the
14 obligation of a qualified group workers' compensation pool or
15 its successor to make arrangements to repay the Group
16 Workers' Compensation Pool Insolvency Fund for all moneys
17 paid out in its behalf. The Director is authorized to make
18 arrangements with the qualified group workers' compensation
19 pool as to terms of repayment. The obligations of qualified
20 group workers' compensation pools to make contributions to
21 the Group Workers' Compensation Pool Insolvency Fund shall be
22 waived on any January 1 or July 1, if the Fund has a positive
23 balance of at least $2,000,000 on the date one month prior to
24 the date of payment.
25 (215 ILCS 5/107a.14 new)
26 Sec. 107a.14. Group workers' compensation pools
27 assessment provisions.
28 (a) When the Director determines by means of audit,
29 annual certified statement, actuarial opinion, or otherwise
30 that the assets possessed by a pool are less than the
31 reserves required together with any other unpaid liabilities,
32 he or she shall order the pool trustees to assess the
33 individual pool participants in an amount not less than
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1 necessary to correct the deficiency. This Section is not
2 intended to restrict or preclude the trustees from time to
3 time levying assessments or increasing premium deposits in
4 accordance with the pooling agreement.
5 (b) When the Director determines that the compensation
6 and medical services provided pursuant to this Article may be
7 unpaid by reason of the default of an insolvent qualified
8 group workers' compensation pool and the penal sum of the
9 fidelity bond and the securities provided by the qualified
10 group workers' compensation pool are about to become
11 exhausted, the Director shall declare the qualified group
12 workers' compensation pool to be in default and first levy
13 upon and collect from the individual employer members of the
14 qualified group workers' compensation pool in default an
15 assessment to assure prompt payment of compensation and
16 medical services. No assessment of any individual employer
17 member of the qualified group workers' compensation pool made
18 pursuant to this subsection shall exceed 25% of the average
19 annual contribution paid by that employer over the previous
20 3-year period; however, if the Group Workers' Compensation
21 Pool Insolvency Fund is then for any reason financially
22 unable to assure prompt payment of compensation and medical
23 services, the employer member may be assessed without
24 limitation. If and only if (i) the Group Workers'
25 Compensation Pool Insolvency Fund has a positive balance of
26 less than $1,000,000, (ii) the Director has declared a
27 qualified group workers' compensation pool to be in default,
28 and (iii) the Group Workers' Compensation Pool Insolvency
29 Fund is financially unable to pay all employees whose
30 compensation and medical services have been approved, the
31 Director shall levy upon and collect from all qualified
32 group workers' compensation pools an assessment to provide
33 the balance necessary to assure prompt payment of approved
34 compensation and medical services. If an insurance carrier
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1 becomes liable for workers' compensation and occupational
2 diseases payments under the terms of the policy covering the
3 qualified group workers' compensation pool, the carrier shall
4 make appropriate payments and payments from the Fund shall
5 cease. Payments from the Fund shall resume only when the
6 insurance carrier's liability is exhausted.
7 (215 ILCS 5/107a.15 new)
8 Sec. 107a.15. Authority of Director.
9 (a) If the Director determines that a group workers'
10 compensation pool is not in compliance with this Article, the
11 Director shall require the pool to eliminate the condition
12 causing the noncompliance within a specified time from the
13 date the notice of the Director's requirement is mailed or
14 delivered to the pool.
15 (b) If a pool fails to comply with the Director's
16 requirement, the pool shall be deemed to be in a hazardous
17 financial condition, and the Director may take one or more of
18 the actions authorized by law as to pools in hazardous
19 financial condition.
20 (215 ILCS 5/464a rep.)
21 Section 15. The Illinois Insurance Code is amended by
22 repealing Section 464a.
23 Section 20. The Workers' Compensation Act is amended by
24 changing Section 4 and adding Section 10.1 as follows:
25 (820 ILCS 305/4) (from Ch. 48, par. 138.4)
26 Sec. 4. (a) Any employer, including but not limited to
27 general contractors and their subcontractors, who shall come
28 within the provisions of Section 3 of this Act, and any other
29 employer who shall elect to provide and pay the compensation
30 provided for in this Act shall:
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1 (1) File with the Commission annually an
2 application for approval as a self-insurer which shall
3 include a current financial statement, and annually,
4 thereafter, an application for renewal of self-insurance,
5 which shall include a current financial statement. Said
6 application and financial statement shall be signed and
7 sworn to by the president or vice president and secretary
8 or assistant secretary of the employer if it be a
9 corporation, or by all of the partners, if it be a
10 copartnership, or by the owner if it be neither a
11 copartnership nor a corporation. All initial applications
12 and all applications for renewal of self-insurance must
13 be submitted at least 60 days prior to the requested
14 effective date of self-insurance. An employer may elect
15 to provide and pay compensation as provided for in this
16 Act as a member of a group workers' compensation pool
17 under Article V 3/4 of the Illinois Insurance Code. If
18 an employer becomes a member of a group workers'
19 compensation pool, the employer shall not be relieved of
20 any obligations imposed by this Act.
21 If the sworn application and financial statement of
22 any such employer does not satisfy the Commission of the
23 financial ability of the employer who has filed it, the
24 Commission shall require such employer to,
25 (2) Furnish security, indemnity or a bond
26 guaranteeing the payment by the employer of the
27 compensation provided for in this Act, provided that any
28 such employer whose application and financial statement
29 shall not have satisfied the commission of his or her
30 financial ability and who shall have secured his
31 liability in part by excess liability insurance shall be
32 required to furnish to the Commission security, indemnity
33 or bond guaranteeing his or her payment up to the
34 effective limits of the excess coverage, or
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1 (3) Insure his entire liability to pay such
2 compensation in some insurance carrier authorized,
3 licensed, or permitted to do such insurance business in
4 this State. Every policy of an insurance carrier,
5 insuring the payment of compensation under this Act shall
6 cover all the employees and the entire compensation
7 liability of the insured: Provided, however, that any
8 employer may insure his or her compensation liability
9 with 2 or more insurance carriers or may insure a part
10 and qualify under subsection 1, 2, or 4 for the remainder
11 of his or her liability to pay such compensation, subject
12 to the following two provisions:
13 Firstly, the entire compensation liability of
14 the employer to employees working at or from one
15 location shall be insured in one such insurance
16 carrier or shall be self-insured, and
17 Secondly, the employer shall submit evidence
18 satisfactorily to the Commission that his or her
19 entire liability for the compensation provided for
20 in this Act will be secured. Any provisions in any
21 policy, or in any endorsement attached thereto,
22 attempting to limit or modify in any way, the
23 liability of the insurance carriers issuing the same
24 except as otherwise provided herein shall be wholly
25 void.
26 Nothing herein contained shall apply to policies of
27 excess liability carriage secured by employers who have
28 been approved by the Commission as self-insurers, or
29 (4) Make some other provision, satisfactory to the
30 Commission, for the securing of the payment of
31 compensation provided for in this Act, and
32 (5) Upon becoming subject to this Act and
33 thereafter as often as the Commission may in writing
34 demand, file with the Commission in form prescribed by it
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1 evidence of his or her compliance with the provision of
2 this Section.
3 (a-1) Regardless of its state of domicile or its
4 principal place of business, an employer shall make payments
5 to its insurance carrier or group self-insurance fund, where
6 applicable, based upon the premium rates of the situs where
7 the work or project is located in Illinois if:
8 (A) the employer is engaged primarily in the
9 building and construction industry; and
10 (B) subdivision (a)(3) of this Section applies to
11 the employer or the employer is a member of a group
12 self-insurance plan as defined in subsection (1) of
13 Section 4a.
14 The Industrial Commission shall impose a penalty upon an
15 employer for violation of this subsection (a-1) if:
16 (i) the employer is given an opportunity at a
17 hearing to present evidence of its compliance with this
18 subsection (a-1); and
19 (ii) after the hearing, the Commission finds that
20 the employer failed to make payments upon the premium
21 rates of the situs where the work or project is located
22 in Illinois.
23 The penalty shall not exceed $1,000 for each day of work
24 for which the employer failed to make payments upon the
25 premium rates of the situs where the work or project is
26 located in Illinois, but the total penalty shall not exceed
27 $50,000 for each project or each contract under which the
28 work was performed.
29 Any penalty under this subsection (a-1) must be imposed
30 not later than one year after the expiration of the
31 applicable limitation period specified in subsection (d) of
32 Section 6 of this Act. Penalties imposed under this
33 subsection (a-1) shall be deposited into the Industrial
34 Commission Operations Fund, a special fund that is created
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1 in the State treasury. Subject to appropriation, moneys in
2 the Fund shall be used solely for the operations of the
3 Industrial Commission.
4 (b) The sworn application and financial statement, or
5 security, indemnity or bond, or amount of insurance, or other
6 provisions, filed, furnished, carried, or made by the
7 employer, as the case may be, shall be subject to the
8 approval of the Commission.
9 Deposits under escrow agreements shall be cash,
10 negotiable United States government bonds or negotiable
11 general obligation bonds of the State of Illinois. Such cash
12 or bonds shall be deposited in escrow with any State or
13 National Bank or Trust Company having trust authority in the
14 State of Illinois.
15 Upon the approval of the sworn application and financial
16 statement, security, indemnity or bond or amount of
17 insurance, filed, furnished or carried, as the case may be,
18 the Commission shall send to the employer written notice of
19 its approval thereof. The certificate of compliance by the
20 employer with the provisions of subparagraphs (2) and (3) of
21 paragraph (a) of this Section shall be delivered by the
22 insurance carrier to the Industrial Commission within five
23 days after the effective date of the policy so certified.
24 The insurance so certified shall cover all compensation
25 liability occurring during the time that the insurance is in
26 effect and no further certificate need be filed in case such
27 insurance is renewed, extended or otherwise continued by such
28 carrier. The insurance so certified shall not be cancelled
29 or in the event that such insurance is not renewed, extended
30 or otherwise continued, such insurance shall not be
31 terminated until at least 10 days after receipt by the
32 Industrial Commission of notice of the cancellation or
33 termination of said insurance; provided, however, that if the
34 employer has secured insurance from another insurance
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1 carrier, or has otherwise secured the payment of compensation
2 in accordance with this Section, and such insurance or other
3 security becomes effective prior to the expiration of the 10
4 days, cancellation or termination may, at the option of the
5 insurance carrier indicated in such notice, be effective as
6 of the effective date of such other insurance or security.
7 (c) Whenever the Commission shall find that any
8 corporation, company, association, aggregation of
9 individuals, reciprocal or interinsurers exchange, or other
10 insurer effecting workers' compensation insurance in this
11 State shall be insolvent, financially unsound, or unable to
12 fully meet all payments and liabilities assumed or to be
13 assumed for compensation insurance in this State, or shall
14 practice a policy of delay or unfairness toward employees in
15 the adjustment, settlement, or payment of benefits due such
16 employees, the Commission may after reasonable notice and
17 hearing order and direct that such corporation, company,
18 association, aggregation of individuals, reciprocal or
19 interinsurers exchange, or insurer, shall from and after a
20 date fixed in such order discontinue the writing of any such
21 workers' compensation insurance in this State. Subject to
22 such modification of the order as the Commission may later
23 make on review of the order, as herein provided, it shall
24 thereupon be unlawful for any such corporation, company,
25 association, aggregation of individuals, reciprocal or
26 interinsurers exchange, or insurer to effect any workers'
27 compensation insurance in this State. A copy of the order
28 shall be served upon the Director of Insurance by registered
29 mail. Whenever the Commission finds that any service or
30 adjustment company used or employed by a self-insured
31 employer or by an insurance carrier to process, adjust,
32 investigate, compromise or otherwise handle claims under this
33 Act, has practiced or is practicing a policy of delay or
34 unfairness toward employees in the adjustment, settlement or
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1 payment of benefits due such employees, the Commission may
2 after reasonable notice and hearing order and direct that
3 such service or adjustment company shall from and after a
4 date fixed in such order be prohibited from processing,
5 adjusting, investigating, compromising or otherwise handling
6 claims under this Act.
7 Whenever the Commission finds that any self-insured
8 employer has practiced or is practicing delay or unfairness
9 toward employees in the adjustment, settlement or payment of
10 benefits due such employees, the Commission may, after
11 reasonable notice and hearing, order and direct that after a
12 date fixed in the order such self-insured employer shall be
13 disqualified to operate as a self-insurer and shall be
14 required to insure his entire liability to pay compensation
15 in some insurance carrier authorized, licensed and permitted
16 to do such insurance business in this State, as provided in
17 subparagraph 3 of paragraph (a) of this Section.
18 All orders made by the Commission under this Section
19 shall be subject to review by the courts, said review to be
20 taken in the same manner and within the same time as provided
21 by Section 19 of this Act for review of awards and decisions
22 of the Commission, upon the party seeking the review filing
23 with the clerk of the court to which said review is taken a
24 bond in an amount to be fixed and approved by the court to
25 which the review is taken, conditioned upon the payment of
26 all compensation awarded against the person taking said
27 review pending a decision thereof and further conditioned
28 upon such other obligations as the court may impose. Upon
29 the review the Circuit Court shall have power to review all
30 questions of fact as well as of law. The penalty hereinafter
31 provided for in this paragraph shall not attach and shall not
32 begin to run until the final determination of the order of
33 the Commission.
34 (d) Upon a finding by the Commission, after reasonable
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1 notice and hearing, of the knowing and wilful failure of an
2 employer to comply with any of the provisions of paragraph
3 (a) of this Section or the failure or refusal of an employer,
4 service or adjustment company, or an insurance carrier to
5 comply with any order of the Industrial Commission pursuant
6 to paragraph (c) of this Section disqualifying him or her to
7 operate as a self insurer and requiring him or her to insure
8 his or her liability, the Commission may assess a civil
9 penalty of up to $500 per day for each day of such failure or
10 refusal after the effective date of this amendatory Act of
11 1989. Each day of such failure or refusal shall constitute a
12 separate offense.
13 Upon the failure or refusal of any employer, service or
14 adjustment company or insurance carrier to comply with the
15 provisions of this Section and with the orders of the
16 Commission under this Section, or the order of the court on
17 review after final adjudication, the Commission may bring a
18 civil action to recover the amount of the penalty in Cook
19 County or in Sangamon County in which litigation the
20 Commission shall be represented by the Attorney General. The
21 Commission shall send notice of its finding of non-compliance
22 and assessment of the civil penalty to the Attorney General.
23 It shall be the duty of the Attorney General within 30 days
24 after receipt of the notice, to institute prosecutions and
25 promptly prosecute all reported violations of this Section.
26 (e) This Act shall not affect or disturb the continuance
27 of any existing insurance, mutual aid, benefit, or relief
28 association or department, whether maintained in whole or in
29 part by the employer or whether maintained by the employees,
30 the payment of benefits of such association or department
31 being guaranteed by the employer or by some person, firm or
32 corporation for him or her: Provided, the employer
33 contributes to such association or department an amount not
34 less than the full compensation herein provided, exclusive of
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1 the cost of the maintenance of such association or department
2 and without any expense to the employee. This Act shall not
3 prevent the organization and maintaining under the insurance
4 laws of this State of any benefit or insurance company for
5 the purpose of insuring against the compensation provided for
6 in this Act, the expense of which is maintained by the
7 employer. This Act shall not prevent the organization or
8 maintaining under the insurance laws of this State of any
9 voluntary mutual aid, benefit or relief association among
10 employees for the payment of additional accident or sick
11 benefits.
12 (f) No existing insurance, mutual aid, benefit or relief
13 association or department shall, by reason of anything herein
14 contained, be authorized to discontinue its operation without
15 first discharging its obligations to any and all persons
16 carrying insurance in the same or entitled to relief or
17 benefits therein.
18 (g) Any contract, oral, written or implied, of
19 employment providing for relief benefit, or insurance or any
20 other device whereby the employee is required to pay any
21 premium or premiums for insurance against the compensation
22 provided for in this Act shall be null and void. Any
23 employer withholding from the wages of any employee any
24 amount for the purpose of paying any such premium shall be
25 guilty of a Class B misdemeanor.
26 In the event the employer does not pay the compensation
27 for which he or she is liable, then an insurance company,
28 association or insurer which may have insured such employer
29 against such liability shall become primarily liable to pay
30 to the employee, his or her personal representative or
31 beneficiary the compensation required by the provisions of
32 this Act to be paid by such employer. The insurance carrier
33 may be made a party to the proceedings in which the employer
34 is a party and an award may be entered jointly against the
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1 employer and the insurance carrier.
2 (h) It shall be unlawful for any employer, insurance
3 company or service or adjustment company to interfere with,
4 restrain or coerce an employee in any manner whatsoever in
5 the exercise of the rights or remedies granted to him or her
6 by this Act or to discriminate, attempt to discriminate, or
7 threaten to discriminate against an employee in any way
8 because of his or her exercise of the rights or remedies
9 granted to him or her by this Act.
10 It shall be unlawful for any employer, individually or
11 through any insurance company or service or adjustment
12 company, to discharge or to threaten to discharge, or to
13 refuse to rehire or recall to active service in a suitable
14 capacity an employee because of the exercise of his or her
15 rights or remedies granted to him or her by this Act.
16 (i) If an employer elects to obtain a life insurance
17 policy on his employees, he may also elect to apply such
18 benefits in satisfaction of all or a portion of the death
19 benefits payable under this Act, in which case, the
20 employer's compensation premium shall be reduced accordingly.
21 (j) Within 45 days of receipt of an initial application
22 or application to renew self-insurance privileges the
23 Self-Insurers Advisory Board shall review and submit for
24 approval by the Chairman of the Commission recommendations of
25 disposition of all initial applications to self-insure and
26 all applications to renew self-insurance privileges filed by
27 private self-insurers pursuant to the provisions of this
28 Section and Section 4a-9 of this Act. Each private
29 self-insurer shall submit with its initial and renewal
30 applications the application fee required by Section 4a-4 of
31 this Act.
32 The Chairman of the Commission shall promptly act upon
33 all initial applications and applications for renewal in full
34 accordance with the recommendations of the Board or, should
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1 the Chairman disagree with any recommendation of disposition
2 of the Self-Insurer's Advisory Board, he shall within 30 days
3 of receipt of such recommendation provide to the Board in
4 writing the reasons supporting his decision. The Chairman
5 shall also promptly notify the employer of his decision
6 within 15 days of receipt of the recommendation of the Board.
7 If an employer is denied a renewal of self-insurance
8 privileges pursuant to application it shall retain said
9 privilege for 120 days after receipt of a notice of
10 cancellation of the privilege from the Chairman of the
11 Commission.
12 All orders made by the Chairman under this Section shall
13 be subject to review by the courts, such review to be taken
14 in the same manner and within the same time as provided by
15 subsection (f) of Section 19 of this Act for review of awards
16 and decisions of the Commission, upon the party seeking the
17 review filing with the clerk of the court to which such
18 review is taken a bond in an amount to be fixed and approved
19 by the court to which the review is taken, conditioned upon
20 the payment of all compensation awarded against the person
21 taking such review pending a decision thereof and further
22 conditioned upon such other obligations as the court may
23 impose. Upon the review the Circuit Court shall have power
24 to review all questions of fact as well as of law.
25 (Source: P.A. 90-109, eff. 1-1-98; 91-375, eff. 1-1-00.)
26 (820 ILCS 305/10.1 new)
27 Sec. 10.1. Compromise lump sum settlement. The parties,
28 by agreement and with approval of an arbitrator or the
29 Commission, may enter into a compromise lump sum settlement
30 in either permanent total or permanent partial disability
31 cases which prorates the lump sum settlement over the life
32 expectancy of the injured worker. When such an agreement has
33 been approved, neither the weekly compensation rate paid
SB1658 Enrolled -30- LRB9111673JSpcA
1 throughout the case nor the maximum statutory weekly rate
2 applicable to the injury shall apply. No compensation rate
3 shall exceed the maximum statutory weekly rate as of the date
4 of the injury. Instead, the prorated rate set forth in the
5 approved settlement documents shall control and become the
6 rate for that case.
7 (820 ILCS 305/4a rep.)
8 Section 25. The Workers' Compensation Act is amended by
9 repealing Section 4a.
10 Section 30. The Workers' Occupational Diseases Act is
11 amended by changing Section 4 as follows:
12 (820 ILCS 310/4) (from Ch. 48, par. 172.39)
13 Sec. 4. (a) Any employer, including but not limited to
14 general contractors and their subcontractors, required by the
15 terms of this Act or by election to pay the compensation
16 provided for in this Act shall:
17 (1) File with the Commission an application for
18 approval as a self-insurer which shall include a current
19 financial statement. The application and financial
20 statement shall be signed and sworn to by the president
21 or vice-president and secretary or assistant secretary of
22 the employer if it be a corporation, or by all of the
23 partners if it be a copartnership, or by the owner if it
24 be neither a copartnership nor a corporation. An
25 employer may elect to provide and pay compensation as
26 provided for in this Act as a member of a group workers'
27 compensation pool under Article V 3/4 of the Illinois
28 Insurance Code. If an employer becomes a member of a
29 group workers' compensation pool, the employer shall not
30 be relieved of any obligations imposed by this Act.
31 If the sworn application and financial statement of
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1 any such employer does not satisfy the Commission of the
2 financial ability of the employer who has filed it, the
3 Commission shall require such employer to:
4 (2) Furnish security, indemnity or a bond
5 guaranteeing the payment by the employer of the
6 compensation provided for in this Act, provided that any
7 such employer who shall have secured his or her liability
8 in part by excess liability coverage shall be required to
9 furnish to the Commission security, indemnity or bond
10 guaranteeing his or her payment up to the amount of the
11 effective limits of the excess coverage in accordance
12 with the provisions of this paragraph, or
13 (3) Insure his or her entire liability to pay such
14 compensation in some insurance carrier authorized,
15 licensed or permitted to do such insurance business in
16 this State. All policies of such insurance carriers
17 insuring the payment of compensation under this Act shall
18 cover all the employees and all such employer's
19 compensation liability in all cases in which the last day
20 of the last exposure to the occupational disease involved
21 is within the effective period of the policy, anything to
22 the contrary in the policy notwithstanding. Provided,
23 however, that any employer may insure his or her
24 compensation liability under this Act with 2 or more
25 insurance carriers or may insure a part and qualify under
26 Subsection 1, 2, or 4 for the remainder of his liability
27 to pay such compensation, subject to the following two
28 provisions:
29 Firstly, the entire liability of the employer
30 to employees working at or from one location shall
31 be insured in one such insurance carrier or shall be
32 self-insured.
33 Secondly, the employer shall submit evidence
34 satisfactory to the Commission that his or her
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1 entire liability for the compensation provided for
2 in this Act will be secured.
3 Any provision in a policy or in any endorsement
4 attached thereto attempting to limit or modify in any way
5 the liability of the insurance carrier issuing the same,
6 except as otherwise provided herein, shall be wholly
7 void.
8 The insurance or security in force to cover
9 compensation liability under this Act shall be separate
10 and distinct from the insurance or security under the
11 "Workers' Compensation Act" and any insurance contract
12 covering liability under either Act need not cover any
13 liability under the other. Nothing herein contained
14 shall apply to policies of excess liability carriage
15 secured by employers who have been approved by the
16 Commission as self-insurers, or
17 (4) Make some other provision, satisfactory to the
18 Commission, for the securing of the payment of
19 compensation provided for in this Act, and
20 (5) Upon becoming subject to this Act and
21 thereafter as often as the Commission may in writing
22 demand, file with the Commission in form prescribed by it
23 evidence of his or her compliance with the provision of
24 this Section.
25 (a-1) Regardless of its state of domicile or its
26 principal place of business, an employer shall make payments
27 to its insurance carrier or group self-insurance fund, where
28 applicable, based upon the premium rates of the situs where
29 the work or project is located in Illinois if:
30 (A) the employer is engaged primarily in the
31 building and construction industry; and
32 (B) subdivision (a)(3) of this Section applies to
33 the employer or the employer is a member of a group
34 self-insurance plan as defined in subsection (1) of
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1 Section 4a.
2 The Industrial Commission shall impose a penalty upon an
3 employer for violation of this subsection (a-1) if:
4 (i) the employer is given an opportunity at a
5 hearing to present evidence of its compliance with this
6 subsection (a-1); and
7 (ii) after the hearing, the Commission finds that
8 the employer failed to make payments upon the premium
9 rates of the situs where the work or project is located
10 in Illinois.
11 The penalty shall not exceed $1,000 for each day of work
12 for which the employer failed to make payments upon the
13 premium rates of the situs where the work or project is
14 located in Illinois, but the total penalty shall not exceed
15 $50,000 for each project or each contract under which the
16 work was performed.
17 Any penalty under this subsection (a-1) must be imposed
18 not later than one year after the expiration of the
19 applicable limitation period specified in subsection (c) of
20 Section 6 of this Act. Penalties imposed under this
21 subsection (a-1) shall be deposited into the Industrial
22 Commission Operations Fund created under Section 4 of the
23 Workers' Compensation Act.
24 (b) The sworn application and financial statement, or
25 security, indemnity or bond, or amount of insurance, or other
26 provisions, filed, furnished, carried, or made by the
27 employer, as the case may be, shall be subject to the
28 approval of the Commission.
29 Deposits under escrow agreements shall be cash,
30 negotiable United States government bonds or negotiable
31 general obligation bonds of the State of Illinois. Such cash
32 or bonds shall be deposited in escrow with any State or
33 National Bank or Trust Company having trust authority in the
34 State of Illinois.
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1 Upon the approval of the sworn application and financial
2 statement, security, indemnity or bond or amount of
3 insurance, filed, furnished, or carried, as the case may be,
4 the Commission shall send to the employer written notice of
5 its approval thereof. Said certificate of compliance by the
6 employer with the provisions of subparagraphs (2) and (3) of
7 paragraph (a) of this Section shall be delivered by the
8 insurance carrier to the Industrial Commission within 5 days
9 after the effective date of the policy so certified. The
10 insurance so certified shall cover all compensation liability
11 occurring during the time that the insurance is in effect and
12 no further certificate need be filed in case such insurance
13 is renewed, extended or otherwise continued by such carrier.
14 The insurance so certified shall not be cancelled or in the
15 event that such insurance is not renewed, extended or
16 otherwise continued, such insurance shall not be terminated
17 until at least 10 days after receipt by the Industrial
18 Commission of notice of the cancellation or termination of
19 said insurance; provided, however, that if the employer has
20 secured insurance from another insurance carrier, or has
21 otherwise secured the payment of compensation in accordance
22 with this Section, and such insurance or other security
23 becomes effective prior to the expiration of said 10 days,
24 cancellation or termination may, at the option of the
25 insurance carrier indicated in such notice, be effective as
26 of the effective date of such other insurance or security.
27 (c) Whenever the Commission shall find that any
28 corporation, company, association, aggregation of
29 individuals, reciprocal or interinsurers exchange, or other
30 insurer effecting workers' occupational disease compensation
31 insurance in this State shall be insolvent, financially
32 unsound, or unable to fully meet all payments and liabilities
33 assumed or to be assumed for compensation insurance in this
34 State, or shall practice a policy of delay or unfairness
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1 toward employees in the adjustment, settlement, or payment of
2 benefits due such employees, the Commission may after
3 reasonable notice and hearing order and direct that such
4 corporation, company, association, aggregation of
5 individuals, reciprocal or interinsurers exchange, or
6 insurer, shall from and after a date fixed in such order
7 discontinue the writing of any such workers' occupational
8 disease compensation insurance in this State. It shall
9 thereupon be unlawful for any such corporation, company,
10 association, aggregation of individuals, reciprocal or
11 interinsurers exchange, or insurer to effect any workers'
12 occupational disease compensation insurance in this State. A
13 copy of the order shall be served upon the Director of
14 Insurance by registered mail. Whenever the Commission finds
15 that any service or adjustment company used or employed by a
16 self-insured employer or by an insurance carrier to process,
17 adjust, investigate, compromise or otherwise handle claims
18 under this Act, has practiced or is practicing a policy of
19 delay or unfairness toward employees in the adjustment,
20 settlement or payment of benefits due such employees, the
21 Commission may after reasonable notice and hearing order and
22 direct that such service or adjustment company shall from and
23 after a date fixed in such order be prohibited from
24 processing, adjusting, investigating, compromising or
25 otherwise handling claims under this Act.
26 Whenever the Commission finds that any self-insured
27 employer has practiced or is practicing delay or unfairness
28 toward employees in the adjustment, settlement or payment of
29 benefits due such employees, the Commission may after
30 reasonable notice and hearing order and direct that after a
31 date fixed in the order such self-insured employer shall be
32 disqualified to operate as a self-insurer and shall be
33 required to insure his entire liability to pay compensation
34 in some insurance carrier authorized, licensed and permitted
SB1658 Enrolled -36- LRB9111673JSpcA
1 to do such insurance business in this State as provided in
2 subparagraph (3) of paragraph (a) of this Section.
3 All orders made by the Commission under this Section
4 shall be subject to review by the courts, the review to be
5 taken in the same manner and within the same time as provided
6 by Section 19 of this Act for review of awards and decisions
7 of the Commission, upon the party seeking the review filing
8 with the clerk of the court to which said review is taken a
9 bond in an amount to be fixed and approved by the court to
10 which said review is taken, conditioned upon the payment of
11 all compensation awarded against the person taking the review
12 pending a decision thereof and further conditioned upon such
13 other obligations as the court may impose. Upon the review
14 the Circuit Court shall have power to review all questions of
15 fact as well as of law. The penalty hereinafter provided for
16 in this paragraph shall not attach and shall not begin to run
17 until the final determination of the order of the Commission.
18 (d) Upon a finding by the Commission, after reasonable
19 notice and hearing, of the knowing and wilful failure of an
20 employer to comply with any of the provisions of paragraph
21 (a) of this Section or the failure or refusal of an employer,
22 service or adjustment company, or insurance carrier to comply
23 with any order of the Industrial Commission pursuant to
24 paragraph (c) of this Section the Commission may assess a
25 civil penalty of up to $500 per day for each day of such
26 failure or refusal after the effective date of this
27 amendatory Act of 1989. Each day of such failure or refusal
28 shall constitute a separate offense.
29 Upon the failure or refusal of any employer, service or
30 adjustment company or insurance carrier to comply with the
31 provisions of this Section and orders of the Commission under
32 this Section, or the order of the court on review after final
33 adjudication, the Commission may bring a civil action to
34 recover the amount of the penalty in Cook County or in
SB1658 Enrolled -37- LRB9111673JSpcA
1 Sangamon County in which litigation the Commission shall be
2 represented by the Attorney General. The Commission shall
3 send notice of its finding of non-compliance and assessment
4 of the civil penalty to the Attorney General. It shall be
5 the duty of the Attorney General within 30 days after receipt
6 of the notice, to institute prosecutions and promptly
7 prosecute all reported violations of this Section.
8 (e) This Act shall not affect or disturb the continuance
9 of any existing insurance, mutual aid, benefit, or relief
10 association or department, whether maintained in whole or in
11 part by the employer or whether maintained by the employees,
12 the payment of benefits of such association or department
13 being guaranteed by the employer or by some person, firm or
14 corporation for him or her: Provided, the employer
15 contributes to such association or department an amount not
16 less than the full compensation herein provided, exclusive of
17 the cost of the maintenance of such association or department
18 and without any expense to the employee. This Act shall not
19 prevent the organization and maintaining under the insurance
20 laws of this State of any benefit or insurance company for
21 the purpose of insuring against the compensation provided for
22 in this Act, the expense of which is maintained by the
23 employer. This Act shall not prevent the organization or
24 maintaining under the insurance laws of this State of any
25 voluntary mutual aid, benefit or relief association among
26 employees for the payment of additional accident or sick
27 benefits.
28 (f) No existing insurance, mutual aid, benefit or relief
29 association or department shall, by reason of anything herein
30 contained, be authorized to discontinue its operation without
31 first discharging its obligations to any and all persons
32 carrying insurance in the same or entitled to relief or
33 benefits therein.
34 (g) Any contract, oral, written or implied, of
SB1658 Enrolled -38- LRB9111673JSpcA
1 employment providing for relief benefit, or insurance or any
2 other device whereby the employee is required to pay any
3 premium or premiums for insurance against the compensation
4 provided for in this Act shall be null and void. Any
5 employer withholding from the wages of any employee any
6 amount for the purpose of paying any such premium shall be
7 guilty of a Class B misdemeanor.
8 In the event the employer does not pay the compensation
9 for which he or she is liable, then an insurance company,
10 association or insurer which may have insured such employer
11 against such liability shall become primarily liable to pay
12 to the employee, his personal representative or beneficiary
13 the compensation required by the provisions of this Act to be
14 paid by such employer. The insurance carrier may be made a
15 party to the proceedings in which the employer is a party and
16 an award may be entered jointly against the employer and the
17 insurance carrier.
18 (h) It shall be unlawful for any employer, insurance
19 company or service or adjustment company to interfere with,
20 restrain or coerce an employee in any manner whatsoever in
21 the exercise of the rights or remedies granted to him or her
22 by this Act or to discriminate, attempt to discriminate, or
23 threaten to discriminate against an employee in any way
24 because of his exercise of the rights or remedies granted to
25 him by this Act.
26 It shall be unlawful for any employer, individually or
27 through any insurance company or service or adjustment
28 company, to discharge or to threaten to discharge, or to
29 refuse to rehire or recall to active service in a suitable
30 capacity an employee because of the exercise of his or her
31 rights or remedies granted to him or her by this Act.
32 (i) If an employer elects to obtain a life insurance
33 policy on his employees, he may also elect to apply such
34 benefits in satisfaction of all or a portion of the death
SB1658 Enrolled -39- LRB9111673JSpcA
1 benefits payable under this Act, in which case, the
2 employer's premium for coverage for benefits under this Act
3 shall be reduced accordingly.
4 (Source: P.A. 90-109, eff. 1-1-98; 91-375, eff. 1-1-00.)
5 (820 ILCS 310/4a rep.)
6 Section 35. The Workers' Occupational Diseases Act is
7 amended by repealing Section 4a.
8 Section 99. Effective date. This Act takes effect
9 January 1, 2001.
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