820 ILCS 305/4a-6

(820 ILCS 305/4a-6) (from Ch. 48, par. 138.4a-6)

Sec. 4a-6. (a) Whenever a private self-insurer shall become an insolvent self-insurer and the surety, the guarantor, the excess insurance company and the holder of the securities, indemnities or bond provided by the insolvent self-insurer to secure its payment of compensation under this Act or the Workers' Occupational Diseases Act, are unwilling or unable to administer and defend the claims against the insolvent self-insurer, the Board is empowered to and shall assume on behalf of the Commission the outstanding workers' compensation and occupational disease obligations of the insolvent self-insured and shall take all steps necessary to collect, recover and enforce all securities, indemnity, insurance or bonds furnished by such self-insurer guaranteeing the payment of compensation provided in such Acts for the purpose of paying outstanding obligations of the insolvent self-insurer. Upon the direction of the Board, the Commission shall convert and deposit into the Fund such securities and any amounts received under agreements of surety, guaranty, insurance or otherwise. Any amounts remaining from such securities, indemnity, insurance, bonds, guaranties and sureties, following payment of all compensation costs and related administrative fees of the Board including attorneys' fees, and following exhaustion of all amounts assessed and received pursuant to Section 4a-7, shall be refunded by the Commission from the Fund as directed by the Board to the original holder one year thereafter, provided no outstanding liabilities remain against the Fund.

(i) Any private self-insurer who may become an insolvent self-insurer subject to any of the proceedings set forth in this subsection (a) shall file written notice of such fact with the Commission and the Board within 30 days of the occurrence of such event. Upon receipt of notice by the Commission and the Board from the insolvent self-insurer, or upon receipt of a notice from any person who has filed an application for adjustment of a claim against a private self-insurer which raises a reasonable question with respect to that employer's ability to pay compensation under this Act or the Workers' Occupational Diseases Act, the Board on behalf of the Commission shall determine the ability of that private self-insurer to pay compensation under such Acts.

(ii) The bond holder or excess insurance carrier, or both, shall provide written notification to the Commission within the 30-day period set forth in paragraph (i) that it is able and willing to administer the claims pending against the insolvent self-insurer. Should said notice not be given, the bond holder shall immediately deliver all such securities, guaranties, excess insurance, indemnity or bonds it holds to the Board; otherwise the Board shall take all action necessary on behalf of the Commission pursuant to this Section to collect or recover all such securities, guaranties, excess insurance, indemnities, or bonds.

(b) The Board shall be a party in interest in all proceedings involving compensation claims against an insolvent self-insurer whose compensation obligations have been paid or assumed by the Board and shall have all rights of subrogation of the insolvent employer. In such proceedings the Board shall assume and may exercise all rights and defenses of the insolvent self-insurer, including but not limited to,

(1) The right to appear, defend and appeal claims.

(2) The right to receive notice of, investigate, adjust, compromise, settle and pay claims.

(3) The right to investigate, handle and contest claims.

(4) The right to institute an action or to appear in any proceeding to enforce the employer's rights under Section 5 of the Workers' Compensation Act or Section 5 of the Workers' Occupational Diseases Act.

(c) In any proceeding in bankruptcy, the Commission at the direction of the Board shall appear and move to lift the automatic stay and shall stand in the place of the employees in the bankruptcy proceedings.

(d) The Commission shall notify all employees of the name, address and telephone number of the party administering and defending their claims.

(Source: P.A. 85-1385.)