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