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91_SB1658eng SB1658 Engrossed LRB9111673JSpcA 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 9Self-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, SB1658 Engrossed -2- LRB9111673JSpcA 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 SB1658 Engrossed -3- LRB9111673JSpcA 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 SB1658 Engrossed -4- LRB9111673JSpcA 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 SB1658 Engrossed -5- LRB9111673JSpcA 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 SB1658 Engrossed -6- LRB9111673JSpcA 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 SB1658 Engrossed -7- LRB9111673JSpcA 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 SB1658 Engrossed -8- LRB9111673JSpcA 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 SB1658 Engrossed -9- LRB9111673JSpcA 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 SB1658 Engrossed -10- LRB9111673JSpcA 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 SB1658 Engrossed -11- LRB9111673JSpcA 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. SB1658 Engrossed -12- LRB9111673JSpcA 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 SB1658 Engrossed -13- LRB9111673JSpcA 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. SB1658 Engrossed -14- LRB9111673JSpcA 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. SB1658 Engrossed -15- LRB9111673JSpcA 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 SB1658 Engrossed -16- LRB9111673JSpcA 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 SB1658 Engrossed -17- LRB9111673JSpcA 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 SB1658 Engrossed -18- LRB9111673JSpcA 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 SB1658 Engrossed -19- LRB9111673JSpcA 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 SB1658 Engrossed -21- LRB9111673JSpcA 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 SB1658 Engrossed -23- LRB9111673JSpcA 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 SB1658 Engrossed -25- LRB9111673JSpcA 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. SB1658 Engrossed -26- LRB9111673JSpcA 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 SB1658 Engrossed -38- LRB9111673JSpcA 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.