AN ACT Relating to workers' compensation; amending RCW 43.22.030, 48.32.020, 51.04.020, 51.04.030, 51.04.040, 51.04.070, 51.04.085, 51.04.100, 51.04.105, 51.08.013, 41.06.070, 51.08.015, 51.08.100, 51.08.160, 51.12.050, 51.12.070, 51.12.100, 51.12.110, 51.12.120, 51.12.140, 51.12.150, 51.14.010, 51.14.020, 51.14.050, 51.14.150, 51.16.035, 51.16.060, 51.16.070, 51.16.100, 51.16.120, 51.16.140, 51.16.150, 51.24.030, 51.24.050, 51.24.060, 51.24.070, 51.24.080, 51.24.090, 51.28.010, 51.28.020, 51.28.025, 51.28.030, 51.28.070, 51.32.010, 51.32.015, 51.32.030, 51.32.040, 51.32.050, 51.32.055, 51.32.060, 51.32.072, 51.32.073, 51.32.075, 51.32.080, 51.32.090, 51.32.095, 51.32.110, 51.32.130, 51.32.135, 51.32.150, 51.32.160, 51.32.190, 51.32.200, 51.32.210, 51.32.220, 51.32.230, 51.32.240, 51.32.250, 51.36.010, 51.36.020, 51.36.040, 51.36.060, 51.36.070, 51.36.080, 51.44.040, 51.44.070, 51.44.140, 51.44.150, 51.48.010, 51.48.015, 51.48.017, 51.48.020, 51.48.040, 51.48.050, 51.48.060, 51.48.090, 51.48.110, 51.48.120, 51.48.130, 51.48.140, 51.48.150, 51.52.010, 51.52.030, 51.52.050, 51.52.060, 51.52.070, 51.52.080, 51.52.095, 51.52.100, 51.52.110, 51.52.120, 51.52.130, 51.52.132, and 51.52.135; adding a new section to chapter 48.19 RCW; adding a new section to chapter 51.04 RCW; adding new sections to chapter 51.08 RCW; adding a new section to chapter 51.16 RCW; adding a new section to chapter 51.28 RCW; adding a new section to chapter 51.32 RCW; adding new sections to chapter 51.44 RCW; adding a new section to chapter 51.52 RCW; adding a new section to chapter 51.98 RCW; adding a new chapter to Title 51 RCW; creating new sections; repealing RCW 51.04.110, 51.08.014, 51.08.175, 51.14.100, 51.14.110, 51.16.042, 51.16.050, 51.36.050, 51.41.005, 51.41.010, 51.41.020, 51.41.030, 51.41.040, 51.41.050, 51.41.060, 51.41.070, 51.41.080, 51.41.090, 51.41.100, 51.44.010, 51.44.020, 51.44.050, 51.44.060, 51.44.160, and 51.52.150; making appropriations; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 51.08 RCW to read as follows:

"Industrial insurance benefits" means all compensation, monetary benefits, and medical and related benefits provided under this title.

NEW SECTION. Sec. 2. A new section is added to chapter 51.08 RCW to read as follows:

"Insurer" means:

(1) The state fund as defined in section 3 of this act;

(2) Any private company, corporation, mutual association, reciprocal or interinsurance exchange that meets the requirement of section 14 of this act, and that insures the total liability created under this title for one or more employers;

(3) The state fund or any private company, corporation, mutual association, reciprocal or interinsurance exchange that meets the requirements of this title, and that fully insures the liability created under this title for a group of employers as defined in RCW 51.16.035; or

(4) Any employer to whom a certificate of qualification to self-insure has been issued under RCW 51.14.030, or group of employers certified to self-insure in accordance with chapter 51.14 RCW.

NEW SECTION. Sec. 3. A new section is added to chapter 51.08 RCW to read as follows:

"State fund" means the Washington state industrial insurance fund as established by section 7 of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 51.08 RCW to read as follows:

"Manager" means the manager of the state fund as established by section 7 of this act.

NEW SECTION. Sec. 5. A new section is added to chapter 51.08 RCW to read as follows:

"Industrial insurance administrative fund" means the fund established under section 15 of this act.

NEW SECTION. Sec. 6. A new section is added to chapter 51.08 RCW to read as follows:

"Commissioner" means the insurance commissioner as defined by RCW 48.02.010.

NEW SECTION. Sec. 7. (1) The "Washington state industrial insurance fund" is established for the purpose of insuring employers for their liability arising out of this title beginning July 1, 1986.

(2) The state fund may also insure any other liability that an employer who has secured coverage under this title with the state fund may have to his or her workers for bodily injury arising out of and in the course of employment as fully as any other insurer, including but not limited to any liability the employer may have under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. 901 to 950, or any act amendatory or supplementary thereto or in lieu thereof, and may enter into any contract or obligation relating to the transaction of its business that is permitted by law.

If the state fund does not insure the liability under the Longshoremen's and Harbor Worker's Compensation Act, 33 U.S.C. 901 to 950, or any act amendatory or supplementary thereto or in lieu thereof, then the state fund shall arrange to make such insurance available from another insurer properly authorized under Title 48 RCW to provide such insurance to any employer who insures its industrial insurance liability with the state fund.

(3) The functions of the state fund shall be:

(a) To confer with and solicit employers and to handle, audit, and enforce collection of premiums, assessments, and fees of employers insured with it;

(b) To receive, handle, and process the claims of workers and beneficiaries of workers injured in the employ of employers insured with the state fund and to issue warrants for the payment of its obligations; and

(c) To perform all other functions that the laws of this state authorize an industrial insurance insurer to perform and that are necessary or appropriate to carry out the functions authorized, including securing reinsurance for any risk insured by the state fund.

(4) The state fund in its own name may sue and be sued in all actions arising out of any act or omission in connection with its business affairs, and shall be entitled to appear as a party in any proceedings involving claims payable by the state fund under this title.

(5) The attorney general is the legal advisor of the state fund and shall represent it in all legal proceedings. Any employer may also join in any legal proceedings arising from claims for which the employer has secured coverage from the state fund.

(6) The state fund shall allocate revenues received from its investments, other than revenues allocated for the payment of pensions, to reduce the premiums for employers insured by the state fund and shall apply, whenever possible, for a deviation as provided in section 13 of this act from manual rates filed by the department so that its charges for industrial insurance are the lowest possible rates necessary to maintain the actuarial solvency of the state fund.

(7) The state fund shall annually determine if it has excess funds that are not necessary under recognized insurance principles to maintain actuarial solvency, pay fees due to the industrial insurance administrative fund, pay fees due to the supplemental pension fund, pay fees as required in section 20 of this act, or pay any other fees required. Thereafter the state fund shall then return or credit to its insureds excess funds on a pro rata share relative to the premiums paid by each employer.

(8) The state fund shall participate in the Washington insurance guaranty association under chapter 48.32 RCW in the same manner as any other industrial insurance insurer.

(9) The state fund shall charge premiums in accordance with this title and based on the rates filed by the department under chapter 51.16 RCW.

(10) The state fund shall participate in the assigned risk plan under section 13 of this act.

(11) The state fund may acquire, lease, rent, own, and manage real property. It may construct, equip, and furnish buildings or other structures as are necessary to accommodate its needs. It may purchase, rent, lease, or otherwise acquire for its use all supplies, materials, equipment, and services necessary to carry out its functions. It may sell or otherwise dispose of any property acquired under this subsection.

(12) The state fund may furnish advice, services, insurance, or reinsurance to any employer, group of insured employers, employer qualified as a self-insured employer, or group of self-insured employers, on such terms and conditions as the state fund deems reasonable in accordance with this title.

(13) The state fund shall pay all taxes and fees as any other insurer meeting the requirements of section 14 of this act.

NEW SECTION. Sec. 8. (1) The state fund created by section 7 of this act shall be governed by policies established by a board of five directors appointed by the governor and approved by the senate. Three of the members shall be employers or representatives of employers who, as of the date of the appointment, are insured with the state fund and who had been continuously insured with the state fund for not less than twelve months except that the first such directors shall be employers or representatives of employers who, on June 30, 1986, are insured with the department of labor and industries and have been continuously insured with the department of labor and industries for twenty-four consecutive months. One of the employer members shall represent a business with twenty or fewer employees at the time of appointment. Two members shall represent the public.

The initial terms of the board members shall be: One member shall serve for two years, two members shall serve for four years, and two members shall serve for six years. Thereafter, each member shall serve a term of six years. No member may serve more than two consecutive terms. Any member of the board who is not able to fulfill his or her term due to any cause including but not limited to death, disability, resignation, or any other reason shall be replaced by the governor within thirty days of the date it is determined by three of the five board members that the member is not able to fulfill his or her term. A member appointed by the governor shall be considered for confirmation by the next regular meeting of the senate. Failure of the senate to vote on the confirmation of any member as required by this section shall allow that member to serve his or her full term as appointed by the governor without approval of the senate.

(2) The board of directors shall:

(a) Elect a chair from among its members to serve for the following calendar year.

(b) Meet not less than monthly to consider and act on the affairs of the state fund.

(d) Employ a manager to manage the daily operations of the state fund.

(e) Be paid a salary of two hundred fifty dollars per day when participating in meetings of the board and be reimbursed for all expenses in accordance with chapter 43.03 RCW.

(3) The manager shall not be a voting member of the board of directors but shall act at the will of and in support of the board of directors and provide staff support as required by the board of directors to carry out its activities.

(4) No member of the board of directors may have any pecuniary interest, other than an incidental interest which is disclosed and made a matter of public record at the time of appointment to the board, in any corporation or other business entity doing business as an industrial insurance insurer.

(5) A majority of the members of the board shall constitute a quorum for the transaction of business.

NEW SECTION. Sec. 9. The state fund shall be under the direct supervision of a manager who shall be selected and employed at the discretion of the board of directors. The salary of the manager shall be fixed by the board of directors. The manager's entire time shall be devoted to the operations of the state fund and carrying out the policies set by the board of directors. The manager shall report at least annually to the board of directors, the governor, and the legislature on the state of the state fund and shall include in the report a review of its operations for the previous twelve months.

NEW SECTION. Sec. 10. The assets and liabilities of the following funds are transferred on July 1, 1986, to the state fund:

(1) The accident fund previously maintained under RCW 51.44.010 before July 1, 1986;

(2) The medical aid fund previously maintained under RCW 51.44.020 before July 1, 1986;

(3) The reserve fund previously maintained under RCW 51.44.030, before July 1, 1986, except that portion attributable to self-insurers pursuant to RCW 51.44.140 before July 1, 1986;

(4) All other assets and liabilities held by the industrial insurance division of the department under this title on July 1, 1986, except the supplemental pension fund and any other funds pertaining to the regulatory functions of the department; and

(5) The equipment and fixtures used by the department on June 30, 1986, to administer insurance for the liability of employers under Title 51 RCW, shall be transferred to the state fund without cost to the state fund.

NEW SECTION. Sec. 11. (1) Effective July 1, 1986, all employers required to pay industrial insurance benefits, medical aid, and supplemental pension fees to the industrial insurance division of the department of labor and industries under this title shall become insureds of the state fund until: (a) The employer elects to secure otherwise the payment of industrial insurance benefits under this title; or (b) the employer receives notice from the state fund of the termination or nonrenewal of insurance.

(2) All liability accruing under the law in effect to July 1, 1986, for employers paying premiums to the industrial insurance division of the department of labor and industries under this title is transferred on July 1, 1986, to the state fund, together with liabilities for all expenses, claim costs, administrative costs, and all other obligations arising out of the operations of the division and having accrued until July 1, 1986.

(3) The powers, duties, and functions of the industrial insurance division relating to insurance coverage, actuarial computations, claims management, premium collection, accounting, and all other powers necessary to administer the state fund as an insurer, that are not otherwise transferred by this chapter, are vested in the state fund as of July 1, 1986.

NEW SECTION. Sec. 12. The state of Washington shall not be liable beyond the assets of the state fund for any obligations of the state fund. The state fund shall operate on a parity with other insurers, other than self-insurers and self-insured groups, and shall be self-supporting and without subsidy of any kind. It is the intent of the legislature that the state fund shall have authority to acquire any equipment, supplies, or other personal or real property, and employ such personnel as may be reasonably necessary to solicit and provide industrial insurance, and take all actions to enable it to be fully competitive in offering industrial insurance. The state fund shall be subject to the same regulation, examination, reporting requirements and disclosure as all other insurers other than self-insurers and self-insured groups providing insurance under this title.

All moneys received by and under the supervision and control of the state fund shall be deposited and maintained by the state fund. Disbursements from the state fund for all the operating costs of the fund and for payment of all claims obligations shall be on authorization of the manager or a duly authorized representative of the manager.

NEW SECTION. Sec. 13. A new section is added to chapter 48.19 RCW to read as follows:

(1) For the purposes of this chapter, the term "industrial insurance insurer" includes an insurer authorized to insure the liabilities defined by Title 51 RCW and includes the state fund as established by section 7 of this act, but does not include any employer or group of employers who are authorized to self-insure as provided by chapter 51.14 RCW, or any other insurer authorized to provide insurance in this state that insures a portion of the liability arising from this title for an employer that is self-insured or a group of employers that are self-insured. However, chapter 48.22 RCW shall not apply to industrial insurance unless specified. Where provisions of this section conflict with other provisions of this title, the provisions of this section shall control.

(2) The commissioner shall issue a certificate of authority to be an industrial insurance insurer if the insurer meets the requirements to be licensed to sell insurance in this state and meets the applicable provisions of this title and Title 51 RCW. The commissioner shall perform all duties required under this title to ensure that each insurer continues to meet the requirements of the applicable provisions of this title and Title 51 RCW.

(3) Any insurer may make written application to the commissioner for approval of uniform percentage deviations from the manual rates filed by the department and approved by the commissioner. An insurer shall not charge more than either the manual rates filed by the department or, for insurers who have approval to deviate, the manual rate multiplied by the percentage deviation.

(4) The commissioner shall establish an assigned risk plan for all industrial insurance insurers. The commissioner may agree to have the department operate the assigned risk plan if consistent with the requirements in this title and Title 51 RCW.

(5) Nothing in this chapter may be construed to prohibit or regulate the payment of dividends and savings on unabsorbed premium deposits allowed or returned by industrial insurance insurers to their policyholders, members, or subscribers. A plan returned by insurers to their policyholders, members, or subscribers shall not be deemed a rating plan or system.

NEW SECTION. Sec. 14. (1) Each insurer offering to sell industrial insurance meeting the requirements of this title, except for employers that are self-insured, or any group of employers who are self-insured as authorized under chapter 51.14 RCW, or insurers providing partial reinsurance for a self-insurer, shall:

(a) Hold a certificate of authority issued by the insurance commissioner under chapter 48.05 RCW permitting it to provide industrial insurance.

(b) Hold a certificate issued by the director that it will provide adequate safety engineering, loss prevention, and claims management services for all employers the insurer insures. Such a certificate shall not be valid if the insurer fails to maintain a location within the state where applications for industrial insurance benefits may be made and maintain with the director a list of the locations and telephone numbers where information may be obtained about all appropriate matters relating to claims.

(2) Each insurer may refuse to provide industrial insurance for any employer except that each insurer shall participate in the assigned risk plan as provided in section 13 of this act. Any insurer failing to provide insurance as required by the assigned risk plan shall not be permitted to sell industrial insurance in this state.

(3) Each insurer shall meet the requirements of the department in reporting information needed for the department to establish rates in accordance with chapter 51.16 RCW. Failure of any insurer to meet these requirements or failure to provide accurate data as required by the department shall prohibit such insurer from selling industrial insurance in this state.

(4) Each insurer shall provide or arrange for another insurance company properly authorized in this state to make coverage available to any of its insureds requesting to insure the employer's liability under the Federal Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. 901 to 950, or any act amendatory or supplementary thereto or in lieu thereof either directly or through any other insurer properly authorized under Title 48 RCW to provide such insurance.

(5) Each insurer shall continue to insure the liability under this title for any employer it has insured for the same cost except when it provides the employer a written notice not less than forty-five days before the renewal date of the insurance notifying the employer of the insurer's decision not to renew the insurance or notifying the employer of a different cost for the insurance upon renewal.

(6) On the effective date of this section, the state fund shall be issued a certificate of authority from the insurance commissioner and shall also be issued a certificate from the director as required in subsection (1) of this section. Thereafter, the state fund shall be required to maintain those certificates and meet all of the applicable provisions of Title 48 RCW and this title like any other insurer.

NEW SECTION. Sec. 15. A new section is added to chapter 51.44 RCW to read as follows:

A revolving fund to be known and designated as the "industrial insurance administrative fund" is created in the office of the state treasurer. The director shall be the administrator of this fund. The industrial insurance administrative fund is established to provide for the payment of all expenses of the department, the board of industrial insurance appeals, and the insurance commissioner with respect to the administration of their respective duties under this title and those sections of Title 48 RCW governing industrial insurance. There shall be separate appropriations approved by the legislature and the governor for the department, the board, and the insurance commissioner. Any money appropriated from the general fund for the uses and purposes of the administrative fund shall be placed in the administrative fund.

NEW SECTION. Sec. 16. A new section is added to chapter 51.44 RCW to read as follows:

(1) The director shall periodically calculate and collect from insurers assessments that, with the interest earned, are sufficient to cover the administrative costs described in sections 15 and 18 of this act. The time and manner of collecting assessments shall be set forth in rules promulgated by the director under chapter 34.04 RCW.

(2) The director shall prepare as soon as is practicable after July 1 each year, a line item budget for the industrial insurance administrative fund for the succeeding fiscal year. The budget shall be based upon the actual expenditures of the preceding fiscal year and a reasonable estimate of expenses for the succeeding year. This budget shall be adopted in accordance with chapter 34.04 RCW.

(3) The assessment of each insurer shall be an amount bearing the same ratio to such total administrative costs that each insurer's adjusted premium bears to the aggregated adjusted premium of all insurers. As used in this subsection "adjusted premium" means:

(a) For insurers, other than self-insurers or self-insured groups, the direct earned premium for industrial insurance under this title, determined under uniform rules promulgated by the director after consultation with the insurance commissioner; and

(b) For self-insurers and self-insured groups, the premium that would have been incurred had it insured its liability under this title with the state fund, determined under uniform rules promulgated by the director after consultation with the insurance commissioner.

(4) The assessment for each insurer shall be calculated in the following manner:

(a) The assessment for each insurer shall be based on adjusted premium for the period immediately preceding the period to which the assessment will apply.

(b) The periodic assessment shall be adjusted after each fiscal year to reflect the actual adjusted premium of each insurer for such fiscal year, as determined by the director after consultation with the insurance commissioner.

(c) Notwithstanding any provision of this section, each insurer may be assessed annually a minimum amount not to exceed five hundred dollars, as determined by the director after consultation with the insurance commissioner.

(d) As of July 1, 1987, assessments shall be determined for insurers on a fiscal year basis and collected annually, and the provisions of (b) of this subsection shall no longer apply.

(5) Assessments shall be payable in full within thirty days of the notice of assessment. If any insurer fails to pay the assessment by the date due, interest may be charged on all past due amounts at such reasonable market rate as the director may establish from time to time.

(6) In no event may any assessment made under this section exceed four percent per annum of the total taxable industrial insurance premiums in this state for the year immediately preceding such assessment.

(7) Any amount resulting from or anticipated for expenditures from the industrial insurance administrative fund that arises from the uncorrected default of a self-insurer or self-insured group shall be assessed only upon self-insurers and self-insured groups.

NEW SECTION. Sec. 17. A new section is added to chapter 51.44 RCW to read as follows:

There shall be created in the office of the state treasurer a fund to be known and designated as the "insurance commissioner's industrial insurance operating fund." This fund is established to provide for the payment of all expenses of the insurance commissioner for the administrative and regulatory duties relating to workers' compensation insurance imposed by this title and Title 48 RCW.

The insurance commissioner shall annually estimate the costs of administering the provisions of this title relating to industrial insurance and shall submit the estimate for inclusion, together with justification, in the assessment upon insurers to be imposed by the director of labor and industries pursuant to section 16 of this act. The director of labor and industries shall transfer the amount of the assessment relating to the office of the insurance commissioner to the insurance commissioner's industrial insurance operating fund. The commissioner shall report annually to the legislature the activity of the insurance commissioner's industrial insurance operating fund, including justification for assessments.

NEW SECTION. Sec. 18. A new section is added to chapter 51.16 RCW to read as follows:

Whenever industrial insurance benefits due under this title are not paid as required, it shall be defined as a default. Industrial insurance benefits due but which are the subject of a default shall be paid as follows:

(1) Where such default results from the failure of an employer to secure the payment of industrial insurance benefits due under this title, industrial insurance benefits shall be paid by the director from the industrial insurance administrative fund. In addition to any penalty imposed under RCW 51.48.010 and 51.48.015, the defaulting employer shall be liable for payment into the industrial insurance administrative fund the amounts paid therefrom by the director plus market interest on any outstanding balance. For the purpose of enforcing this liability, the director, for the benefit of the industrial insurance administrative fund, shall be subrogated to all of the rights of the person receiving such industrial insurance benefits;

(2) Where such default results from the failure of a self-insurer or a self-insured group to make industrial insurance payments, industrial insurance benefits shall be paid by the director from the industrial insurance administrative fund only after the moneys available from the bonds or other security provided under the requirements of this title have been exhausted. Such defaulting self-insurer or self-insured group shall be liable for payment into the industrial insurance administrative fund the amounts paid therefrom by the director plus market interest on any unpaid balance. For the purpose of enforcing this liability, the director, for the benefit of the industrial insurance administrative fund, shall be subrogated to all of the rights of the person receiving such industrial insurance benefits;

(3) Where such default results from the failure of an insolvent insurer as defined in RCW 48.32.030, to make industrial insurance benefit payments, industrial insurance benefits shall be paid by the director from the industrial insurance administrative fund. The Washington insurance guaranty association, as defined by chapter 48.32 RCW, shall be liable for payment into the industrial insurance administrative fund the amounts paid therefrom by the director in lieu of paying any such amounts of industrial insurance benefits directly to the claimant;

(4) In cases other than those involving insurer insolvency where industrial insurance benefits are not timely paid or where the payment of industrial insurance benefits are delayed as a result of a dispute as to which insurer is responsible for the payment of industrial insurance benefits, such payments shall be made from the industrial insurance administrative fund and the director shall have the right of recovery from the party or parties ultimately deemed responsible for the payment of such industrial insurance benefits;

(5) The director may purchase insurance for the industrial insurance administrative fund to pay for defaults under this section. The administrative fund shall pay for such insurance, and the liability of insurers shall be limited to the liabilities not paid by such insurance. The director shall actively pursue legal action to collect payments to the industrial insurance administrative fund as set forth in this section.

NEW SECTION. Sec. 19. (1) On the effective date of this section, the department, together with the commissioner, shall estimate the amount of all liabilities and all assets of the department as provided for in section 11 of this act. If the department and the commissioner estimate that the liabilities are greater than the assets on the effective date of this section, the amount of that liability shall be reported to the governor and the legislature within thirty days after the effective date of this section.

(2) If it is determined that there are greater liabilities than assets, the director and the commissioner shall determine the amount necessary, when invested with the other funds transferred to the state fund under section 10 of this act, to be a sufficient amount plus interest earned to pay the excess liabilities. The director and the commissioner shall determine the total amount of principal plus the cost of paying that amount in equal payments per calendar quarter for a period not to exceed five years beginning October 1, 1985. In determining the period over which the payments shall be made, the director and the commissioner shall set the period of time to minimize the financial impact on all employers of the state. The director and the commissioner shall fix the amount to be paid quarterly for each calendar quarter, beginning October 1, 1985. Each employer, other than employers who are self-insured or group self-insured pursuant to chapter 51.14 RCW before the effective date of this section shall pay its portion of the quarterly payment based on a flat percentage rate of the rates calculated for each employer including each employer's experience modification as calculated by the department. Employers who become self-insured or group self-insured after October 1, 1985, shall pay a flat percentage of the appropriate manual rates set by the department for their type of business. Insurers of employers who are not self-insured shall collect these payments from their insureds and remit them to the state fund, without charge. The state fund shall invest the payments received with its other reserves and together, these payments and their earnings shall be used to pay the excess liabilities of the department incurred before the effective date of this section.

(3) Within sixty days after the effective date of this section, the department shall set rates under chapter 51.16 RCW to avoid adding any additional liability. These rates shall not exceed the expected costs for the proper actuarial insuring of the liability under this title.

(4) If, at anytime after the effective date of this section it is determined by the state fund board of directors, the department, and the commissioner that the liabilities before the effective date of this section of the industrial insurance division of the department of labor and industries exceed the assets transferred from the industrial insurance division of the department of labor and industries to the state fund under section 10 of this act, plus all payments received by the state fund under subsection (2) of this section, the board of directors, the department, and the commissioner may use the provisions of subsection (2) of this section to recover this excess liability. The payments provided for in subsection (2) of this section may be established for a period of less than five years if it is determined by the board of directors, the department, and the commissioner that this will not place an excessive financial burden on all employers.

NEW SECTION. Sec. 20. A new section is added to chapter 51.28 RCW to read as follows:

(1) The insurer shall notify the employer of an injured worker:

(a) Of its decision whether or not to pay industrial insurance benefits for any application for industrial insurance benefits within five days of making such decision.

(b) Each time the insurer makes a decision to pay industrial insurance benefits pursuant to chapter 51.32 RCW.

(c) At intervals not to exceed thirty calendar days of any medical services approved or authorized pursuant to chapter 51.36 RCW.

(2) Each notice under this section shall include an explanation, in nontechnical language, of the potential impacts of the decision on the industrial insurance rates of the employer and the employer's right to request mediation or appeal the decision. The sixty day requirement to request reconsideration or appeal a decision shall not begin until the notice had been sent to the employer.

(3) Failure of the insurer to provide the notice required by this section prohibits the insurer from reporting against the employer's experience, the benefits provided but which the employer was not notified about in accordance with this section.

Sec. 21. Section 43.22.030, chapter 8, Laws of 1965 and RCW 43.22.030 are each amended to read as follows:

The director of labor and industries, through the division of industrial insurance, shall:

(1) Exercise all the powers and perform all the duties prescribed by law with respect to the ((~~administration~~)) regulation of ((~~workmen's compensation and medical aid~~)) this title in this state((;

(2) Have the custody of all property acquired by the state at execution sales upon judgments obtained for delinquent industrial insurance premiums or medical aid contributions, and penalties and costs; sell and dispose of the same at private sales for the sale purchase price, and pay the proceeds into the state treasury to the credit of the accident fund, or medical aid fund, as the case may be. In case of the sale of real estate the director shall execute the deed in the name of the state)) and the implementation of such laws and rules adopted to achieve the expressed legislative purpose and goals of the law.

Sec. 22. Section 2, chapter 265, Laws of 1971 ex. sess. as amended by section 2, chapter 109, Laws of 1975-'76 2nd ex. sess. and RCW 48.32.020 are each amended to read as follows:

This chapter shall apply to all kinds of direct insurance, except life, title, surety, disability, credit, mortgage guaranty, ((~~workmen's compensation~~)) and ocean marine insurance. This chapter shall not apply to an obligation of, nor create a duty in a self-insurer certified under RCW 51.14.030, or a self-insured group as defined in section 14 of this 1985 act, or the state fund as established in section 7 of this 1985 act.

NEW SECTION. Sec. 23. A new section is added to chapter 51.04 RCW to read as follows:

(1) The department shall attempt to mediate disputes concerning the provisions of this title between employers, workers claiming industrial insurance benefits under this title, or insurers. No person may file an appeal under chapter 51.52 RCW before the board without first submitting a written "notice of dispute" to the director or the director's designee and all other parties concerned. The director shall establish the format and contents of a "notice of dispute" by rules adopted in accordance with chapter 34.04 RCW.

(2) The department shall review each "notice of dispute" and send a notice within five days of receiving the "notice of dispute" to all parties identified in the dispute of its determination either:

(a) Setting a date to meet with the parties to the dispute to attempt to mediate the dispute; or

(b) That the department has determined that mediation will not be effective and notifying all parties of their right to proceed with an appeal in accordance with chapter 51.52 RCW.

(3) The department shall make every effort reasonably possible to mediate the dispute within twenty calendar days. If the department has been unsuccessful in achieving an agreement among the parties to the dispute within twenty calendar days, any party to the dispute may file an appeal to the board in accordance with chapter 51.52 RCW. The department may continue to attempt to mediate the dispute but such attempt to mediate shall not delay consideration of the appeal by the board, except where a settlement is reached by the parties before the industrial insurance appeals judge issuing his or her proposed decision and order of the appeal.

(4) Each party to the dispute may be represented by or may consult with counsel during mediation by the department. The department shall be objective and impartial during all mediation efforts. The department shall only advise the parties to the dispute of the application of the laws and facts under this title.

(5) If all parties agree to a settlement during mediation, the parties shall not have a right of appeal of the settlement to the board after fifteen days after agreeing to the settlement. The department shall mail a written notice of the terms of the settlement to each party within two business days of reaching the settlement.

(6) The records of the attempt to mediate by the department shall not be considered by the board when considering an appeal under this chapter.

(7) The department shall not charge any of the parties to a dispute for the costs of mediation under this section.

NEW SECTION. Sec. 24. A new section is added to chapter 51.52 RCW to read as follows:

The board shall not consider any appeal which has not met the requirements of section 23 of this act.

Sec. 25. Section 51.04.020, chapter 23, Laws of 1961 as last amended by section 77, chapter 75, Laws of 1977 and RCW 51.04.020 are each amended to read as follows:

The director shall:

(1) Establish and promulgate rules governing the administration of this title;

(2) ((~~Ascertain and establish the amounts to be paid into and out of the accident fund;~~

~~(3)~~)) Regulate the proof of accident and extent thereof, the proof of death and the proof of relationship and the extent of dependency;

((~~(4) Supervise the~~)) (3) Establish and promulgate rules governing the provision of medical, surgical, and hospital treatment to the intent that it may be in all cases efficient and up to the recognized standard of modern surgery;

(4) Regulate the claims handling practices of all insurers to achieve prompt and fair claims services to injured workers and beneficiaries;

(5) ((~~Issue proper receipts for moneys received and certificates for benefits accrued or accruing;~~

~~(6)~~)) Investigate the cause of all serious injuries and report to the governor from time to time any violations or laxity in performance of protective statutes or regulations coming under the observation of the department;

((~~(7)~~)) (6) Create a division of statistics within which shall be compiled such statistics as will afford reliable information upon which to base operations of all divisions under the department;

((~~(8)~~)) (7) Make an annual report to the governor of the workings of the department under this title;

((~~(9)~~)) (8) Be empowered to enter into agreements with the appropriate agencies of other states relating to conflicts of jurisdiction where the contract of employment is in one state and injuries are received in the other state, and insofar as permitted by the Constitution and laws of the United States, to enter into similar agreements with the provinces of Canada.

Sec. 26. Section 1, chapter 14, Laws of 1980 and RCW 51.04.030 are each amended to read as follows:

((The director shall, through the division of industrial insurance, supervise the providing of prompt and efficient care and treatment, including care provided by physicians' assistants governed by the provisions of chapters 18.57A and 18.71A RCW, acting under a supervising physician to workers injured during the course of their employment at the least cost consistent with promptness and efficiency, without discrimination or favoritism, and with as great uniformity as the various and diverse surrounding circumstances and locations of industries will permit and to that end shall, from time to time, establish and promulgate and supervise the administration of printed forms, rules, regulations, and practices for the furnishing of such care and treatment.))

The director shall make and, from time to time, change as may be, and promulgate a fee ((~~bill of~~)) schedule for the maximum charges to be made by any physician, surgeon, hospital, druggist, physicians' assistants as defined in chapters 18.57A and 18.71A RCW, acting under a supervising physician or other agency or person rendering services to injured workers. No service covered under this title shall be charged or paid at a rate or rates exceeding those specified in such fee ((~~bill~~)) schedule, and no contract providing for greater fees shall be valid as to the excess.

((~~The director or self-insurer, as the case may be,~~)) All insurers shall make a record of the commencement of every disability and the termination thereof and, when bills are rendered for the care and treatment of injured workers, shall approve and pay those which conform to the promulgated rules, regulations, and practices of the director and may reject any bill or item thereof incurred in violation of the principles laid down in this section or the rules and regulations promulgated under it.

Sec. 27. Section 51.04.040, chapter 23, Laws of 1961 as amended by section 1, chapter 323, Laws of 1977 ex. sess. and RCW 51.04.040 are each amended to read as follows:

The director shall have power to issue subpoenas to enforce the attendance and testimony of witnesses and the production and examination of books, papers, photographs, tapes, and records before the department in connection with any claim made ((~~to the department, or the assessment or collection of premiums~~)) under this title. The superior court shall have the power to enforce any such subpoena by proper proceedings.

Sec. 28. Section 2, chapter 14, Laws of 1980 and RCW 51.04.070 are each amended to read as follows:

A minor shall be deemed sui juris for the purpose of this title, and no other person shall have any cause of action or right to compensation for an injury to such minor worker, except as expressly provided in this title, but in the event of any disability payments becoming due under this title to a minor worker, under the age of eighteen, such disability payments shall be paid to his or her parent, guardian or other person having legal custody of his or her person until he or she reaches the age of eighteen. Upon the submission of written authorization by any such parent, guardian, or other person, any such disability payments may be paid directly to such injured worker under the age of eighteen years. If it is necessary to appoint a legal guardian to receive such disability payments, there shall be paid ((~~from the accident fund or by the self-insurer, as the case may be,~~)) by the insurer toward the expenses of such guardianship a sum not to exceed three hundred dollars.

Sec. 29. Section 26, chapter 323, Laws of 1977 ex. sess. and RCW 51.04.085 are each amended to read as follows:

((~~The department~~)) An insurer may, at any time, on receipt of written authorization, transmit amounts payable to a claimant, beneficiary, or any supplier of goods or services to the account of such person in a bank or other financial institution regulated by state or federal authority.

Sec. 30. Section 51.04.100, chapter 23, Laws of 1961 as amended by section 6, chapter 350, Laws of 1977 ex. sess. and RCW 51.04.100 are each amended to read as follows:

If the provisions of this title relative to compensation for injuries to or death of workers become invalid because of any adjudication, or be repealed, the period intervening between the occurrence of an injury or death, not previously compensated for under this title by lump payment or completed monthly payments, and such repeal or the rendition of the final adjudication of invalidity shall not be computed as a part of the time limited by law for the commencement of any action relating to such injury or death: PROVIDED, That such action be commenced within one year after such repeal or adjudication; but in any such action any sum paid out ((~~of the accident fund~~)) to the worker on account of injury, to whom the action is prosecuted, shall be taken into account or disposed of as follows: If the defendant employer shall have paid without delinquency ((~~into the accident fund~~)) the payment provided by this title, such sums shall be credited upon the recovery as payment thereon, otherwise the sum shall not be so credited but shall be deducted from the sum collected and be paid ((~~into the said fund~~)) to the source from which they had been previously disbursed.

Sec. 31. Section 25, chapter 323, Laws of 1977 ex. sess. and RCW 51.04.105 are each amended to read as follows:

The obligations of all medical aid contracts approved by the supervisor prior to the repeal of any section of this title pertaining to medical aid contracts shall continue until the expiration of such contracts notwithstanding any such repeal and all provisions of this title pertaining to the operation of medical aid contracts and the control and supervision of such contracts which were in effect at the time of such approval shall, notwithstanding any other provision of law, remain in full force and effect. All medical aid contracts shall expire on June 30, 1986.

Sec. 32. Section 3, chapter 107, Laws of 1961 as last amended by section 15, chapter 111, Laws of 1979 and RCW 51.08.013 are each amended to read as follows:

"Acting in the course of employment" means the worker acting at his or her employer's direction or in the furtherance of his or her employer's business ((~~which shall include time spent going to and from work on the jobsite~~)), as defined in RCW 51.32.015 and 51.36.040, insofar as such time is immediate to the actual time that the worker is engaged in the work process in areas controlled by his or her employer, except parking areas, and it is not necessary that at the time an injury is sustained by a worker he or she be doing the work on which his or her compensation is based or that the event be within the time limits on which industrial insurance ((~~or medical aid~~)) premiums or assessments are paid. The term shall not include time spent going to or coming from the employer's place of business in commuter ride sharing, as defined in RCW 46.74.010(1), notwithstanding any participation by the employer in the ride-sharing arrangement.

Sec. 33. Section 1, chapter 11, Laws of 1972 ex. sess. as last amended by section 2, chapter 210, Laws of 1984 and RCW 41.06.070 are each amended to read as follows:

The provisions of this chapter do not apply to:

(1) The members of the legislature or to any employee of, or position in, the legislative branch of the state government including members, officers, and employees of the legislative council, legislative budget committee, statute law committee, and any interim committee of the legislature;

(2) The justices of the supreme court, judges of the court of appeals, judges of the superior courts or of the inferior courts, or to any employee of, or position in the judicial branch of state government;

(3) Officers, academic personnel, and employees of state institutions of higher education, the state board for community college education, and the higher education personnel board;

(4) The officers of the Washington state patrol;

(5) Elective officers of the state;

(6) The chief executive officer of each agency;

(7) In the departments of employment security, fisheries, social and health services, the director and his confidential secretary; in all other departments, the executive head of which is an individual appointed by the governor, the director, his confidential secretary, and his statutory assistant directors;

(8) In the case of a multimember board, commission, or committee, whether the members thereof are elected, appointed by the governor or other authority, serve ex officio, or are otherwise chosen:

(a) All members of such boards, commissions, or committees;

(b) If the members of the board, commission, or committee serve on a part time basis and there is a statutory executive officer: (i) The secretary of the board, commission, or committee; (ii) the chief executive officer of the board, commission, or committee; and (iii) the confidential secretary of the chief executive officer of the board, commission, or committee;

(c) If the members of the board, commission, or committee serve on a full time basis: (i) The chief executive officer or administrative officer as designated by the board, commission, or committee; and (ii) a confidential secretary to the chairman of the board, commission, or committee;

(d) If all members of the board, commission, or committee serve ex officio: (i) The chief executive officer; and (ii) the confidential secretary of such chief executive officer;

(9) The confidential secretaries and administrative assistants in the immediate offices of the elective officers of the state;

(10) Assistant attorneys general;

(11) Commissioned and enlisted personnel in the military service of the state;

(12) Inmate, student, part time, or temporary employees, and part time professional consultants, as defined by the state personnel board or the board having jurisdiction;

(13) The public printer or to any employees of or positions in the state printing plant;

(14) Officers and employees of the Washington state fruit commission;

(15) Officers and employees of the Washington state apple advertising commission;

(16) Officers and employees of the Washington state dairy products commission;

(17) Officers and employees of the Washington tree fruit research commission;

(18) Officers and employees of the Washington state beef commission;

(19) Officers and employees of any commission formed under the provisions of chapter 191, Laws of 1955, and chapter 15.66 RCW;

(20) Officers and employees of the state wheat commission formed under the provisions of chapter 87, Laws of 1961 (chapter 15.63 RCW);

(21) Officers and employees of agricultural commissions formed under the provisions of chapter 256, Laws of 1961 (chapter 15.65 RCW);

(22) Officers and employees of the nonprofit corporation formed under chapter 67.40 RCW;

(23) Liquor vendors appointed by the Washington state liquor control board pursuant to RCW 66.08.050: PROVIDED, HOWEVER, That rules and regulations adopted by the state personnel board pursuant to RCW 41.06.150 regarding the basis for, and procedures to be followed for, the dismissal, suspension, or demotion of an employee, and appeals therefrom shall be fully applicable to liquor vendors except those part time agency vendors employed by the liquor control board when, in addition to the sale of liquor for the state, they sell goods, wares, merchandise, or services as a self-sustaining private retail business;

(24) Executive assistants for personnel administration and labor relations in all state agencies employing such executive assistants including but not limited to all departments, offices, commissions, committees, boards, or other bodies subject to the provisions of this chapter and this subsection shall prevail over any provision of law inconsistent herewith unless specific exception is made in such law;

(25) All employees of the marine employees' commission;

(26) The manager and all employees of the Washington state industrial insurance fund;

(27) In addition to the exemptions specifically provided by this chapter, the state personnel board may provide for further exemptions pursuant to the following procedures. The governor or other appropriate elected official may submit requests for exemption to the personnel board stating the reasons for requesting such exemptions. The personnel board shall hold a public hearing, after proper notice, on requests submitted pursuant to this subsection. If the board determines that the position for which exemption is requested is one involving substantial responsibility for the formulation of basic agency or executive policy or one involving directing and controlling program operations of an agency or a major administrative division thereof, the personnel board shall grant the request and such determination shall be final. The total number of additional exemptions permitted under this subsection shall not exceed one hundred seventy-five for those agencies not directly under the authority of any elected public official other than the governor, and shall not exceed a total of twenty-five for all agencies under the authority of elected public officials other than the governor. The state personnel board shall report to each regular session of the legislature during an odd-numbered year all exemptions granted pursuant to the provisions of this subsection, together with the reasons for such exemptions.

The salary and fringe benefits of all positions presently or hereafter exempted except for the chief executive officer of each agency, full time members of boards and commissions, administrative assistants and confidential secretaries in the immediate office of an elected state official, and the personnel listed in subsections (10) through (22) of this section, shall be determined by the state personnel board.

Any person holding a classified position subject to the provisions of this chapter shall, when and if such position is subsequently exempted from the application of this chapter, be afforded the following rights: If such person previously held permanent status in another classified position, such person shall have a right of reversion to the highest class of position previously held, or to a position of similar nature and salary.

Any classified employee having civil service status in a classified position who accepts an appointment in an exempt position shall have the right of reversion to the highest class of position previously held, or to a position of similar nature and salary, within four years from the date of appointment to the exempt position. However, (a) upon the prior request of the appointing authority of the exempt position, the personnel board may approve one extension of no more than four years; and (b) if an appointment was accepted prior to July 10, 1982, then the four-year period shall begin on July 10, 1982.

Sec. 34. Section 51.08.015, chapter 23, Laws of 1961 as last amended by section 9, chapter 350, Laws of 1977 ex. sess. and RCW 51.08.015 are each amended to read as follows:

Wherever and whenever in any of the provisions of this title relating to any payments by an employer or worker or insurer to the department, the words "amount" and/or "amounts," "payment" and/or "payments," ((~~"premium" and/or "premiums,"~~)) "contribution" and/or "contributions," and "assessment" and/or "assessments" appear said words shall be construed to mean taxes, which are the money payments by an employer or worker or insurer which are required by this title to be made to the state treasury for the ((~~accident~~)) industrial insurance administrative fund, ((~~the medical aid fund,~~)) the supplemental pension fund, the second injury fund, or any other fund created by this title that is administered by the director.

Sec. 35. Section 51.08.100, chapter 23, Laws of 1961 and RCW 51.08.100 are each amended to read as follows:

"Injury" means a sudden and tangible happening, of a traumatic nature, producing an immediate or prompt result, and occurring from without, and such physical conditions as result therefrom, that rise naturally and proximately out of employment, and that do not include physical conditions that occur or develop as the result of normal bodily movements that are not peculiar to the worker's employment and that occur commonly in nonemployment life.

Sec. 36. Section 51.08.160, chapter 23, Laws of 1961 as amended by section 13, chapter 350, Laws of 1977 ex. sess. and RCW 51.08.160 are each amended to read as follows:

"Permanent total disability" means: (1) Loss of both legs, or arms, or one leg and one arm, total loss of eyesight, or paralysis; or (2) other conditions permanently incapacitating the worker from performing any work at any gainful occupation as a direct result of the worker's injury or disease and without regard or consideration to the worker's age, education, prior work experience, or prior injuries, diseases, or disabilities.

If the basis for a claim for permanent total disability is subsection (2) of this section, in order to qualify as such, the injured worker shall present evidence sufficient to show that his or her inability to obtain employment is due to physical limitations related to the accident or disease and is not due to economic conditions or the lack of availability of employment. In any event, permanent total disability benefits shall not be paid to any worker who is over seventy years of age.

Sec. 37. Section 51.12.050, chapter 23, Laws of 1961 as last amended by section 18, chapter 350, Laws of 1977 ex. sess. and RCW 51.12.050 are each amended to read as follows:

((Whenever the state, county, any municipal corporation, or other taxing district shall engage in any work, or let a contract therefor, in which workers are employed for wages, this title shall be applicable thereto. The employer's payments into the accident fund shall be made from the treasury of the state, county, municipality, or other taxing district. If the work is being done by contract, the payroll of the contractor and the subcontractor shall be the basis of computation and, in the case of contract work consuming less than one year in performance, the required payment into the accident fund shall be based upon the total payroll. The contractor and any subcontractor shall be subject to the provisions of this title, and the state for its general fund, the county, municipal corporation, or other taxing district shall be entitled to collect from the contractor the full amount payable to the accident fund and the contractor, in turn, shall be entitled to collect from the subcontractor his or her proportionate amount of the payment.))

Whenever and so long as, by state law, city charter, or municipal ordinance, provision is made for employees or peace officers injured in the course of employment, such employees shall not be entitled to the benefits of this title and shall not be included in the payroll of the municipality under this title: PROVIDED, That whenever any state law, city charter, or municipal ordinance only provides for payment to the employee of the difference between his or her actual wages and that received under this title such employees shall be entitled to the benefits of this title and may be included in the payroll of the municipality.

Sec. 38. Section 51.12.070, chapter 23, Laws of 1961 as last amended by section 4, chapter 128, Laws of 1981 and RCW 51.12.070 are each amended to read as follows:

The provisions of this title shall apply to all work done by contract; the person, firm, or corporation who lets a contract for such work shall be responsible primarily and directly for all premiums upon the work. The contractor and any subcontractor shall be subject to the provisions of this title and the person, firm, or corporation letting the contract shall be entitled to collect from the contractor the full amount payable in premiums and the contractor in turn shall be entitled to collect from the subcontractor his proportionate amount of the payment.

For the purposes of this section, a contractor registered under chapter 18.27 RCW or licensed under chapter 19.28 RCW shall not be responsible for any premiums upon the work of any subcontractor if:

(1) The subcontractor is currently engaging in a business which is registered under chapter 18.27 RCW or licensed under chapter 19.28 RCW;

(2) The subcontractor has a principal place of business which would be eligible for a business deduction for internal revenue service tax purposes other than that furnished by the contractor for which the business has contracted to furnish services;

(3) The subcontractor maintains a separate set of books or records that reflect all items of income and expenses of the business; and

(4) The subcontractor has contracted to perform:

(a) The work of a contractor as defined in RCW 18.27.010; or

(b) The work of installing wires or equipment to convey electric current or installing apparatus to be operated by such current as it pertains to the electrical industry as described in chapter 19.28 RCW.

It shall be unlawful for any county, city or town to issue a construction building permit to any person who has not submitted ((~~to the department an estimate of payroll and paid premium thereon as provided by chapter 51.16 RCW of this title or~~)) proof that such person has ((~~qualified as a self-insurer~~)) secured the payment of industrial insurance benefits under this title.

Sec. 39. Section 51.12.100, chapter 23, Laws of 1961 as last amended by section 21, chapter 350, Laws of 1977 ex. sess. and RCW 51.12.100 are each amended to read as follows:

The provisions of this title shall not apply to a master or member of a crew of any vessel, or to employers and workers for whom a right or obligation exists under the maritime laws for personal injuries or death of such workers, except as provided in sections 7 and 14 of this 1985 act.

If an accurate segregation of payrolls of workers for whom such a right or obligation exists under the maritime laws cannot be made by the employer, the director is hereby authorized and directed to fix from time to time a basis for the approximate segregation of the payrolls of employees to cover the part of their work for which no right or obligation exists under the maritime laws for injuries or death occurring in such work, and the employer, if not a self-insurer, shall pay premiums on that basis for the time such workers are engaged in their work.

Where two or more employers are simultaneously engaged in a common enterprise at one and the same site or place in maritime occupations under circumstances in which no right or obligation exists under the maritime laws for personal injuries or death of such workers, such site or place shall be deemed for the purposes of this title to be the common plant of such employers.

In the event payments are made under this title prior to the final determination under the maritime laws, such benefits shall be repaid if recovery is subsequently made under the maritime laws.

Sec. 40. Section 6, chapter 14, Laws of 1980 as amended by section 17, chapter 63, Laws of 1982 and RCW 51.12.110 are each amended to read as follows:

Any employer who has in his or her employment any person or persons excluded from mandatory coverage pursuant to RCW 51.12.020 (1), (2), (3), (4), (6), (7), (8), or (9) may file notice in writing with the director and the insurer, on such forms as the department may provide, of his or her election to make such persons otherwise excluded subject to this title. The employer shall forthwith display in a conspicuous manner about his or her works, and in a sufficient number of places to reasonably inform his or her workers of the fact, printed notices furnished by the ((~~department~~)) insurer in a form substantially identical to a form prescribed by the director stating that he or she has so elected. Said election shall become effective upon the filing of said notice in writing. The employer and his or her workers shall be subject to all the provisions of this title and entitled to all of the benefits thereof: PROVIDED, That those who have heretofore complied with the foregoing conditions and are carried and considered ((~~by the department~~)) as within the purview of this title shall be deemed and considered as having fully complied with its terms and shall be continued ((~~by the department~~)) as entitled to all of the benefits and subject to all of the liabilities without other or further action. Any employer who has complied with this section may withdraw his or her acceptance of liability under this title by filing written notice with the director and the insurer of the withdrawal of his or her acceptance. Such withdrawal shall become effective thirty days after the filing of such notice or on the date of the termination of the security for payment of compensation, whichever last occurs. The employer shall, at least thirty days before the effective date of the withdrawal, post reasonable notice of such withdrawal where the affected worker or workers work and shall otherwise notify personally the affected workers. Withdrawal of acceptance of this title shall not affect the liability of the ((~~department or self-insurer~~)) insurer for compensation for any injury occurring during the period of acceptance.

The ((~~department~~)) insurer shall have the power to cancel the elective adoption coverage if any required payments or reports have not been made. Cancellation by the ((~~department~~)) insurer shall be no ((~~later~~)) earlier than thirty days from the date of notice in writing by the department advising of cancellation being made.

Sec. 41. Section 82, chapter 289, Laws of 1971 ex. sess. as last amended by section 23, chapter 350, Laws of 1977 ex. sess. and RCW 51.12.120 are each amended to read as follows:

(1) If a worker, while working outside the territorial limits of this state, suffers an injury on account of which he or she, or his or her beneficiaries, would have been entitled to compensation under this title had such injury occurred within this state, such worker, or his or her beneficiaries, shall be entitled to compensation under this title: PROVIDED, That if at the time of such injury:

(a) His or her employment is principally localized in this state; or

(b) He or she is working under a contract of hire made in this state for employment not principally localized in any state; or

(c) He or she is working under a contract of hire made in this state for employment principally localized in another state whose workers' compensation law is not applicable to his or her employer; or

(d) He or she is working under a contract of hire made in this state for employment outside the United States and Canada.

(2) The payment or award of compensation under the workers' compensation law of another state, territory, province, or foreign nation to a worker or his or her beneficiaries otherwise entitled on account of such injury to compensation under this title shall not be a bar to a claim for compensation under this title: PROVIDED, That claim under this title is timely filed. If compensation is paid or awarded under this title, the total amount of compensation paid or awarded the worker or beneficiary under such other workers' compensation law shall be credited against the compensation due the worker or beneficiary under this title.

(3) If a worker or beneficiary is entitled to compensation under this title by reason of an injury sustained in this state while in the employ of an employer who is domiciled in another state and who has ((~~neither opened an account with the department nor qualified as a self-insurer~~)) not secured the payment of industrial insurance benefits under this title, such an employer or his or her insurance carrier shall file with the director a certificate issued by the agency which administers the workers' compensation law in the state of the employer's domicile, certifying that such employer has secured the payment of compensation under the workers' compensation law of such other state and that with respect to said injury such worker or beneficiary is entitled to the benefits provided under such law. In such event:

(a) The filing of such certificate shall constitute appointment by the employer or his or her insurance carrier of the director as its agent for acceptance of the service of process in any proceeding brought by any claimant to enforce rights under this title;

(b) The director shall send to such employer or his or her insurance carrier, by registered or certified mail to the address shown on such certificate, a true copy of any notice of claim or other process served on the director by the claimant in any proceeding brought to enforce rights under this title;

(c) (i) If such employer is a self-insurer or member of a self-insured group under the workers' compensation law of such other state, such employer shall, upon submission of evidence or security, satisfactory to the director, of his or her ability to meet his or her liability to such claimant under this title, be deemed to be a qualified self-insurer or member of a self-insured group under this title;

(ii) If such employer's liability under the workers' compensation law of such other state is insured, such employer's carrier, as to such claimant only, shall be deemed to be subject to this title: PROVIDED, That unless its contract with said employer requires it to pay an amount equivalent to the compensation benefits provided by this title, the insurer's liability for compensation shall not exceed its liability under the workers' compensation law of such other state;

(d) If the total amount for which such employer's insurer is liable under (c)(ii) above is less than the total of the compensation to which such claimant is entitled under this title, the director may require the employer to file security satisfactory to the director to secure the payment of compensation under this title; and

(e) If such employer has neither qualified as a self-insurer or member of a self-insured group nor secured insurance coverage under the workers' compensation law of another state, such claimant shall be paid compensation by the department from the industrial insurance administrative fund;

(f) Any such employer shall have the same rights and obligations as other employers subject to this title and where he or she has not provided coverage or sufficient coverage to secure the compensation provided by this title to such claimant, the director may impose a penalty payable to the department of a sum not to exceed fifty percent of the cost to the department of any deficiency between the compensation provided by this title and that afforded such claimant by such employer or his or her insurance carrier if any.

(4) As used in this section:

(a) A person's employment is principally localized in this or another state when (i) his or her employer has a place of business in this or such other state and he or she regularly works at or from such place of business, or (ii) if clause (i) foregoing is not applicable, he or she is domiciled in and spends a substantial part of his or her working time in the service of his or her employer in this or such other state;

(b) "Workers' compensation law" includes "occupational disease law" for the purposes of this section.

(5) A worker whose duties require him or her to travel regularly in the service of his or her employer in this and one or more other states may agree in writing with his or her employer that his or her employment is principally localized in this or another state, and, unless such other state refuses jurisdiction, such agreement shall govern as to any injury occurring after the effective date of the agreement.

(6) The director shall be authorized to enter into agreements with the appropriate agencies of other states and provinces of Canada which administer their workers' compensation law with respect to conflicts of jurisdiction and the assumption of jurisdiction in cases where the contract of employment arises in one state or province and the injury occurs in another, and when any such agreement has been executed and promulgated as a regulation of the department under chapter 34.04 RCW, it shall bind all employers and workers subject to this title and the jurisdiction of this title shall be governed by this regulation.

Sec. 42. Section 1, chapter 113, Laws of 1977 ex. sess. and RCW 51.12.140 are each amended to read as follows:

(1) As used in this section:

(a) "Municipal corporation" means any city, town, or county authorized by law to maintain and operate a law enforcement department;

(b) "Law enforcement department" means any regularly organized police department, sheriff's department, department of public safety, or other similar organization which has as its primary purpose the enforcement of state or local penal laws and the preservation of public order, which consists wholly of volunteer law enforcement officers or a combination of volunteer and paid law enforcement officers, and which is duly organized and maintained by a municipal corporation;

(c) "Volunteer law enforcement officer" means a person who is a member of a law enforcement department and who (i) performs assigned or authorized duties for the law enforcement department by his or her own free choice; (ii) serves in a position that is not basically clerical or secretarial in nature; (iii) is registered and accepted as a volunteer by the law enforcement department; and (iv) receives no monetary remuneration other than maintenance and reimbursement for actual expenses necessarily incurred in performing assigned duties; and

(d) "Performance of duty" includes any work in and about the volunteer law enforcement officers' quarters, police station, or any other place under the direction or general orders of the officer having the authority to order a volunteer law enforcement officer to perform the work; providing law enforcement assistance; patrol; drill; and any work of an emergency nature performed in accordance with the rules of the law enforcement department.

(2) Any municipal corporation maintaining and operating a law enforcement department may elect to provide coverage under this title for all of its volunteer law enforcement officers for death or disability occurring in the performance of their duties as volunteer law enforcement officers. Any municipal corporation electing to provide the coverage shall file a written notice of coverage with the director.

(3) Coverage under this section shall be for all the applicable death, disability, and medical aid benefits of this title and shall be effective only for injuries which occur and occupational diseases which are contracted after the notice of coverage has been filed with the director.

Nothing in this subsection shall be construed to prohibit a municipal corporation from covering its volunteer law enforcement officers and other volunteers under RCW 51.12.035(2), as now or hereafter amended, for medical aid benefits only.

(4) Volunteer law enforcement officers for whom municipal corporations have given notice of coverage under this section shall be deemed workers or employees, as the case may be, and the performance of their duties shall be deemed employment or in the course of employment, as the case may be, for all purposes of this title except where expressly excluded or where the context clearly requires otherwise.

(5) All premiums, assessments, contributions, and penalties due under this title because coverage is provided under this section shall be the obligation of and be paid by the municipal corporation giving the notice of coverage to the director.

(6) Any municipal corporation electing coverage under this section shall maintain a time log in which the number of hours worked by each of its volunteer law enforcement officers is recorded. The log shall be made available for inspection upon the request of any authorized employee of the department, or the insurer of the municipal corporation.

(7) Any municipal corporation electing coverage under this section may withdraw the coverage by filing a written notice of the withdrawal with the ((~~director~~)) insurer. The withdrawal shall become effective thirty days after filing the notice or on the date of the termination of the security for payment of compensation, whichever occurs later. At least thirty days before the effective date of the withdrawal, the municipal corporation shall notify each of its volunteer law enforcement officers of the withdrawal. Withdrawal of coverage under this section shall not affect the liability of the ((~~department or self-insurer~~)) insurer for compensation for any injury occurring during the period in which coverage was provided.

Sec. 43. Section 2, chapter 252, Laws of 1983 and RCW 51.12.150 are each amended to read as follows:

Any musician or entertainer who performs as a member of a group or recognized entity is deemed an employee of the group or entity and the leader of the group or entity shall be required to properly register as an employer ((~~with the department and pay industrial insurance premiums~~)) and comply with this title on behalf of his or her employees. If a musician or entertainer is a sole performer or performs as a partner in a group or entity, or performs on a casual basis, the musician or entertainer shall be exempted from mandatory coverage of this title. However, any such sole performer, partner, or casual performer may elect to be covered under this title and shall be subject to all the provisions and entitled to all the benefits under this title.

Sec. 44. Section 26, chapter 289, Laws of 1971 ex. sess. and RCW 51.14.010 are each amended to read as follows:

Every employer under this title shall secure the payment of compensation under this title by:

(1) Insuring and keeping insured the payment of such industrial insurance benefits with the state fund; or

(2) Qualifying as a self-insurer or a member of a self-insured group under this title;

(3) Insuring and keeping insured the payment of such compensation with any private insurer meeting the requirements of section 14 of this 1985 act; or

(4) Insuring as a member of a group of employers that meets the requirements of RCW 51.16.035 and that insures with an insurer meeting the requirements of section 14 of this 1985 act.

Sec. 45. Section 27, chapter 289, Laws of 1971 ex. sess. as last amended by section 9, chapter 323, Laws of 1977 ex. sess. and RCW 51.14.020 are each amended to read as follows:

(1) An employer or group of employers may qualify as a self-insurer by establishing to the director's satisfaction that he or she has sufficient financial ability to make certain the prompt payment of all compensation under this title and all assessments which may become due from such employer. Each application for certification as a self-insurer submitted by an employer or group of employers shall be accompanied by payment of a fee of one hundred fifty dollars or such larger sum as the director shall find necessary for the administrative costs of evaluation of the applicant's qualifications. Any employer who has formerly been certified as a self-insurer and thereafter ceases to be so certified may not apply for certification within three years of ceasing to have been so certified.

(2) A self-insurer may be required by the director to supplement existing financial ability by depositing in an escrow account in a depository designated by the director, money and/or corporate or governmental securities approved by the director, or a surety bond written by any company admitted to transact surety business in this state filed with the department. The money, securities, or bond shall be in an amount reasonably sufficient in the director's discretion to insure payment of reasonably foreseeable compensation and assessments but not less than the employer's normal expected annual claim liabilities and in no event less than one hundred thousand dollars. In arriving at the amount of money, securities, or bond required under this subsection, the director shall take into consideration the financial ability of the employer to pay compensation and assessments and his or her probable continuity of operation. The money, securities, or bond so deposited shall be held by the director to secure the payment of compensation by the self-insurer and to secure payment of his or her assessments. The amount of security may be increased or decreased from time to time by the director. The income from any securities deposited may be distributed currently to the self-insurer.

(3) Securities or money deposited by an employer pursuant to subsection (2) of this section shall be returned to him or her upon his or her written request provided the employer files the bond required by such subsection.

(4) If the employer seeking to qualify as a self-insurer has previously insured with the state fund, the director shall require the employer to make up his or her proper share of any deficit or insufficiency in the state fund as a condition to certification as a self-insurer.

Any employer becoming self-insured individually or as a group after October 1, 1985, may, in lieu of paying the liability determined under this subsection, pay its share of the liability as provided in section 19 of this 1985 act provided that the employer provides sufficient security to the director and the insurance commissioner to assure that such liability will be paid by the employer.

(5) A self-insurer or group self-insurer may reinsure a portion of his or her liability under this title with any reinsurer authorized to transact such reinsurance in this state((: PROVIDED, That the reinsurer may not participate in the administration of the responsibilities of the self-insurer under this title. Such reinsurance may not exceed eighty percent of the liabilities under this title)).

Sec. 46. Section 30, chapter 289, Laws of 1971 ex. sess. and RCW 51.14.050 are each amended to read as follows:

(1) Any employer may at any time terminate his status as a self-insurer by giving the director written notice stating when, not less than thirty days thereafter, such termination shall be effective, provided such termination shall not be effective until the employer either shall have ceased to be an employer or shall have filed with the director ((~~for state industrial insurance coverage~~)) proof that he or she has otherwise secured the payment of industrial insurance benefits under this title.

(2) An employer who ceases to be a self-insurer, and who so files with the director, must maintain money, securities or surety bonds deemed sufficient in the director's discretion to cover the entire liability of such employer for injuries or occupational diseases to his employees which occurred during the period of self-insurance: PROVIDED, That the ((~~director~~)) employer's new insurer may agree ((~~for the medical aid and accident funds~~)) to assume the obligation of such claims, in whole or in part, and shall adjust the employer's premium rate without approval by the insurance commissioner to provide for the payment of such obligations on behalf of the employer.

Sec. 47. Section 7, chapter 191, Laws of 1982 as amended by section 2, chapter 174, Laws of 1983 and RCW 51.14.150 are each amended to read as follows:

(1) Any two or more employers which are school districts or educational service districts, (2) any two or more employers which are hospitals, as defined in RCW 70.39.020(3), and are owned or operated by a state agency or municipal corporation of this state, ((or)) (3) any two or more employers which are hospitals, as defined in RCW 70.39.020(3), no one of which is owned or operated by a state agency or municipal corporation of this state or subject to RCW 70.39.150(3), or (4) any two or more employers which are members of a group of employers where the following conditions are met:

(a) All the employers in the group are members of an organization that has been in existence for at least two years;

(b) The organization was formed for a purpose other than that of obtaining workers' compensation coverage;

(c) The occupations or industries of the employers in a group within the organization are substantially similar, taking into consideration the nature of the services being performed by workers of such employers; and

(d) The formation and operation of the group program in the organization will substantially improve accident prevention and claim management for the employers in the group,

!ix may enter into agreements to form self-insurance groups for the purposes of this chapter: PROVIDED, That no more than one group may be formed under subsection (2) of this section and no more than one group may be formed under subsection (3) of this section. The self-insurance groups shall be organized and operated under rules promulgated by the director under RCW 51.14.160. Such a self-insurance group shall be deemed an employer for the purposes of this chapter, and may qualify as a self-insurer if it meets all the other requirements of this chapter.

Sec. 48. Section 16, chapter 289, Laws of 1971 ex. sess. as last amended by section 4, chapter 129, Laws of 1980 and RCW 51.16.035 are each amended to read as follows:

The department shall classify all occupations or industries in accordance with their degree of hazard and fix therefor basic rates of premium which shall be the lowest necessary to maintain actuarial solvency of the accident and medical aid funds in accordance with recognized insurance principles. The department shall formulate and adopt rules and regulations governing the method of premium calculation ((~~and collection~~)) based on the hours worked by employees and providing for ((a)) and calculating the experience rating ((~~system~~)) for each employer, other than employers authorized under chapter 51.14 RCW to self-insure or group self-insure, consistent with recognized principles of workers' compensation insurance which shall be designed to stimulate and encourage accident prevention and to facilitate collection. The department may annually, or at such other times as it deems necessary ((~~to maintain solvency of the funds~~)), readjust rates in accordance with the rating system to become effective on such dates as the department may designate.

((~~The department may insure the workers' compensation obligations~~)) An insurer meeting the requirements of section 14 of this 1985 act may insure the industrial insurance liability of employers as a group if the following conditions are met:

(1) All the employers in the group are members of an organization that has been in existence for at least two years;

(2) The organization was formed for a purpose other than that of obtaining workers' compensation coverage;

(3) The occupations or industries of the employers in the group within the organization are substantially similar, taking into consideration the nature of the services being performed by workers of such employers; and

(4) ((~~The employers in the group constitute at least fifty percent of the total employers in such organization; and~~

~~(5)~~)) The formation and operation of the group program in the organization will substantially improve accident prevention and claim management for the employers in the group.

In providing an employer group plan under this section, the ((~~department~~)) insurer may consider an employer group as a single employing entity for purposes of dividends or premium discounts.

Sec. 49. Section 13, chapter 260, Laws of 1981 and RCW 51.16.060 are each amended to read as follows:

Every employer not qualifying as a self-insurer, shall insure with ((~~the state and shall, on or before the last day of January, April, July and October of each year thereafter,~~)) an insurer as required under this title and furnish the ((~~department~~)) insurer with a true and accurate ((~~payroll~~)) record of all hours worked for the period in which workers were employed by it during the preceding calendar quarter, ((~~the total amount paid to such workers during such preceding calendar quarter, and~~)) a segregation of employment ((in)) into the different classes established pursuant to this title, and shall pay its premium thereon ((~~to the appropriate fund~~)). The sufficiency of such statement shall be subject to the approval of the director. The director shall require each insurer, other than qualified self-insured employers, to report to the department the information the department requires to carry out the provisions of this chapter: PROVIDED, That the director may in his or her discretion and for the effective administration of this title require an ((~~employer~~)) insurer in individual instances to furnish a supplementary report containing the name of each individual worker, his or her hours worked, his or her rate of pay and the class or classes in which such work was performed: ((PROVIDED FURTHER, That in the event an employer shall furnish the department with four consecutive quarterly reports wherein each such quarterly report indicates that no premium is due the department may close the account:)) PROVIDED FURTHER, That the department ((~~may~~)) shall promulgate rules and regulations in accordance with chapter 34.04 RCW to establish ((~~other~~)) reporting periods ((~~and payment due dates in lieu of reports and payments following each calendar quarter~~)) for insurers, and may also establish terms and conditions for payment of premiums and assessments based on estimated ((~~payrolls~~)) hours of employment, with such payments being subject to approval as to sufficiency of the estimated ((~~payroll~~)) hours by the department, and also subject to appropriate periodic adjustments made by the department based on actual ((~~payroll~~)) hours of employment: AND PROVIDED FURTHER, That a temporary help company which provides workers on a temporary basis to its customers shall be considered the employer for purposes of reporting and paying premiums and assessments under this title according to the appropriate rate classifications as determined by the department: PROVIDED, That the employer shall be liable for paying premiums and assessments, should the temporary help company fail to pay the premiums and assessments under this title.

Sec. 50. Section 51.16.070, chapter 23, Laws of 1961 and RCW 51.16.070 are each amended to read as follows:

Every employer shall keep at his place of business a record of his employment from which the information needed by the department may be obtained and such record shall at all times be open to the inspection of the director, ((~~supervisor of industrial insurance, or the traveling auditors, agents,~~)) or assistants of the department, as provided in RCW 51.48.040.

Information obtained from employing unit records under the provisions of this title shall be deemed confidential and shall not be open to public inspection (other than to public employees in the performance of their official duties), but any interested party shall be supplied with information from such records to the extent necessary for the proper presentation of the case in question: PROVIDED, That any employing unit may authorize inspection of its records by written consent.

Sec. 51. Section 51.16.100, chapter 23, Laws of 1961 and RCW 51.16.100 are each amended to read as follows:

((It is the intent that the accident fund shall ultimately become neither more nor less than self-supporting, except as provided in RCW 51.16.105 and, if in the adjustment of premium rates by the director the moneys paid into the fund by any class or classes shall be insufficient to properly and safely distribute the burden of accidents occurring therein,)) The department may divide, rearrange, or consolidate such class or classes, making such adjustment ((~~or transfer of funds~~)) as it may deem proper. The director shall make corrections of classifications or subclassifications or changes in rates, classes and subclasses when the best interest of such classes or subclasses will be served thereby.

Sec. 52. Section 7, chapter 14, Laws of 1980 as amended by section 1, chapter 63, Laws of 1984 and RCW 51.16.120 are each amended to read as follows:

(1) Whenever a worker has a previous bodily disability from any previous injury or disease, whether known or unknown to the employer, and shall suffer a further disability from injury or occupational disease in employment covered by this title and become totally and permanently disabled from the combined effects thereof or die when death was substantially accelerated by the combined effects thereof, then the ((~~experience record of an employer insured with the state fund~~)) employer's insurer at the time of said further injury or disease shall be charged, and a self-insured employer shall pay directly into the ((~~reserve~~)) second injury fund only the accident cost which would have resulted solely from said further injury or disease, had there been no preexisting disability, and which accident cost shall be based upon an evaluation of the disability by medical experts. The difference between the charge thus assessed to such employer at the time of said further injury or disease and the total cost of the pension reserve shall be assessed against the second injury fund. The department shall pass upon the application of this section in all cases where benefits are paid for total permanent disability or death and issue an order thereon appealable by the employer or insurer. Pending outcome of such appeal the transfer or payment shall be made as required by such order.

(2) ((~~The department shall,~~)) In cases of claims of workers sustaining injuries or occupational diseases in the employ of ((~~state fund~~)) insured employers, ((~~recompute~~)) the experience record of such employers shall be recomputed when the claims of workers injured in their employ have been found to qualify for payments from the second injury fund after the regular time for computation of such experience records and the ((~~department may~~)) insurer shall make appropriate adjustments in such cases including cash refunds or credits to such employers.

(3) To encourage employment of injured workers who are not reemployed by the employer at the time of injury, the department may adopt rules providing for the reduction or elimination of premiums or assessments from subsequent employers of such workers through its insurer, and may also adopt rules for the reduction or elimination of charges against such employers in the event of further injury to such workers in their employ.

(4) The director shall annually determine the amount necessary to fund or insure the obligations of the second injury fund, whichever is less, and shall collect that amount from the industrial insurance administrative fund.

Sec. 53. Section 51.16.140, chapter 23, Laws of 1961 as last amended by section 29, chapter 350, Laws of 1977 ex. sess. and RCW 51.16.140 are each amended to read as follows:

Every employer ((~~who is not a self-insurer~~)) shall deduct from the pay of each of his or her workers one-half of ((~~the amount he or she is required to pay, for medical benefits within each risk classification. Such amount shall be periodically~~)) that portion of the employer's premium or cost that is determined annually by the ((~~director and reported by him or her to all employers under this title~~)) department to be that portion of the industrial insurance premium or cost attributable to overall medical benefits. Employers insured by an insurer which deviates from the rates filed by the rating organization shall deduct a proportionate amount of the premiums charged: PROVIDED, That the state governmental unit shall pay the entire amount ((~~into the medical aid fund~~)) to the insurer for volunteers, as defined in RCW 51.12.035, and the state apprenticeship council shall pay the entire amount into the medical aid fund for registered apprentices or trainees, for the purposes of RCW 51.12.130. It shall be unlawful for ((~~the~~)) any employer, unless specifically authorized by this title, to deduct or obtain any part of the premium or other costs required to be by him or her paid by reason of this title from the wages or earnings of any of his or her workers, and the making of or attempt to make any such deduction shall be a gross misdemeanor.

Sec. 54. Section 51.16.150, chapter 23, Laws of 1961 as amended by section 15, chapter 43, Laws of 1972 ex. sess. and RCW 51.16.150 are each amended to read as follows:

If any employer or insurer shall default in any payment to any fund administered by the director the sum due shall be collected by action at law in the name of the state as plaintiff, and such right of action shall be in addition to any other right of action or remedy. If such default occurs after demand, there shall also be collected a penalty equal to twenty-five percent of the amount of the defaulted payment or payments, and the director may require from the defaulting employer or insurer a bond to the state for the benefit of any fund, with surety to the director's satisfaction, in the penalty of double the amount of the estimated payments which will be required from such employer or insurer into the said funds for and during the ensuing one year, together with any penalty or penalties incurred. In case of refusal or failure after written demand personally served to furnish such bond, the state shall be entitled to an injunction restraining the delinquent from prosecuting an occupation or work until such bond is furnished, and until all delinquent ((~~premiums~~)) payments, penalties, interest and costs are paid, conditioned for the prompt and punctual making of all payments into said funds during such periods, and any sale, transfer, or lease attempted to be made by such delinquent during the period of any of the defaults herein mentioned, of his works, plant, or lease thereto, shall be invalid until all past delinquencies are made good, and such bond furnished.

Sec. 55. Section 1, chapter 85, Laws of 1977 ex. sess. as amended by section 3, chapter 218, Laws of 1984 and RCW 51.24.030 are each amended to read as follows:

(1) If an injury to a worker for which benefits and compensation are provided under this title is due to the negligence or wrong of a third person not in the same employ, the injured worker or beneficiary may elect to seek damages from the third person. However, no liability exists on the part of and no cause of action shall arise against:

(a) Any insurer or safety consultant concerning the scope of or any other safety related service undertaking to assist an employer in carrying out the employer's obligation under this title and chapter 49.17 RCW if the consultation or any other related service was consistent with chapter 49.17 RCW;

(b) Any collective bargaining unit or other organization of employees concerning any suggestions made or offered to the employer relating to the safety of the workplace.

(2) For the purposes of this chapter, "injury" shall include any physical or mental condition, disease, ailment or loss, including death, for which compensation and benefits are paid or payable under this title.

Sec. 56. Section 3, chapter 85, Laws of 1977 ex. sess. as last amended by section 4, chapter 218, Laws of 1984 and RCW 51.24.050 are each amended to read as follows:

(1) An election not to proceed against the third person operates as an assignment of the cause of action to the ((~~department~~)) insurer or self-insurer, which may prosecute or compromise the action in its discretion in the name of the injured worker, beneficiary or legal representative.

(2) If an injury to a worker results in the worker's death, the ((~~department~~)) insurer or self-insurer to which the cause of action has been assigned may petition ((a)) the appropriate court for the appointment of a special personal representative for the limited purpose of maintaining an action under this chapter and chapter 4.20 RCW.

(3) If a beneficiary is a minor child, an election not to proceed against a third person on such beneficiary's cause of action may be exercised by the beneficiary's legal custodian or guardian.

(4) Any recovery made by the ((~~department~~)) insurer or self-insurer shall be distributed as follows:

(a) The ((~~department~~)) insurer or self-insurer shall be paid the expenses incurred in making the recovery including reasonable costs of legal services;

(b) The injured worker or beneficiary shall be paid twenty-five percent of the balance of the recovery made, which shall not be subject to subsection (5) of this section: PROVIDED, That in the event of a compromise and settlement by the parties, the injured worker or beneficiary may agree to a sum less than twenty-five percent;

(c) The ((~~department~~)) insurer and/or self-insurer shall be paid the compensation and benefits paid to or on behalf of the injured worker or beneficiary by the ((~~department~~)) insurer and/or self-insurer; and

(d) The injured worker or beneficiary shall be paid any remaining balance.

(5) Thereafter no payment shall be made to or on behalf of a worker or beneficiary by the ((~~department~~)) insurer and/or self-insurer for such injury until the amount of any further compensation and benefits shall equal any such remaining balance. Thereafter, such benefits shall be paid by the ((~~department~~)) insurer and/or self-insurer to or on behalf of the worker or beneficiary as though no recovery had been made from a third person.

(6) In the case of an employer not qualifying as a self-insurer, ((~~the department~~)) its insurers shall make a retroactive adjustment to such employer's experience rating in which the third party claim has been included to reflect that portion of the award or settlement which is reimbursed for compensation and benefits paid and, if the claim is open at the time of recovery, applied against further compensation or benefits to which the injured worker or beneficiary may be entitled.

(7) When the cause of action has been assigned to the self-insurer and compensation and benefits have been paid and/or are payable from state funds for the same injury:

(a) The prosecution of such cause of action shall also be for the benefit of the department to the extent of compensation and benefits paid and payable from state funds;

(b) Any compromise or settlement of such cause of action which results in less than the entitlement under this title is void unless made with the written approval of the department;

(d) The department shall bear its proportionate share of the costs and reasonable attorneys' fees incurred by the self-insurer in obtaining the award or settlement; and

(e) Any remaining balance under subsection (4)(d) of this section shall be applied, under subsection (5) of this section, to reduce the obligations of the ((~~department~~)) insurer and self-insurer to pay further compensation and benefits in proportion to which the obligations of each bear to the remaining entitlement of the worker or beneficiary.

Sec. 57. Section 4, chapter 85, Laws of 1977 ex. sess. as last amended by section 5, chapter 218, Laws of 1984 and RCW 51.24.060 are each amended to read as follows:

(1) If the injured worker or beneficiary elects to seek damages from the third person, any recovery made shall be distributed as follows:

(a) The costs and reasonable attorneys' fees shall be paid proportionately by the injured worker or beneficiary and the ((~~department~~)) insurer and/or self-insurer;

(b) The injured worker or beneficiary shall be paid twenty-five percent of the balance of the award: PROVIDED, That in the event of a compromise and settlement by the parties, the injured worker or beneficiary may agree to a sum less than twenty-five percent;

(c) The ((~~department~~)) insurer and/or self-insurer shall be paid the balance of the recovery made, but only to the extent necessary to reimburse the ((~~department~~)) insurer and/or self-insurer for compensation and benefits paid;

(i) The ((~~department~~)) insurer and/or self-insurer shall bear its proportionate share of the costs and reasonable attorneys' fees incurred by the worker or beneficiary to the extent of the benefits paid or payable under this title: PROVIDED, That the ((~~department~~)) insurer or self-insurer may require court approval of costs and attorneys' fees or may petition a court for determination of the reasonableness of costs and attorneys' fees.

(ii) The sum representing the ((~~department's~~)) insurer's and/or self-insurer's proportionate share shall not be subject to subsection (1) (d) and (e) of this section.

(d) Any remaining balance shall be paid to the injured worker or beneficiary;