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91_SB1658eng
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1 AN ACT concerning workers' compensation self-insurance
2 pools, amending named Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The State Finance Act is amended by changing
6 Section 5.138 as follows:
7 (30 ILCS 105/5.138) (from Ch. 127, par. 141.138)
8 Sec. 5.138. The Group Workers' Compensation Pool
9 Self-Insurers' Insolvency Fund.
10 (Source: P.A. 83-1362.)
11 Section 10. The Illinois Insurance Code is amended by
12 adding Article V 3/4 as follows:
13 (215 ILCS 5/Art. V 3/4 heading new)
14 Article V 3/4 Group Workers' Compensation Pools; pooling;
15 insolvency fund.
16 (215 ILCS 5/107a.01 new)
17 Sec. 107a.01. Short title. This Article may be cited as
18 the Workers' Compensation Pool Law.
19 (215 ILCS 5/107a.02 new)
20 Sec. 107a.02. Scope. This Article applies to all
21 qualified group workers' compensation pools.
22 (215 ILCS 5/107a.03 new)
23 Sec. 107a.03. Purpose. The purpose of this Article is
24 to permit 2 or more employers with homogeneous risk
25 characteristics or that are members of a bona fide
26 professional, commercial, industrial, or trade association,
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1 with homogenous risk characteristics to pool their workers'
2 compensation and employer's liability exposures under this
3 Article.
4 The State of Illinois, a unit of local government or
5 school district, or association or instrumentality thereof,
6 or an intergovernmental risk management association,
7 self-insurance pool or self-administered health and accident
8 cooperative or pool shall not be deemed an "employer" or
9 "pool" for the purpose of this Article.
10 (215 ILCS 5/107a.04 new)
11 Sec. 107a.04. Organization under the Illinois Insurance
12 Code.
13 (a) After December 31, 2000, group workers' compensation
14 pools shall for the purpose of this Article, and this Article
15 only, be considered as though they were assessable domestic
16 mutual insurance companies and subject to the following:
17 (1) Article XII 1/2, Article XIII, Article XIII
18 1/2, Article XXIV; and
19 (2) Sections 126.2, 126.4, 126.7, 132, 132.1
20 through 132.7, 133, 134, 137, 139, 140, 141.1, 141.2,
21 142, 143, 143c, 147, 148, 149, 154.5, 154.6, 154.7,
22 154.8, 155.01, 155.04, 173.1, 173.2, 173.3, 173.4, 173.5,
23 174, 174.1, 175, 176, 178, 179b, 378, 379.1, 408, 408.3,
24 449, 456, 457, and 458, subsections A, B, C, and E of
25 Section 126.5, subsection A of Section 126.6, and
26 subsections (1) and (7) of Section 412 of this Code.
27 (b) If there is a conflict between any Section of this
28 Article and any other Section of this Code, then the
29 provisions of this Article shall apply.
30 (c) No other provision of this Code shall be applicable
31 to any qualified workers' compensation group workers'
32 compensation pool except as provided in this Article.
33 (d) A certificate of authority that is in effect on the
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1 effective date of this amendatory Act of the 91st General
2 Assembly and that was issued pursuant to Section 4a of the
3 Workers' Compensation Act or Section 4a of the Workers'
4 Occupational Diseases Act to a group self-insurer shall
5 remain in effect under this Article. Such group self-insurer
6 shall then be deemed to be a qualified group workers'
7 compensation pool and shall be subject to this Article.
8 (215 ILCS 5/107a.05 new)
9 Sec. 107a.05. Definitions and interchangeable terms.
10 (a) Unless otherwise provided, the following definitions
11 shall apply:
12 "Authorized insurer" means an insurer licensed in this
13 State to transact business as described in Clauses (c) and
14 (d) of Class 2 of Section 4 of this Code.
15 "Calendar Quarter" means the 3-month periods ending March
16 31, June 30, September 30, and December 31.
17 "Director" means the Director of Insurance.
18 "Engaged actively in the business" means a bona fide
19 business concern having conducted commerce, trade, or
20 industry in this State for a specified period of time. Any
21 and all records relating to this requirement shall be open to
22 inspection by the Director or his designee during normal
23 business hours.
24 "Gross annual payroll" means payroll for the preceding
25 fiscal year.
26 "Independent actuarial opinion" means an opinion
27 expressed by a member of the American Academy of Actuaries or
28 Casualty Actuarial Society.
29 "Independent CPA" means an independent certified public
30 accountant or independent certified public accounting firm in
31 good standing and licensed to practice by the Department of
32 Professional Regulation.
33 "Pool" means a qualified group workers' compensation
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1 pool as authorized by this Article.
2 "Qualified group workers' compensation pool" means a
3 group workers' compensation pool that has received a
4 certificate of authority pursuant to this Article.
5 (b) For purposes of incorporating the provisions of this
6 Code designated in paragraphs (1) and (2) of subsection (a)
7 of Section 107a.04 into this Article, the following terms
8 shall be interchangeable:
9 "Contribution" shall be considered premium.
10 "Pooling agreement" shall be considered a policy of
11 insurance.
12 "Trustees of a group workers' compensation pool" shall be
13 considered as though they were directors of a domestic mutual
14 insurance company.
15 (215 ILCS 5/107a.06 new)
16 Sec. 107a.06. Pool administration.
17 (a) An application for Certificate of Authority to
18 establish a pool must include the documentation and
19 information regarding its administrator, pooling agreement,
20 plan of operation, and membership required by this Section.
21 (b) Administrators must disclose all of the following:
22 (1) Biography of the risk manager on forms
23 prescribed by the Director.
24 (2) If a corporation, biographies of all officers
25 and directors.
26 (3) The size of staff and other information, such
27 as the kinds of staff positions, location of
28 administrative offices and the nature of any electronic
29 data processing equipment, if any, available for
30 servicing the pool, to demonstrate that the administrator
31 has the resources to administer the program disclosed
32 pursuant to subsection (d).
33 (4) The most recent financial statement of the
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1 administrator. If a publicly held company, a copy of the
2 last 10-K filed with the Securities and Exchange
3 Commission.
4 (5) The compensation contract of the administrator.
5 (6) The bylaws of the pool and articles of
6 incorporation, if any.
7 (7) Any agreement that subcontracts any of the
8 administrator's duties or responsibilities.
9 (c) A pooling agreement must contain all of the
10 following:
11 (1) A description of the services to be provided by
12 the administrator.
13 (2) The manner in which costs are to be apportioned
14 by the administrator.
15 (3) The initial premium deposit.
16 (4) The assessment provision.
17 (5) The termination provisions and minimum term of
18 membership, which minimum term of membership shall not be
19 less than one year.
20 (6) The duration of liability for additional
21 assessments following termination of membership, which
22 shall be for a period of not less than 3 years.
23 (7) The prerequisites for membership.
24 (8) A provision stating that a claim shall be paid
25 by the pool, regardless of the size of the claim, and
26 that the pool shall be reimbursed by the employer for any
27 amounts required to be paid by the employer under the
28 agreement.
29 (9) A provision stating that the terms of
30 termination after the first year of pool membership shall
31 be dictated by the pooling agreement.
32 (10) If a pooling agreement requires a member to
33 submit written notice in order for the member to withdraw
34 from a qualified pool, then the period in which the
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1 member must provide the written notice cannot be greater
2 than 90 days.
3 (d) Plans of operation must disclose all of the
4 following:
5 (1) A listing of initial members.
6 (2) The aggregate loss history of initial members
7 for each of the last 3 years.
8 (3) The amount of the net retention of the pool and
9 a list of reinsurers.
10 (4) The names of all entities that will provide
11 services for the pool and copies of proposed contracts in
12 connection those services.
13 (5) The safety and loss control programs to be
14 provided or required.
15 (e) The application must contain information about
16 initial members specified on forms prescribed by the
17 Director.
18 (f) The application must contain the combined loss
19 experience for the group for the last 3 years and any other
20 financial data required by the Director.
21 (g) A pool administrator's original books and records
22 relating to the operations of the pool shall at all times be
23 located within the State of Illinois.
24 (h) Any change of the pooling agreement, bylaws, plan of
25 operation, reinsurance agreements, or membership shall be
26 delivered to the Director within 30 days after the amendment
27 or change.
28 (i) A pool trustee must be an employee, officer,
29 director, or owner of a pool member.
30 (215 ILCS 5/107a.07 new)
31 Sec. 107a.07. Standards for issuing and maintaining pool
32 certificates of authority.
33 (a) The Department shall consider the following in
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1 evaluating the financial strength of the pool:
2 (1) The number of employees covered by the pool.
3 (2) The particular industries in which the
4 participants are engaged.
5 (3) The combined net worth of pool participants.
6 (4) Any excess insurance purchased from authorized
7 insurers.
8 (5) The gross annual payroll of members, which must
9 be at least $10,000,000.
10 (b) The pool administrator must either contract with a
11 licensed service company or have sufficient resources, such
12 as those set forth in item (3) of subsection (b) of Section
13 107a.06, to administer the proposed pool.
14 (c) The Department must determine whether the pool can
15 ensure that individual pool members are in compliance with
16 Section 107a.08.
17 (215 ILCS 5/107a.08 new)
18 Sec. 107a.08. Provisions applicable to members of a
19 group workers' compensation pool.
20 (a) All members of a group workers' compensation pool
21 must have homogeneous risk characteristics as provided in
22 Section 107a.03.
23 (b) In determining whether members exhibit homogeneous
24 risk characteristics, the Director shall consider any or all
25 of the following characteristics:
26 (1) The loss frequency inherent in the occupational
27 framework of group members.
28 (2) The loss severity inherent in the occupational
29 framework of group members.
30 (3) The occupational disease potential inherent in
31 the occupational framework of group members.
32 (4) The occupational tasks of member employees.
33 (5) Any other relevant fact the group members
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1 present to the Director that has reference to the
2 classification of similar risks (e.g. SIC codes).
3 (c) Eligibility as a pool participant shall be based
4 upon having a minimum of:
5 (l) 20 employees and $250,000 gross annual payroll;
6 or
7 (2) 10 employees and $125,000 gross annual payroll
8 for participants who have engaged actively in business
9 for a minimum of 3 years; or
10 (3) 5 employees and $62,500 gross annual payroll
11 for participants who have actively engaged in business
12 for a minimum of 5 years.
13 (d) Exceptions to the minimum eligibility requirements
14 of this Section may be allowed by any pool whenever the
15 following conditions are met:
16 (1) the participant has been actively engaged in
17 business for a minimum period of 5 consecutive years in
18 Illinois; and
19 (2) the participant agrees to make all of its
20 financial records available to the Director for
21 reasonable inspection during the period of membership;
22 and
23 (3) the pool administrator certifies to the
24 Director that he examined the financial records of the
25 pool participant prior to the participant's admission to
26 the pool and found the participant to be solvent and
27 financially stable.
28 (215 ILCS 5/107a.09 new)
29 Sec. 107a.09. Service companies for group workers'
30 compensation pools.
31 (a) No association, corporation, partnership, sole
32 proprietorship, trust, or other business entity shall provide
33 services in the design, establishment, or administration of a
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1 group workers' compensation pool unless it is licensed to do
2 so by the Department. An applicant for a license shall state
3 in writing the type of activities it seeks authorization to
4 engage in and the type of services it seeks authorization to
5 provide. The license shall be granted only when the Director
6 is satisfied that the entity possesses the necessary
7 organization, background, character, expertise, and financial
8 integrity to supply the services sought to be offered. The
9 Department may issue a license subject to restrictions or
10 limitations, including restrictions or limitations on the
11 type of services that may be supplied or the activities in
12 which the entity may engage. A license issued under this
13 Section shall be valid for 2 years.
14 (b) To assure that administrators are financially
15 solvent, that pools are administered in a fair and capable
16 fashion, and that administrators are able to process claims
17 and pay benefits in a prompt, fair, and equitable manner,
18 entities licensed to engage in those activities under this
19 Section are subject to supervision and examination by the
20 Department.
21 (c) The Department may adopt rules for the purposes of
22 this Article. The rules shall (i) establish reporting
23 requirements for administrators for group workers'
24 compensation pools, including experience reporting
25 requirements consistent with those established under this
26 Code for insurers; (ii) establish bonding requirements or
27 other provisions assuring the financial integrity of entities
28 administering group self-insurance; and (iii) establish other
29 reasonable requirements to further the purposes of this
30 Article.
31 (215 ILCS 5/107a.10 new)
32 Sec. 107a.10. Bond requirements.
33 (a) An administrator shall obtain and maintain in force
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1 fidelity bonds on employees, officers, or positions in an
2 amount not less than the amount set forth in the column
3 "Minimum Amount of Bond", based on the amount of assets
4 administered on behalf of pools by the administrator (as
5 determined from year to year) stated in the annual statement
6 of the pools as filed with the Department. All such bonds
7 shall be written with at least a one-year discovery period
8 and, if written with less than a 3-year discovery period,
9 shall contain a provision that no cancellation or termination
10 of the bond, whether by or at the request of the insured or
11 by the underwriter, shall take effect before the expiration
12 of 90 days after written notice of the cancellation or
13 termination has been filed with the Department unless an
14 earlier date of cancellation or termination is approved by
15 the Department.
16 (b) The bonds shall include all employees, officers, or
17 positions for the following perils, which may be covered
18 under separate policies:
19 (1) dishonesty of employees and officers;
20 (2) robbery, burglary, larceny, theft, false
21 pretense, hold-up, misplacement, mysterious
22 disappearance, and damage or destruction while property
23 is in any bank, any recognized place of safe deposit, or
24 in transit; and
25 (3) forgery or alteration.
26 (c) The bond shall be written by an insurer licensed to
27 transact business in the State of Illinois.
28 (d) Schedule of assets in relationship to amount of
29 bond:
30 TOTAL ASSETS MINIMUM AMOUNT OF BOND
31 $500,000 or less.............. $20,000 plus 6% of total
32 assets
33 more than $ 500,000 and
34 not more than $1,000,000...... $50,000 plus 4% of assets
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1 over $500,000
2 more than $1,000,000 and
3 not more than $3,000,000...... $70,000 plus 3% of assets
4 over $1,000,000
5 more than $3,000,000 and
6 not more than $5,000,000...... $130,000 plus 2% of assets
7 over $3,000,000
8 more than $5,000,000 and
9 not more than $10,000,000..... $170,000 plus 1.5% of assets
10 over $5,000,000
11 more than $10,000,000......... $245,000 plus 0.75% of assets
12 more than $10,000,000
13 (215 ILCS 5/107a.11 new)
14 Sec. 107a.11. Admissible assets.
15 (a) Admitted assets include amounts permitted under
16 Section 107a.12 as modified by only the following:
17 (1) Direct obligations of the United States of
18 America for the payment of money or obligations for the
19 payment of money that are guaranteed as to the payment of
20 principal and interest by the United States of America.
21 (2) Direct obligations for the payment of money
22 issued by an agency or instrumentality of the United
23 States of America or obligations for the payment of money
24 that are guaranteed as to payment of principal and
25 interest by an agency or instrumentality of the United
26 States of America.
27 (3) Bonds or securities that are issued by any
28 state of the United States and that are secured by the
29 full faith and credit of that state.
30 (4) Certificates of deposit, time deposits, or
31 demand deposits in a bank in the State of Illinois that
32 has deposits insured by the Federal Deposit Insurance
33 Corporation.
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1 (5) Saving certificates issued by any savings and
2 loan association in the State of Illinois that has
3 deposits insured by the Federal Deposit Insurance
4 Corporation.
5 (6) Direct, unconditional obligations of a solvent
6 business corporation for the payment of money on the
7 following conditions:
8 (A) the corporation is incorporated under the
9 laws of the United States of America or any state of
10 the United States of America;
11 (B) the corporation has a tangible net worth
12 of not less than $500,000 and the obligations have
13 been awarded a "1" or "2" rating by the Securities
14 Valuation Office of the National Association of
15 Insurance Commissioners;
16 (C) the corporation is not affiliated with any
17 member of the pool;
18 (D) no such obligation of the corporation has
19 been in default as to principal or interest during
20 the 5 years preceding the date of investment,
21 however, the corporation need not have had
22 obligations outstanding during that period and need
23 not have been in existence for that period, and
24 obligations acquired under this Section may be newly
25 issued;
26 (E) a pool may not invest more than 33 1/3% of
27 its assets under this item (6); and
28 (F) a pool may not invest under this Section
29 more than 5% of its assets in the obligations of any
30 one corporation.
31 (7) Obligations of any political subdivision of any
32 state of the United States of America for the payment of
33 money on the following conditions:
34 (A) the obligations are payable from ad
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1 valorem taxes;
2 (B) the political subdivision is not in
3 default in the payment of principal or interest on
4 any of its direct, general obligations;
5 (C) no investment may be made under this
6 Section in obligations that are secured only by
7 special assessments for local improvements;
8 (D) a pool may not invest under this Section
9 more than 4% of its assets in direct, general
10 obligations issued by any one political subdivision;
11 and
12 (E) a pool may not invest more than 50% of its
13 assets under this item (7).
14 (8) Mutual funds:
15 (A) government money market mutual funds that
16 meet the conditions of paragraphs (c)(2), (c)(3),
17 and (c)(4) of 17 C.F.R. 270.2a-7, revised as of
18 April l, 1992, that have been rated in one of the 2
19 highest rating categories by an independent rating
20 agency recognized by the National Association of
21 Insurance Commissioners, and that invest in
22 obligations issued, guaranteed, or insured by the
23 United States or Canada or any agency or
24 instrumentality of the United States or Canada.
25 (B) fixed income bond mutual funds that meet
26 the conditions of paragraphs (c)(2), (c)(3), and
27 (c)(4) of 17 C.F.R. 270.2a-7, revised as of April 1,
28 1992, and that have been rated in one of the 2
29 highest rating categories by an independent rating
30 agency recognized by the National Association of
31 Insurance Commissioners, however, a pool may not
32 invest in fixed income bond mutual funds more than
33 the greater of $100,000 or 10% of its total assets
34 in any one fund.
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1 (9) Not more than 5% of a pool's admitted assets
2 may be assessment receivables. In order to be an admitted
3 asset, an assessment receivable cannot be more than 60
4 days past due.
5 (10) Not more than 10% of a pool's admitted assets
6 may be reinsurance receivables. In order to be an
7 admitted asset, a reinsurance receivable cannot be more
8 than 90 days past due.
9 (b) Amounts recoverable from authorized reinsurers on
10 unpaid losses may be deducted from the reserves required by
11 Section 4 of the Workers' Compensation Act.
12 (c) All securities eligible for registration shall be
13 registered in the name of the pool and all securities shall
14 be maintained in a State or National Bank having trust powers
15 and located within this State.
16 (215 ILCS 5/107a.12 new)
17 Sec. 107a.12. Annual statement.
18 (a) A pool authorized to do business in this State shall
19 file with the Director by March 1st in each year 2 copies of
20 its financial statement for the year ending December 31st
21 immediately preceding on forms prescribed by the Director,
22 which shall conform substantially to the form of statement
23 adopted by the National Association of Insurance
24 Commissioners. Unless the Director provides otherwise, the
25 annual statement is to be prepared in accordance with the
26 annual statement instructions and the Accounting Practices
27 and Procedures Manual adopted by the National Association of
28 Insurance Commissioners. The Director may promulgate rules
29 for determining which portions of the annual statement
30 instructions and Accounting Practices and Procedures Manual
31 adopted by the National Association of Insurance
32 Commissioners are germane for the purpose of ascertaining
33 the condition and affairs of a pool.
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1 (b) The Director shall have authority to extend the time
2 for filing any statement by any pool for reasons that he
3 considers good and sufficient. The admitted assets shall be
4 shown in the statement at the actual values as of the last
5 day of the preceding year, in accordance with Section 126.7
6 of this Code. The statement shall be verified by oaths of a
7 majority of the trustees or directors of the pool. In
8 addition, when the Director considers it to be necessary and
9 appropriate for the protection of policyholders, creditors,
10 shareholders, or claimants, the Director may require the pool
11 to file, within 60 days after mailing to the pool a notice
12 that a supplemental summary statement is required, a
13 supplemental summary statement, as of the last day of any
14 calendar month occurring during the 100 days next preceding
15 the mailing of the notice, designated by him or her on forms
16 prescribed and furnished by the Director. The Director may
17 require supplemental summary statements to be certified by an
18 independent actuary deemed competent by the Director or by an
19 independent certified public accountant.
20 (c) On or before June 1 of each year, a pool shall file
21 with the Director an audited financial statement reporting
22 the financial condition of the pool as of the end of the most
23 recent calendar year and changes in the surplus funds for the
24 year then ending. The annual audited financial report shall
25 include the following:
26 (1) a report of an independent certified public
27 accountant;
28 (2) a balance sheet reporting assets, as defined in
29 this Article, liabilities, and surplus funds;
30 (3) a statement of gain and loss from operations;
31 (4) a statement of changes in financial position;
32 (5) a statement of changes in surplus funds; and
33 (6) the notes to financial statements.
34 (d) The Director shall require a pool to file an
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1 independent actuarial opinion as to the sufficiency of the
2 loss and loss adjustment expense reserves. This opinion shall
3 be due on June 1 of each year.
4 (215 ILCS 5/107a.13 new)
5 Sec. 107a.13. Group Workers' Compensation Pool
6 Insolvency Fund.
7 (a) All qualified group workers' compensation pools
8 shall pay a sum equal to 0.5% of all compensation and medical
9 service payments made under either the Workers' Compensation
10 Act or the Workers' Occupational Diseases Act during the 6
11 months immediately preceding the date of payment, into the
12 Group Workers' Compensation Pool Insolvency Fund, the
13 successor fund to the Group Self-Insurers' Insolvency Fund.
14 On the effective date of this amendatory Act of the 91st
15 General Assembly, all moneys in the Group Self-Insurers'
16 Insolvency Fund shall be transferred into the Group Workers'
17 Compensation Pool Insolvency Fund.
18 (b) The State Treasurer is ex-officio custodian of the
19 Group Workers' Compensation Pool Insolvency Fund. Moneys in
20 the Fund shall be deposited the same as are State funds and
21 any interest accruing on moneys in the Fund shall be added to
22 the Fund every 6 months. The Fund shall be subject to audit
23 the same as State funds and accounts and shall be protected
24 by the general bond given by the State Treasurer. The Fund
25 shall be considered always appropriated for the purposes of
26 compensating employees who are eligible to receive benefits
27 from their employers pursuant to the provisions of the
28 Workers' Compensation Act or Workers' Occupational Diseases
29 Act when their employer is a member of a qualified group
30 workers' compensation pool and the qualified group workers'
31 compensation pool has become unable to pay compensation and
32 medical service payments due to financial insolvency either
33 prior to or following the date of award. Moneys in the Fund
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1 may be used to compensate any type of injury or occupational
2 disease that is compensable under either the Workers'
3 Compensation Act or the Workers' Occupational Diseases Act.
4 The State Treasurer shall be joined with the qualified group
5 workers' compensation pool as party respondent in any claim
6 or application for adjustment of claim filed against a
7 qualified group workers' compensation pool whenever the
8 compensation and medical services provided pursuant to this
9 Article may be unpaid by reason of default of an insolvent
10 qualified group workers' compensation pool.
11 (c) Payment shall be made out of the Group Workers'
12 Compensation Pool Insolvency Fund only upon order of the
13 Director and only after the penal sum of the fidelity bond
14 and securities, if any, has been exhausted. It shall be the
15 obligation of a qualified group workers' compensation pool or
16 its successor to make arrangements to repay the Group
17 Workers' Compensation Pool Insolvency Fund for all moneys
18 paid out in its behalf. The Director is authorized to make
19 arrangements with the qualified group workers' compensation
20 pool as to terms of repayment. The obligations of qualified
21 group workers' compensation pools to make contributions to
22 the Group Workers' Compensation Pool Insolvency Fund shall be
23 waived on any January 1 or July 1, if the Fund has a positive
24 balance of at least $2,000,000 on the date one month prior to
25 the date of payment.
26 (215 ILCS 5/107a.14 new)
27 Sec. 107a.14. Group workers' compensation pools
28 assessment provisions.
29 (a) When the Director determines by means of audit,
30 annual certified statement, actuarial opinion, or otherwise
31 that the assets possessed by a pool are less than the
32 reserves required together with any other unpaid liabilities,
33 he or she shall order the pool trustees to assess the
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1 individual pool participants in an amount not less than
2 necessary to correct the deficiency. This Section is not
3 intended to restrict or preclude the trustees from time to
4 time levying assessments or increasing premium deposits in
5 accordance with the pooling agreement.
6 (b) When the Director determines that the compensation
7 and medical services provided pursuant to this Article may be
8 unpaid by reason of the default of an insolvent qualified
9 group workers' compensation pool and the penal sum of the
10 fidelity bond and the securities provided by the qualified
11 group workers' compensation pool are about to become
12 exhausted, the Director shall declare the qualified group
13 workers' compensation pool to be in default and first levy
14 upon and collect from the individual employer members of the
15 qualified group workers' compensation pool in default an
16 assessment to assure prompt payment of compensation and
17 medical services. No assessment of any individual employer
18 member of the qualified group workers' compensation pool made
19 pursuant to this subsection shall exceed 25% of the average
20 annual contribution paid by that employer over the previous
21 3-year period; however, if the Group Workers' Compensation
22 Pool Insolvency Fund is then for any reason financially
23 unable to assure prompt payment of compensation and medical
24 services, the employer member may be assessed without
25 limitation. If and only if (i) the Group Workers'
26 Compensation Pool Insolvency Fund has a positive balance of
27 less than $1,000,000, (ii) the Director has declared a
28 qualified group workers' compensation pool to be in default,
29 and (iii) the Group Workers' Compensation Pool Insolvency
30 Fund is financially unable to pay all employees whose
31 compensation and medical services have been approved, the
32 Director shall levy upon and collect from all qualified
33 group workers' compensation pools an assessment to provide
34 the balance necessary to assure prompt payment of approved
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1 compensation and medical services. If an insurance carrier
2 becomes liable for workers' compensation and occupational
3 diseases payments under the terms of the policy covering the
4 qualified group workers' compensation pool, the carrier shall
5 make appropriate payments and payments from the Fund shall
6 cease. Payments from the Fund shall resume only when the
7 insurance carrier's liability is exhausted.
8 (215 ILCS 5/107a.15 new)
9 Sec. 107a.15. Authority of Director.
10 (a) If the Director determines that a group workers'
11 compensation pool is not in compliance with this Article, the
12 Director shall require the pool to eliminate the condition
13 causing the noncompliance within a specified time from the
14 date the notice of the Director's requirement is mailed or
15 delivered to the pool.
16 (b) If a pool fails to comply with the Director's
17 requirement, the pool shall be deemed to be in a hazardous
18 financial condition, and the Director may take one or more of
19 the actions authorized by law as to pools in hazardous
20 financial condition.
21 (215 ILCS 5/464a rep.)
22 Section 15. The Illinois Insurance Code is amended by
23 repealing Section 464a.
24 Section 20. The Workers' Compensation Act is amended by
25 changing Section 4 as follows:
26 (820 ILCS 305/4) (from Ch. 48, par. 138.4)
27 Sec. 4. (a) Any employer, including but not limited to
28 general contractors and their subcontractors, who shall come
29 within the provisions of Section 3 of this Act, and any other
30 employer who shall elect to provide and pay the compensation
SB1658 Engrossed -20- LRB9111673JSpcA
1 provided for in this Act shall:
2 (1) File with the Commission annually an
3 application for approval as a self-insurer which shall
4 include a current financial statement, and annually,
5 thereafter, an application for renewal of self-insurance,
6 which shall include a current financial statement. Said
7 application and financial statement shall be signed and
8 sworn to by the president or vice president and secretary
9 or assistant secretary of the employer if it be a
10 corporation, or by all of the partners, if it be a
11 copartnership, or by the owner if it be neither a
12 copartnership nor a corporation. All initial applications
13 and all applications for renewal of self-insurance must
14 be submitted at least 60 days prior to the requested
15 effective date of self-insurance. An employer may elect
16 to provide and pay compensation as provided for in this
17 Act as a member of a group workers' compensation pool
18 under Article V 3/4 of the Illinois Insurance Code. If
19 an employer becomes a member of a group workers'
20 compensation pool, the employer shall not be relieved of
21 any obligations imposed by this Act.
22 If the sworn application and financial statement of
23 any such employer does not satisfy the Commission of the
24 financial ability of the employer who has filed it, the
25 Commission shall require such employer to,
26 (2) Furnish security, indemnity or a bond
27 guaranteeing the payment by the employer of the
28 compensation provided for in this Act, provided that any
29 such employer whose application and financial statement
30 shall not have satisfied the commission of his or her
31 financial ability and who shall have secured his
32 liability in part by excess liability insurance shall be
33 required to furnish to the Commission security, indemnity
34 or bond guaranteeing his or her payment up to the
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1 effective limits of the excess coverage, or
2 (3) Insure his entire liability to pay such
3 compensation in some insurance carrier authorized,
4 licensed, or permitted to do such insurance business in
5 this State. Every policy of an insurance carrier,
6 insuring the payment of compensation under this Act shall
7 cover all the employees and the entire compensation
8 liability of the insured: Provided, however, that any
9 employer may insure his or her compensation liability
10 with 2 or more insurance carriers or may insure a part
11 and qualify under subsection 1, 2, or 4 for the remainder
12 of his or her liability to pay such compensation, subject
13 to the following two provisions:
14 Firstly, the entire compensation liability of
15 the employer to employees working at or from one
16 location shall be insured in one such insurance
17 carrier or shall be self-insured, and
18 Secondly, the employer shall submit evidence
19 satisfactorily to the Commission that his or her
20 entire liability for the compensation provided for
21 in this Act will be secured. Any provisions in any
22 policy, or in any endorsement attached thereto,
23 attempting to limit or modify in any way, the
24 liability of the insurance carriers issuing the same
25 except as otherwise provided herein shall be wholly
26 void.
27 Nothing herein contained shall apply to policies of
28 excess liability carriage secured by employers who have
29 been approved by the Commission as self-insurers, or
30 (4) Make some other provision, satisfactory to the
31 Commission, for the securing of the payment of
32 compensation provided for in this Act, and
33 (5) Upon becoming subject to this Act and
34 thereafter as often as the Commission may in writing
SB1658 Engrossed -22- LRB9111673JSpcA
1 demand, file with the Commission in form prescribed by it
2 evidence of his or her compliance with the provision of
3 this Section.
4 (a-1) Regardless of its state of domicile or its
5 principal place of business, an employer shall make payments
6 to its insurance carrier or group self-insurance fund, where
7 applicable, based upon the premium rates of the situs where
8 the work or project is located in Illinois if:
9 (A) the employer is engaged primarily in the
10 building and construction industry; and
11 (B) subdivision (a)(3) of this Section applies to
12 the employer or the employer is a member of a group
13 self-insurance plan as defined in subsection (1) of
14 Section 4a.
15 The Industrial Commission shall impose a penalty upon an
16 employer for violation of this subsection (a-1) if:
17 (i) the employer is given an opportunity at a
18 hearing to present evidence of its compliance with this
19 subsection (a-1); and
20 (ii) after the hearing, the Commission finds that
21 the employer failed to make payments upon the premium
22 rates of the situs where the work or project is located
23 in Illinois.
24 The penalty shall not exceed $1,000 for each day of work
25 for which the employer failed to make payments upon the
26 premium rates of the situs where the work or project is
27 located in Illinois, but the total penalty shall not exceed
28 $50,000 for each project or each contract under which the
29 work was performed.
30 Any penalty under this subsection (a-1) must be imposed
31 not later than one year after the expiration of the
32 applicable limitation period specified in subsection (d) of
33 Section 6 of this Act. Penalties imposed under this
34 subsection (a-1) shall be deposited into the Industrial
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1 Commission Operations Fund, a special fund that is created
2 in the State treasury. Subject to appropriation, moneys in
3 the Fund shall be used solely for the operations of the
4 Industrial Commission.
5 (b) The sworn application and financial statement, or
6 security, indemnity or bond, or amount of insurance, or other
7 provisions, filed, furnished, carried, or made by the
8 employer, as the case may be, shall be subject to the
9 approval of the Commission.
10 Deposits under escrow agreements shall be cash,
11 negotiable United States government bonds or negotiable
12 general obligation bonds of the State of Illinois. Such cash
13 or bonds shall be deposited in escrow with any State or
14 National Bank or Trust Company having trust authority in the
15 State of Illinois.
16 Upon the approval of the sworn application and financial
17 statement, security, indemnity or bond or amount of
18 insurance, filed, furnished or carried, as the case may be,
19 the Commission shall send to the employer written notice of
20 its approval thereof. The certificate of compliance by the
21 employer with the provisions of subparagraphs (2) and (3) of
22 paragraph (a) of this Section shall be delivered by the
23 insurance carrier to the Industrial Commission within five
24 days after the effective date of the policy so certified.
25 The insurance so certified shall cover all compensation
26 liability occurring during the time that the insurance is in
27 effect and no further certificate need be filed in case such
28 insurance is renewed, extended or otherwise continued by such
29 carrier. The insurance so certified shall not be cancelled
30 or in the event that such insurance is not renewed, extended
31 or otherwise continued, such insurance shall not be
32 terminated until at least 10 days after receipt by the
33 Industrial Commission of notice of the cancellation or
34 termination of said insurance; provided, however, that if the
SB1658 Engrossed -24- LRB9111673JSpcA
1 employer has secured insurance from another insurance
2 carrier, or has otherwise secured the payment of compensation
3 in accordance with this Section, and such insurance or other
4 security becomes effective prior to the expiration of the 10
5 days, cancellation or termination may, at the option of the
6 insurance carrier indicated in such notice, be effective as
7 of the effective date of such other insurance or security.
8 (c) Whenever the Commission shall find that any
9 corporation, company, association, aggregation of
10 individuals, reciprocal or interinsurers exchange, or other
11 insurer effecting workers' compensation insurance in this
12 State shall be insolvent, financially unsound, or unable to
13 fully meet all payments and liabilities assumed or to be
14 assumed for compensation insurance in this State, or shall
15 practice a policy of delay or unfairness toward employees in
16 the adjustment, settlement, or payment of benefits due such
17 employees, the Commission may after reasonable notice and
18 hearing order and direct that such corporation, company,
19 association, aggregation of individuals, reciprocal or
20 interinsurers exchange, or insurer, shall from and after a
21 date fixed in such order discontinue the writing of any such
22 workers' compensation insurance in this State. Subject to
23 such modification of the order as the Commission may later
24 make on review of the order, as herein provided, it shall
25 thereupon be unlawful for any such corporation, company,
26 association, aggregation of individuals, reciprocal or
27 interinsurers exchange, or insurer to effect any workers'
28 compensation insurance in this State. A copy of the order
29 shall be served upon the Director of Insurance by registered
30 mail. Whenever the Commission finds that any service or
31 adjustment company used or employed by a self-insured
32 employer or by an insurance carrier to process, adjust,
33 investigate, compromise or otherwise handle claims under this
34 Act, has practiced or is practicing a policy of delay or
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1 unfairness toward employees in the adjustment, settlement or
2 payment of benefits due such employees, the Commission may
3 after reasonable notice and hearing order and direct that
4 such service or adjustment company shall from and after a
5 date fixed in such order be prohibited from processing,
6 adjusting, investigating, compromising or otherwise handling
7 claims under this Act.
8 Whenever the Commission finds that any self-insured
9 employer has practiced or is practicing delay or unfairness
10 toward employees in the adjustment, settlement or payment of
11 benefits due such employees, the Commission may, after
12 reasonable notice and hearing, order and direct that after a
13 date fixed in the order such self-insured employer shall be
14 disqualified to operate as a self-insurer and shall be
15 required to insure his entire liability to pay compensation
16 in some insurance carrier authorized, licensed and permitted
17 to do such insurance business in this State, as provided in
18 subparagraph 3 of paragraph (a) of this Section.
19 All orders made by the Commission under this Section
20 shall be subject to review by the courts, said review to be
21 taken in the same manner and within the same time as provided
22 by Section 19 of this Act for review of awards and decisions
23 of the Commission, upon the party seeking the review filing
24 with the clerk of the court to which said review is taken a
25 bond in an amount to be fixed and approved by the court to
26 which the review is taken, conditioned upon the payment of
27 all compensation awarded against the person taking said
28 review pending a decision thereof and further conditioned
29 upon such other obligations as the court may impose. Upon
30 the review the Circuit Court shall have power to review all
31 questions of fact as well as of law. The penalty hereinafter
32 provided for in this paragraph shall not attach and shall not
33 begin to run until the final determination of the order of
34 the Commission.
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1 (d) Upon a finding by the Commission, after reasonable
2 notice and hearing, of the knowing and wilful failure of an
3 employer to comply with any of the provisions of paragraph
4 (a) of this Section or the failure or refusal of an employer,
5 service or adjustment company, or an insurance carrier to
6 comply with any order of the Industrial Commission pursuant
7 to paragraph (c) of this Section disqualifying him or her to
8 operate as a self insurer and requiring him or her to insure
9 his or her liability, the Commission may assess a civil
10 penalty of up to $500 per day for each day of such failure or
11 refusal after the effective date of this amendatory Act of
12 1989. Each day of such failure or refusal shall constitute a
13 separate offense.
14 Upon the failure or refusal of any employer, service or
15 adjustment company or insurance carrier to comply with the
16 provisions of this Section and with the orders of the
17 Commission under this Section, or the order of the court on
18 review after final adjudication, the Commission may bring a
19 civil action to recover the amount of the penalty in Cook
20 County or in Sangamon County in which litigation the
21 Commission shall be represented by the Attorney General. The
22 Commission shall send notice of its finding of non-compliance
23 and assessment of the civil penalty to the Attorney General.
24 It shall be the duty of the Attorney General within 30 days
25 after receipt of the notice, to institute prosecutions and
26 promptly prosecute all reported violations of this Section.
27 (e) This Act shall not affect or disturb the continuance
28 of any existing insurance, mutual aid, benefit, or relief
29 association or department, whether maintained in whole or in
30 part by the employer or whether maintained by the employees,
31 the payment of benefits of such association or department
32 being guaranteed by the employer or by some person, firm or
33 corporation for him or her: Provided, the employer
34 contributes to such association or department an amount not
SB1658 Engrossed -27- LRB9111673JSpcA
1 less than the full compensation herein provided, exclusive of
2 the cost of the maintenance of such association or department
3 and without any expense to the employee. This Act shall not
4 prevent the organization and maintaining under the insurance
5 laws of this State of any benefit or insurance company for
6 the purpose of insuring against the compensation provided for
7 in this Act, the expense of which is maintained by the
8 employer. This Act shall not prevent the organization or
9 maintaining under the insurance laws of this State of any
10 voluntary mutual aid, benefit or relief association among
11 employees for the payment of additional accident or sick
12 benefits.
13 (f) No existing insurance, mutual aid, benefit or relief
14 association or department shall, by reason of anything herein
15 contained, be authorized to discontinue its operation without
16 first discharging its obligations to any and all persons
17 carrying insurance in the same or entitled to relief or
18 benefits therein.
19 (g) Any contract, oral, written or implied, of
20 employment providing for relief benefit, or insurance or any
21 other device whereby the employee is required to pay any
22 premium or premiums for insurance against the compensation
23 provided for in this Act shall be null and void. Any
24 employer withholding from the wages of any employee any
25 amount for the purpose of paying any such premium shall be
26 guilty of a Class B misdemeanor.
27 In the event the employer does not pay the compensation
28 for which he or she is liable, then an insurance company,
29 association or insurer which may have insured such employer
30 against such liability shall become primarily liable to pay
31 to the employee, his or her personal representative or
32 beneficiary the compensation required by the provisions of
33 this Act to be paid by such employer. The insurance carrier
34 may be made a party to the proceedings in which the employer
SB1658 Engrossed -28- LRB9111673JSpcA
1 is a party and an award may be entered jointly against the
2 employer and the insurance carrier.
3 (h) It shall be unlawful for any employer, insurance
4 company or service or adjustment company to interfere with,
5 restrain or coerce an employee in any manner whatsoever in
6 the exercise of the rights or remedies granted to him or her
7 by this Act or to discriminate, attempt to discriminate, or
8 threaten to discriminate against an employee in any way
9 because of his or her exercise of the rights or remedies
10 granted to him or her by this Act.
11 It shall be unlawful for any employer, individually or
12 through any insurance company or service or adjustment
13 company, to discharge or to threaten to discharge, or to
14 refuse to rehire or recall to active service in a suitable
15 capacity an employee because of the exercise of his or her
16 rights or remedies granted to him or her by this Act.
17 (i) If an employer elects to obtain a life insurance
18 policy on his employees, he may also elect to apply such
19 benefits in satisfaction of all or a portion of the death
20 benefits payable under this Act, in which case, the
21 employer's compensation premium shall be reduced accordingly.
22 (j) Within 45 days of receipt of an initial application
23 or application to renew self-insurance privileges the
24 Self-Insurers Advisory Board shall review and submit for
25 approval by the Chairman of the Commission recommendations of
26 disposition of all initial applications to self-insure and
27 all applications to renew self-insurance privileges filed by
28 private self-insurers pursuant to the provisions of this
29 Section and Section 4a-9 of this Act. Each private
30 self-insurer shall submit with its initial and renewal
31 applications the application fee required by Section 4a-4 of
32 this Act.
33 The Chairman of the Commission shall promptly act upon
34 all initial applications and applications for renewal in full
SB1658 Engrossed -29- LRB9111673JSpcA
1 accordance with the recommendations of the Board or, should
2 the Chairman disagree with any recommendation of disposition
3 of the Self-Insurer's Advisory Board, he shall within 30 days
4 of receipt of such recommendation provide to the Board in
5 writing the reasons supporting his decision. The Chairman
6 shall also promptly notify the employer of his decision
7 within 15 days of receipt of the recommendation of the Board.
8 If an employer is denied a renewal of self-insurance
9 privileges pursuant to application it shall retain said
10 privilege for 120 days after receipt of a notice of
11 cancellation of the privilege from the Chairman of the
12 Commission.
13 All orders made by the Chairman under this Section shall
14 be subject to review by the courts, such review to be taken
15 in the same manner and within the same time as provided by
16 subsection (f) of Section 19 of this Act for review of awards
17 and decisions of the Commission, upon the party seeking the
18 review filing with the clerk of the court to which such
19 review is taken a bond in an amount to be fixed and approved
20 by the court to which the review is taken, conditioned upon
21 the payment of all compensation awarded against the person
22 taking such review pending a decision thereof and further
23 conditioned upon such other obligations as the court may
24 impose. Upon the review the Circuit Court shall have power
25 to review all questions of fact as well as of law.
26 (Source: P.A. 90-109, eff. 1-1-98; 91-375, eff. 1-1-00.)
27 (820 ILCS 305/4a rep.)
28 Section 25. The Workers' Compensation Act is amended by
29 repealing Section 4a.
30 Section 30. The Workers' Occupational Diseases Act is
31 amended by changing Section 4 as follows:
SB1658 Engrossed -30- LRB9111673JSpcA
1 (820 ILCS 310/4) (from Ch. 48, par. 172.39)
2 Sec. 4. (a) Any employer, including but not limited to
3 general contractors and their subcontractors, required by the
4 terms of this Act or by election to pay the compensation
5 provided for in this Act shall:
6 (1) File with the Commission an application for
7 approval as a self-insurer which shall include a current
8 financial statement. The application and financial
9 statement shall be signed and sworn to by the president
10 or vice-president and secretary or assistant secretary of
11 the employer if it be a corporation, or by all of the
12 partners if it be a copartnership, or by the owner if it
13 be neither a copartnership nor a corporation. An
14 employer may elect to provide and pay compensation as
15 provided for in this Act as a member of a group workers'
16 compensation pool under Article V 3/4 of the Illinois
17 Insurance Code. If an employer becomes a member of a
18 group workers' compensation pool, the employer shall not
19 be relieved of any obligations imposed by this Act.
20 If the sworn application and financial statement of
21 any such employer does not satisfy the Commission of the
22 financial ability of the employer who has filed it, the
23 Commission shall require such employer to:
24 (2) Furnish security, indemnity or a bond
25 guaranteeing the payment by the employer of the
26 compensation provided for in this Act, provided that any
27 such employer who shall have secured his or her liability
28 in part by excess liability coverage shall be required to
29 furnish to the Commission security, indemnity or bond
30 guaranteeing his or her payment up to the amount of the
31 effective limits of the excess coverage in accordance
32 with the provisions of this paragraph, or
33 (3) Insure his or her entire liability to pay such
34 compensation in some insurance carrier authorized,
SB1658 Engrossed -31- LRB9111673JSpcA
1 licensed or permitted to do such insurance business in
2 this State. All policies of such insurance carriers
3 insuring the payment of compensation under this Act shall
4 cover all the employees and all such employer's
5 compensation liability in all cases in which the last day
6 of the last exposure to the occupational disease involved
7 is within the effective period of the policy, anything to
8 the contrary in the policy notwithstanding. Provided,
9 however, that any employer may insure his or her
10 compensation liability under this Act with 2 or more
11 insurance carriers or may insure a part and qualify under
12 Subsection 1, 2, or 4 for the remainder of his liability
13 to pay such compensation, subject to the following two
14 provisions:
15 Firstly, the entire liability of the employer
16 to employees working at or from one location shall
17 be insured in one such insurance carrier or shall be
18 self-insured.
19 Secondly, the employer shall submit evidence
20 satisfactory to the Commission that his or her
21 entire liability for the compensation provided for
22 in this Act will be secured.
23 Any provision in a policy or in any endorsement
24 attached thereto attempting to limit or modify in any way
25 the liability of the insurance carrier issuing the same,
26 except as otherwise provided herein, shall be wholly
27 void.
28 The insurance or security in force to cover
29 compensation liability under this Act shall be separate
30 and distinct from the insurance or security under the
31 "Workers' Compensation Act" and any insurance contract
32 covering liability under either Act need not cover any
33 liability under the other. Nothing herein contained
34 shall apply to policies of excess liability carriage
SB1658 Engrossed -32- LRB9111673JSpcA
1 secured by employers who have been approved by the
2 Commission as self-insurers, or
3 (4) Make some other provision, satisfactory to the
4 Commission, for the securing of the payment of
5 compensation provided for in this Act, and
6 (5) Upon becoming subject to this Act and
7 thereafter as often as the Commission may in writing
8 demand, file with the Commission in form prescribed by it
9 evidence of his or her compliance with the provision of
10 this Section.
11 (a-1) Regardless of its state of domicile or its
12 principal place of business, an employer shall make payments
13 to its insurance carrier or group self-insurance fund, where
14 applicable, based upon the premium rates of the situs where
15 the work or project is located in Illinois if:
16 (A) the employer is engaged primarily in the
17 building and construction industry; and
18 (B) subdivision (a)(3) of this Section applies to
19 the employer or the employer is a member of a group
20 self-insurance plan as defined in subsection (1) of
21 Section 4a.
22 The Industrial Commission shall impose a penalty upon an
23 employer for violation of this subsection (a-1) if:
24 (i) the employer is given an opportunity at a
25 hearing to present evidence of its compliance with this
26 subsection (a-1); and
27 (ii) after the hearing, the Commission finds that
28 the employer failed to make payments upon the premium
29 rates of the situs where the work or project is located
30 in Illinois.
31 The penalty shall not exceed $1,000 for each day of work
32 for which the employer failed to make payments upon the
33 premium rates of the situs where the work or project is
34 located in Illinois, but the total penalty shall not exceed
SB1658 Engrossed -33- LRB9111673JSpcA
1 $50,000 for each project or each contract under which the
2 work was performed.
3 Any penalty under this subsection (a-1) must be imposed
4 not later than one year after the expiration of the
5 applicable limitation period specified in subsection (c) of
6 Section 6 of this Act. Penalties imposed under this
7 subsection (a-1) shall be deposited into the Industrial
8 Commission Operations Fund created under Section 4 of the
9 Workers' Compensation Act.
10 (b) The sworn application and financial statement, or
11 security, indemnity or bond, or amount of insurance, or other
12 provisions, filed, furnished, carried, or made by the
13 employer, as the case may be, shall be subject to the
14 approval of the Commission.
15 Deposits under escrow agreements shall be cash,
16 negotiable United States government bonds or negotiable
17 general obligation bonds of the State of Illinois. Such cash
18 or bonds shall be deposited in escrow with any State or
19 National Bank or Trust Company having trust authority in the
20 State of Illinois.
21 Upon the approval of the sworn application and financial
22 statement, security, indemnity or bond or amount of
23 insurance, filed, furnished, or carried, as the case may be,
24 the Commission shall send to the employer written notice of
25 its approval thereof. Said certificate of compliance by the
26 employer with the provisions of subparagraphs (2) and (3) of
27 paragraph (a) of this Section shall be delivered by the
28 insurance carrier to the Industrial Commission within 5 days
29 after the effective date of the policy so certified. The
30 insurance so certified shall cover all compensation liability
31 occurring during the time that the insurance is in effect and
32 no further certificate need be filed in case such insurance
33 is renewed, extended or otherwise continued by such carrier.
34 The insurance so certified shall not be cancelled or in the
SB1658 Engrossed -34- LRB9111673JSpcA
1 event that such insurance is not renewed, extended or
2 otherwise continued, such insurance shall not be terminated
3 until at least 10 days after receipt by the Industrial
4 Commission of notice of the cancellation or termination of
5 said insurance; provided, however, that if the employer has
6 secured insurance from another insurance carrier, or has
7 otherwise secured the payment of compensation in accordance
8 with this Section, and such insurance or other security
9 becomes effective prior to the expiration of said 10 days,
10 cancellation or termination may, at the option of the
11 insurance carrier indicated in such notice, be effective as
12 of the effective date of such other insurance or security.
13 (c) Whenever the Commission shall find that any
14 corporation, company, association, aggregation of
15 individuals, reciprocal or interinsurers exchange, or other
16 insurer effecting workers' occupational disease compensation
17 insurance in this State shall be insolvent, financially
18 unsound, or unable to fully meet all payments and liabilities
19 assumed or to be assumed for compensation insurance in this
20 State, or shall practice a policy of delay or unfairness
21 toward employees in the adjustment, settlement, or payment of
22 benefits due such employees, the Commission may after
23 reasonable notice and hearing order and direct that such
24 corporation, company, association, aggregation of
25 individuals, reciprocal or interinsurers exchange, or
26 insurer, shall from and after a date fixed in such order
27 discontinue the writing of any such workers' occupational
28 disease compensation insurance in this State. It shall
29 thereupon be unlawful for any such corporation, company,
30 association, aggregation of individuals, reciprocal or
31 interinsurers exchange, or insurer to effect any workers'
32 occupational disease compensation insurance in this State. A
33 copy of the order shall be served upon the Director of
34 Insurance by registered mail. Whenever the Commission finds
SB1658 Engrossed -35- LRB9111673JSpcA
1 that any service or adjustment company used or employed by a
2 self-insured employer or by an insurance carrier to process,
3 adjust, investigate, compromise or otherwise handle claims
4 under this Act, has practiced or is practicing a policy of
5 delay or unfairness toward employees in the adjustment,
6 settlement or payment of benefits due such employees, the
7 Commission may after reasonable notice and hearing order and
8 direct that such service or adjustment company shall from and
9 after a date fixed in such order be prohibited from
10 processing, adjusting, investigating, compromising or
11 otherwise handling claims under this Act.
12 Whenever the Commission finds that any self-insured
13 employer has practiced or is practicing delay or unfairness
14 toward employees in the adjustment, settlement or payment of
15 benefits due such employees, the Commission may after
16 reasonable notice and hearing order and direct that after a
17 date fixed in the order such self-insured employer shall be
18 disqualified to operate as a self-insurer and shall be
19 required to insure his entire liability to pay compensation
20 in some insurance carrier authorized, licensed and permitted
21 to do such insurance business in this State as provided in
22 subparagraph (3) of paragraph (a) of this Section.
23 All orders made by the Commission under this Section
24 shall be subject to review by the courts, the review to be
25 taken in the same manner and within the same time as provided
26 by Section 19 of this Act for review of awards and decisions
27 of the Commission, upon the party seeking the review filing
28 with the clerk of the court to which said review is taken a
29 bond in an amount to be fixed and approved by the court to
30 which said review is taken, conditioned upon the payment of
31 all compensation awarded against the person taking the review
32 pending a decision thereof and further conditioned upon such
33 other obligations as the court may impose. Upon the review
34 the Circuit Court shall have power to review all questions of
SB1658 Engrossed -36- LRB9111673JSpcA
1 fact as well as of law. The penalty hereinafter provided for
2 in this paragraph shall not attach and shall not begin to run
3 until the final determination of the order of the Commission.
4 (d) Upon a finding by the Commission, after reasonable
5 notice and hearing, of the knowing and wilful failure of an
6 employer to comply with any of the provisions of paragraph
7 (a) of this Section or the failure or refusal of an employer,
8 service or adjustment company, or insurance carrier to comply
9 with any order of the Industrial Commission pursuant to
10 paragraph (c) of this Section the Commission may assess a
11 civil penalty of up to $500 per day for each day of such
12 failure or refusal after the effective date of this
13 amendatory Act of 1989. Each day of such failure or refusal
14 shall constitute a separate offense.
15 Upon the failure or refusal of any employer, service or
16 adjustment company or insurance carrier to comply with the
17 provisions of this Section and orders of the Commission under
18 this Section, or the order of the court on review after final
19 adjudication, the Commission may bring a civil action to
20 recover the amount of the penalty in Cook County or in
21 Sangamon County in which litigation the Commission shall be
22 represented by the Attorney General. The Commission shall
23 send notice of its finding of non-compliance and assessment
24 of the civil penalty to the Attorney General. It shall be
25 the duty of the Attorney General within 30 days after receipt
26 of the notice, to institute prosecutions and promptly
27 prosecute all reported violations of this Section.
28 (e) This Act shall not affect or disturb the continuance
29 of any existing insurance, mutual aid, benefit, or relief
30 association or department, whether maintained in whole or in
31 part by the employer or whether maintained by the employees,
32 the payment of benefits of such association or department
33 being guaranteed by the employer or by some person, firm or
34 corporation for him or her: Provided, the employer
SB1658 Engrossed -37- LRB9111673JSpcA
1 contributes to such association or department an amount not
2 less than the full compensation herein provided, exclusive of
3 the cost of the maintenance of such association or department
4 and without any expense to the employee. This Act shall not
5 prevent the organization and maintaining under the insurance
6 laws of this State of any benefit or insurance company for
7 the purpose of insuring against the compensation provided for
8 in this Act, the expense of which is maintained by the
9 employer. This Act shall not prevent the organization or
10 maintaining under the insurance laws of this State of any
11 voluntary mutual aid, benefit or relief association among
12 employees for the payment of additional accident or sick
13 benefits.
14 (f) No existing insurance, mutual aid, benefit or relief
15 association or department shall, by reason of anything herein
16 contained, be authorized to discontinue its operation without
17 first discharging its obligations to any and all persons
18 carrying insurance in the same or entitled to relief or
19 benefits therein.
20 (g) Any contract, oral, written or implied, of
21 employment providing for relief benefit, or insurance or any
22 other device whereby the employee is required to pay any
23 premium or premiums for insurance against the compensation
24 provided for in this Act shall be null and void. Any
25 employer withholding from the wages of any employee any
26 amount for the purpose of paying any such premium shall be
27 guilty of a Class B misdemeanor.
28 In the event the employer does not pay the compensation
29 for which he or she is liable, then an insurance company,
30 association or insurer which may have insured such employer
31 against such liability shall become primarily liable to pay
32 to the employee, his personal representative or beneficiary
33 the compensation required by the provisions of this Act to be
34 paid by such employer. The insurance carrier may be made a
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1 party to the proceedings in which the employer is a party and
2 an award may be entered jointly against the employer and the
3 insurance carrier.
4 (h) It shall be unlawful for any employer, insurance
5 company or service or adjustment company to interfere with,
6 restrain or coerce an employee in any manner whatsoever in
7 the exercise of the rights or remedies granted to him or her
8 by this Act or to discriminate, attempt to discriminate, or
9 threaten to discriminate against an employee in any way
10 because of his exercise of the rights or remedies granted to
11 him by this Act.
12 It shall be unlawful for any employer, individually or
13 through any insurance company or service or adjustment
14 company, to discharge or to threaten to discharge, or to
15 refuse to rehire or recall to active service in a suitable
16 capacity an employee because of the exercise of his or her
17 rights or remedies granted to him or her by this Act.
18 (i) If an employer elects to obtain a life insurance
19 policy on his employees, he may also elect to apply such
20 benefits in satisfaction of all or a portion of the death
21 benefits payable under this Act, in which case, the
22 employer's premium for coverage for benefits under this Act
23 shall be reduced accordingly.
24 (Source: P.A. 90-109, eff. 1-1-98; 91-375, eff. 1-1-00.)
25 (820 ILCS 310/4a rep.)
26 Section 35. The Workers' Occupational Diseases Act is
27 amended by repealing Section 4a.
28 Section 99. Effective date. This Act takes effect
29 January 1, 2001.
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